Although health insurance continues to be the anchor of a good employee benefits package, employee benefits experts are seeing that additional benefits, like the ability to work remotely, as well as more flexible time off, are becoming sought after benefits.
Mike Mandolfo, president of Strategic Benefits, emphasized the importance of a competitive employee benefits package.
So, what is competitive in 2023?
That question is commonly asked during employer meetings. Most businesses will offer a traditional “core” benefit package that includes a variation of group health insurance, retirement plans, dental, vision, life insurance and disability insurance.
“The lack of some or all core benefits could be a deal breaker during the hiring process,” Mandolfo said.
Tried and True
Aside from traditional core benefits, remote work and flexible work schedules have made headlines as one of the most sought-after employee benefits during the past three years.
Millions seeking flexible work schedules have turned to contract work during the pandemic, with employee benefits substituted by private marketplace health insurance coverage.
With employers facing more competition than ever to retain and attract employees, a few easy tips can help improve and update an employee benefits package.
As a starter, benefits should create buy-in and alignment for your employees, according to Taylor Royal, wealth management advisor and partner with Royal Wealth Partners.
“It really speaks to the culture that you’re trying to create in the enterprise,” he said. “What I’m seeing for tried and true benefits across all enterprises is really great medical, dental and vision insurance. That is the bread and butter that people really care about and will home in on.
“Employees can cover up to 100% of the cost of those and anything that’s left over the employee can pay for with pretax dollars. That’s a pretty good benefit if an HSA [health saving account] plan or an FSA [flexible savings account] is incorporated into that.”
HSAs are typically used to pay health care expenses while FSAs can be used to pay health care or dependent care or child care expenses.
Most common are medical, life and disability, dental and vision insurance.
“Currently it’s hard to see employers getting an ROI from their health insurance because it’s so expensive,” said Howard Shandell, general partner at Midwest Benefit Advisors. “Ultimately employers have benefits for one reason: to attract and retain quality people.”
Budget is the first consideration when putting together a benefits package.
“People start with health or medical insurance,” Shandell said. “That seems to be the centerpiece of most benefit plans. From there they’re adding what we call ancillary lines of coverage — life insurance, group disability, dental, vision.”
“Health care benefits still are trending but that’s just because of inflation, which is on top of everyone’s mind,” Royal said. “I would say that what is new is more fitness perks, such as reimbursement for fitness-related expenses like a gym membership, going out for a round of golf, fitness equipment, smart watches or running shoes.
“Good maternity and paternity leave is rather new. It shows the employer’s focus on the whole family aspect dynamic, which is important.”
COVID-19 showed that employees could work effectively from home. That consideration continues today in a post-pandemic world as benefit packages often contain the option to work remotely—not only from home but from any part of the country.
“We’re seeing a rise in pet insurance,” Shandell said. “That one’s a lot more popular. “Supplemental health plans are also popular because, as deductibles and copays rise, people look to supplement that loss of protection through other means.”
Extended time off is also popular with employees.
“More employees I work with now are taking sabbatical-type leave—a couple months off to travel and see the sights they might not be able to fit into one or two weeks off,” Royal said. “Being able to be more flexible in work arrangements is more of a new trend.”
The Best ROI
The best ROI for every benefits package is to have educated employees who know what benefits are offered and who take advantage of those benefits.
“It’s important for employers to leverage the tools, resources, and knowledge of your benefits broker by holding annual employee education meetings,” Mandolfo said. “This is the perfect way to ensure that your employees understand their benefits, and it builds better relationships.”
For example, Shandell said that while most health plans cover preventative care in full, only about 30% of the population utilize the benefit.
“I think that would be a huge, huge gain for people,” he said. “Make sure you read all the documentation thoroughly so you know what you have and what you’re paying for so when and if it comes time to use those benefits, you’ll have a better understanding of what you have to do and how to benefit from those insurances.”
Setting up benefits takes time, planning, and it costs money, so it’s not efficient or cost-effective if employees don’t know about their benefits.
“These benefits should be a testament to the culture of your business,” Royal said. “So it’s very important as an employer to be proactive in communicating benefits and programs to the current and new employees and certainly make an effort to support them around the enrollment process, making sure they understand all of their options.
“Have the benefits in the first place, but kind of do the handholding to make sure it’s most valuable to the employee, which in turn makes it great for the employer as well.”
In a work environment, no two employees are the same. An employer might have an employee who is fresh out of college and a veteran who has been with the company for 20 years. It is important to understand from a cultural alignment what is important to employees at both ends of the spectrum.
“Keep the employees’ wellness in mind, so think not necessarily just your true basic 401(k) plans and retirement plans, but try to take more of a work/life balance approach, which is a little more New Age, extending from what COVID brought us,” Royal said.
Prospective new hires commonly share copies of their current benefit package during the negotiation process. Those copies are a valuable resource for employers to compare their benefit package with local competitors.
Employers should offer continuous education around benefits. It is very important for employers to make sure that their employees know who they should contact if they have questions, where they should go, or how they can find out what they need to know.
Dialogue is important, such as lunch-and-learns and setting aside time for discussion, so that employees feel empowered to be able to take advantage of their benefits. Employers should make sure that employees know what’s available to them because today’s work environment is very competitive, and sometimes the menu of options for an employer can make or break whether they will be able to attract and retain talent.
“Because now, post-COVID, you and I can choose to work for anyone around the country if not the world,” Royal said. “The competitive landscape has really changed the dynamic to maybe push a little more of the power to the employee compared to what it has been in the past. It’s all the more important for the employer to hone in on what they’re offering, why they’re offering it, and creating that buy-in and alignment from their existing workforce, hopefully to drive future growth.”
A Changing Landscape
Regulation and tax law changes are constantly impacting benefits.
On the employer side it could be regulations around the number of employees who could be covered in a specific plan or the number of plans or types of plans that need to be offered.
On the employee side there are always tax law changes concerning the contribution levels and amounts, such as what can go into a 401(k) plan or a SIMPLE retirement plan, and what can be contributed from an HSA and FSA perspective.
“So when January 1 rolls around it’s always good that you’re freshening your lens and perspective on your current benefits, on what you can do and cannot do,” Royal said. “Don’t be afraid to ask questions. Some of this is a black box. Employees should be willing to go to their HR [department].”
Mandolfo recommended checking in with employees regularly to understand what’s important to them.
“Annual employee surveys help achieve valuable feedback,” he said. “This could highlight a sought-after benefit not currently being offered, or equally highlight a current benefit that isn’t valued much.”
Legislatively, Shandell expects to see some changes on the pharmaceutical side having to do with pharmaceutical manufacturers patient assistance programs [PAPs].
“If there’s a drug that’s not covered on your health plan, depending on your financial picture, you could qualify for a manufacturers patient assistance program where the manufacturer would pay for the cost of the drug, but there are manufacturers who are trying to change that,” he said.
FNIC Trusted insurance advisors • fnicgroup.com
Baird Private Wealth Management • rittergroup.bairdwealth.com
Swartzbaugh Farber & Associates, Inc. • www.swartzbaugh.com
Clarkson College • ClarksonCollege.edu