No matter the size of the business, when it comes to benefits, most do not want an “in the box” program and size is NOT an issue.
Customization—most entrepreneurs agree—is key to the attraction and retention process of a well thought out, well-structured compensation package. And an employee group benefit plan plays a vital role in ensuring a well-rounded compensation and protection model for employees.
But the question remains, how to customize a benefit plan, ensuring coverage and protection align with flexibility and cost control?
The age of the traditional benefit model is at an end. Enter health spending accounts, health and wellness programs, employee assistance, and administrative services only products. The key to tying these options together is to review with an in-depth evaluation the overall plan as you would a blue print to building a structure designed to meet the needs of various and complex individuals.
- What do you want to cover?
- What benefits are important?
- How much do you want to spend?
- What should be insured?
- What can be self-funded?
- Where do you want to build in flexibility?
Insurance is defined as a “risk” mitigation tool: risk of loss of life, risk of loss of income, risk of a catastrophic event. For that reason, whenever a plan includes Life Insurance, Disability, Pharmacy, Travel—there should be “insurance” as these are unforeseen events which can wipe out a family financially if not adequately protected. However, there are many options on benefits which continue to be “insured” without a major element of risk and it is these items more than most that cause benefit rates to escalate. This is where the employer can take control of the costs.
Whenever a plan includes a pre-defined maximum, ask: is that really insurance? Can the company “afford” to bear the cost of that risk of claim? For instance, Vision Care. If the plan includes $250 of coverage, every 24-months, is that really a “risk” which requires insurance. If the answer includes the option for the company to take on that risk of claim, then that is where an Administrative Services Only (ASO) product may come into play, where the benefit to the employee looks, acts and feels, exactly as it did when it was insured by the insurance carrier, yet now the employer doesn’t have to incur higher administration fees for the insurer to underwrite a risk, which may or may not be considered a “risk” by the employer’s definition of loss. Instead the employer pays for straight administration without the added risk costs of trend, inflation, and demographic change measures.
If this line of thought leads to other areas including dental services, paramedical practitioners, like massage, chiropractic, physiotherapy, etc. then the flexibility of a Health Spending Account (HSA) may provide the flexibility of coverage to meet the needs of a diverse and ever-changing workforce. A HSA provides employees with a set amount of coverage to use annually where they see fit—flexibility and choice—on topping up existing benefits, or paying fully for others up to their allotted maximum. The employer pays for the cost of the claim, plus the administration fee charged by the provider to administer the claim according to regulations.
All of these elements can be altered between divisions and classes of employees. They can be packaged together under one provider allowing for ease of use and administration to streamline and control costs over the long term.
When all of these pieces are put together into a workable solution, we have achieved a fully customized benefit plan unique to that employer.
As an added note, never forget that the benefit plan is NOT a set it and forget it program. To keep up with compensation, whenever company policies shift, compensation, or employee demographics have changes, the benefit plan should be reviewed and further customized to meet these changing needs.
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