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Strategies to maximize your employee benefits

Benefits are good for employee relations. They also give companies a competitive edge in recruiting and retainingbenefits the best employees. Benefits, however, come at a cost, which too often is a well-kept secret, Serrena Bennett, an account executive with Colonial Life (www.coloniallife.com) , told an audience of small business owners at the September Jacksonville Advantage Knowledge Is Power breakfast workshop.

“Many times employees don’t understand that their employers are paying a large portion of their health premiums,” she said. And, they don’t know they are receiving many other benefits, let alone the value of those benefits.

Medical coverage is the first thing that comes to mind when people talk about benefits. Unfortunately, the cost of traditional medical benefits is escalating at a rapid pace. And that presents a dilemma to employers: How to offer benefits yet keep costs under control?

 One way is to provide a consumer-driven healthcare plan, said Randy Hallman, district manager with Colonial Life and co-presenter at the workshop. These plans require a higher deductible. Since consumers (employees) manage their own healthcare dollars, they quickly learn that a doctor’s visit costs much more than the $25 co-pay they were used to paying when they had a traditional medical plan, Hallman said. “What a consumer-driven healthcare plan is designed to do is to put responsibility for healthcare back on the employee so that they make good choices in spending their healthcare dollars.”

Another option available to employers who want to offer benefits to their employees is voluntary benefit ancillary products, said Bennett, who explained that these are stand-alone products that are paid out to the insured directly. They are in addition to any other plan an employee has. One example of an ancillary product is a hospital confinement indemnity insurance plan, which acts as a bridge to offset a high deductible medical plan. Other examples include accident insurance, disability insurance, cancer and critical illness coverage, and life insurance.

All of these ancillary products are paid for by employees, through payroll deduction. “Most of these are portable,” said Bennett. “Employees can carry these wherever they go. They own them.”

Employees may wonder how they can pay for these benefits. If your company is set up to take advantage of Section 125 of the IRS code, which allows employees to pay their contributions to benefits with pre-tax dollars, employees can use these savings for ancillary benefits, said Hallman. It’s like “found” money. (Click here to see chart.) Section 125 itself is a benefit and should be communicated as such, said Hallman, since it saves employees money. “Most employers have section 125,” he said, “but they aren’t getting credit for it as a benefit.”

Communicating your benefits

The value of the benefits you offer your employees should not be a secret; it should be communicated at least annually, as well as at the time of hire.

Conduct group meetings during your annual enrollment period, said Hallman. At that time go over any changes you are making to your plan and give an overview of the ancillary benefits available to employees. Group meetings are also the time to highlight all of the other benefits you offer. These may include, for example, dental, vision, 401(k) and pension plans, disability insurance, paid-time-off and sick leave, as well as the value of cell phones, laptops, uniform allowances, and other similar things. These benefits make up your comprehensive compensation plan, he said.

As important as they are, “group meetings are not enough,” he said. “Because plans are complicated, a few days after the group meeting, schedule one-on-one sessions with employees to go over the plans and answer questions.” The benefits provider should be able to handle these personal counseling sessions for you.

The individual meetings should have a couple of objectives. One is to help employees make elections, such as for ancillary products. “It’s important to show employees how the election would affect their paycheck,” said Hallman. And, assuming you have complied with Section 125 and employees can pay for benefits with pre-tax savings, another objective is to show what their salary would look like with and without the pre-tax savings for the elections they make.

Another objective of the individual meetings is to provide a single statement to the employee, listing anything you consider part of the compensation package. “Showing the value on an individual basis allows employees to have a better appreciation of their total compensation,” said Hallman.

sarrenasmallSerrena Bennett can be contacted at 305-742-1236 or Sarrena.Bennett@ColonialLife.com. The Knowledge Is Power workshop was sponsored in part by Eola Capital, www.EolaCapital.com.  

 

SIDEBAR

Fill your benefits gaps

1. Assess, with the help of a benefits professional, your current benefits. List each benefit and its value.

2. Identify the gaps. In which areas are you weak?

3. Find products to fill the gaps. Many are available at no cost to you; they can be benefits voluntarily purchased by employees.

4. Look for a benefits provider who can conduct group meetings, provide individualized and customized counseling, and provide enrollment services.


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