Employee Benefits: Making It Easy
If your business is among the 60% of U.S. companies that offer employee health and retirement benefits, you may be wondering how best to handle "open enrollment" season, the September-through-November time period when employees are typically asked to enroll or change their benefit options. While 99% of companies with 200 or more employees offer health insurance, fewer than half (45%) of the nation's smallest enterprises (those with fewer than 10 employees) do so, according to the 2007 Employer Health Benefits Survey, released earlier this month by the Kaiser Family Foundation and the Health Research and Educational Trust. The report is available for free at the nonprofit organization's Web site. And BusinessWeek.com's Special Report on Demystifying Health Benefits (BusinessWeek, 9/18/07) offers in-depth coverage on the politics of health care and more.
Here are some tips and best practices for employers eager to help their employees make good decisions about benefits:
• Education is critical. Schedule a session where your human resources representative or an insurance company representative explains the health-care and retirement options to your employees. If you have only a handful of employees, consider doing it one-on-one; otherwise, hold a group information session during work hours. Make it mandatory: A Guardian Life Insurance survey showed that 50% of Americans spend more time filing their taxes and doing their holiday shopping than they do reviewing their benefit choices. "Employees can be overwhelmed with the variety of health-care and retirement choices offered to them. Being able to offer your employees a comprehensive education program around the different health-care and retirement options can make a big difference in their benefit planning efforts," says Renee Schaaf, a vice-president at The Principal Financial Group (PFG), based in Des Moines.
• Simplify the vocabulary. Insider terminology and long plan descriptions can be confusing, so break down the options using worksheets or spreadsheets that make side-by-side comparisons. Make sure you're comparing apples to apples: "It is critical to use the same terminology throughout all communication, so what's online, on paper, and in the plan documents all say the same thing," Schaaf says.
• Choose the right broker. Work with an insurance broker who specializes in small companies and, if possible, has experience with other small businesses in your industry. Not only will you get a better group of choices, but your broker may also be able to suggest options such as multiproduct discounts.
• Provide answers. Put information about enrollment in your company newsletter, send it out via e-mail, and post it on your Web site, if appropriate. Make sure your HR department and your insurance company representatives are available to answer questions from employees as they arise. Put out the information well in advance of enrollment deadlines, so your employees have time to do research and talk with their families before they must decide on options.
• Consider voluntary programs. The Kaiser survey shows that since 2001, premiums for family coverage have increased 78%, while wages have gone up 19% and inflation has risen 17%. The average premium for family coverage in 2007 was $12,106, with employees paying only a small portion of that cost. If your small business can't afford to pay these premiums, consider offering voluntary benefits. "Voluntary benefits are often partially funded by an employer, with the employee paying the balance. Or the employer can allow the employee to pay the full cost," says Barry Pettruzi, vice-president for group life and disability insurance at Guardian. "The employee gains from discounted access to a benefit that an employer may not have otherwise provided."
• Push retirement savings. It's important to get your employees started on retirement planning, so consider automatically deferring funds into your employee's retirement plans on an "opt-out" basis, or at least contribute an employer "match" whether the employee chooses to participate or not. "Some companies would like to make sure their employees are responsible for their own investments," says Schaaf, "but it is important to get them started, and one way to help them do that is the company match. Some companies are also introducing financial planning into the workplace, which has proven beneficial to retirement planning efforts."