4 strategies employers are using to create attractive benefits

In today’s hot labor market, employer-sponsored benefits continue to be a non-negotiable piece of the employee value proposition. But many factors, including inflation, economic instability and increased healthcare utilization as a result of the pandemic are driving up healthcare costs.

Employers must balance the need to offer competitive benefits with what they can afford and invest their benefits budgets wisely.

So how can employers control costs while providing an attractive benefits program that keeps their employees happy, healthy and more financially secure? Consider these four simple steps.

Step 1:

Do more (for less) with voluntary benefits

During times of economic uncertainty, employers may be tempted to scale back employee benefits. But many organizations are actually doing the opposite.

According to a recent study, 60 percent of employers are considering adding a new insurance benefit over the next two years (about twice as much interest as there was five years ago). The top benefits that they are planning to add include disability insurance (both short-term and long-term), vision care benefits, dental insurance and life insurance.

Because these top voluntary benefits are typically partially or 100 percent employee paid, employers can pass some or all of the cost to their employees. This can help employers attract and retain top talent while balancing cost and coverage.

To further ease the financial burden, employers may be able to take advantage of benefits-related tax deductions. Certain voluntary benefits can also be deducted from an employee’s paycheck pre-tax, which can help lower the employee’s taxable income and the employer’s payroll taxes. This can be a win-win for both the organization and its employees.

Voluntary benefits can be especially valuable for small businesses, allowing them to offer more attractive benefits packages and compete with larger organizations that have bigger budgets for salaries.

For employees, voluntary benefits can provide income protection in an uncertain economy and help fill in gaps that are not covered by their core health insurance plan. Voluntary benefits offered through an employer are also typically more affordable than what employees would pay as individuals for similar coverage.

Step 2:

Give employees what they want

Research shows that employees now place greater importance on their benefits, but the types of benefits matter. When designing a benefits program, it’s important for employers to align with their workforces’ priorities.

For example, today’s employees increasingly value benefit offerings that provide income protection. A recent survey reported that the interest in disability insurance almost doubled and the interest in life insurance tripled; while pet insurance and legal protection saw declines as compared to the 2022 survey.

Therefore, employers should be sure to offer fundamental voluntary benefits like disability and life insurance, which help provide employees with valuable income protection and financial security for their families at the time of loss or hardship.

These benefits can be even more valuable when enhanced with optional add-ons. Long-term disability options like student loan repayment benefits and activities of daily living (ADL), for example, provide an additional layer of financial security in the event of a disability. Employers should also look for value-added benefits included in some life and/or disability programs, such as travel assistance, beneficiary companion assistance and identity theft resolution. These important benefits can help add to the financial well-being of employees and their families during challenging times.

Step 3:

Manage long-term health risks

In an uncertain economy, business leaders are likely to prioritize cost savings, driving some companies to scale back on employee perks and extra benefits. But employers may actually be able to decrease future healthcare costs by offering benefits that support a healthy workforce.

Preventive eye and dental exams, for example, can help detect early signs of certain chronic conditions like heart disease and diabetes, which can drive high-cost medical claims. By providing access to preventive care, dental and vision benefits can help catch potential health problems early — before they become more painful and costly.

Mental health is another growing concern. A recent Gallup poll found that nearly one-fifth of U.S. workers (19%) who rated their mental health as fair or poor missed about four times more work than their counterparts who reported good, very good or excellent mental health. This missed work is estimated to cost $47.6 billion in lost productivity over the course of a year.

In response, many employers are expanding mental health support for their employees through benefit offerings and other policies that prioritize employee wellness. One example of this is an Employee Assistance Program (EAP), which offers behavioral health support for employees struggling with a variety of work and life concerns, including mental health, financial and career issues.

Step 4:

Prioritize communication

Benefits communication plays a key role in the employee experience (EX) and helps cultivate an engaged and productive workforce. Research has shown that organizations with more effective EX outperform their peers for top-line growth, bottom-line profitability and return to shareholders.

Getting the most value out of an employee benefits program is contingent upon employees’ understanding and full appreciation of what is available to them. Employers should implement an ongoing, multichannel communication strategy that explains how voluntary benefits can meet employees’ needs during every life stage.

Balancing cost and coverage

For many employers, one of the organization’s largest budget items is likely employee benefits. And rightfully so – a strong employee benefits program continues to be critical for attracting talent and maintaining an engaged workforce.

Fortunately, with the right strategy and smart planning, employers can offer a robust benefits package that can help set them apart from their competition – all the while maintaining their budget.

One of the best ways to develop that strategy is working with an experienced broker and carrier partner focused on making the benefits process easier for employers and their employees. By choosing a voluntary benefits partner that offers customizable options, personalized services and simple administration including employer portals, benefits administrators can help make workplace benefits as seamless as possible.

Published On: August 23rd, 2023

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