Are you wondering how adding or changing a group benefits plan will impact your balance sheet?
As our head bean counter would attest, when it comes to business, you need to be aware of your costs. Any new ideas need to make dollars and sense.
We absolutely agree, and we’ve got some tips to help you review your costs, decide what to cover and watch out for the financial pitfalls of insured benefits. With these tricks, you’ll be able to put a plan in place that supports your team while controlling your costs.
Plan what you can afford
Your benefits plan must fit your bottom line. After all, you need your business to stay afloat and benefits shouldn’t be one and done – you want to provide coverage your team can rely on year after year.
One of the advantages of a Health Spending Account is the contribution amount is up to you – it’s customizable to fit your budget, not defined by an insurance company setting a premium. This means you can set the cost after crunching your numbers.
Before you get scared by this new expense, remember, there are costs to not offering a group benefits plan like:
- Higher turnover;
- Lower morale;
- Increased costs of recruitment; and
- Lower productivity due to sickness.
Once you know how much you can allocate to your benefits plan, the real fun begins.
Decide what your benefits should cover
No two business are the same, so no two group benefits plans should be the same. Around here we call the ability to create unique, customized plans blended benefits.
There are three components to a blended benefits plan:
- Coverage for health and dental expenses - how you help your team take care of day to day, predictable costs.
- Peace of Mind benefits - true insurance that protects your team in the event of a tragedy.
- Accessory Benefits - the nice to haves like Group Travel, an Employee and Family Assistance Program, or Excess Medical Coverage.
It’s up to you (with some sage advice from your advisor and benefits provider) to decide which of these components to use as you build a plan that fits your unique situation. Goals you have for your plan may include:
- Attracting and retaining top talent;
- Building your culture; or
- Differentiating your business.
Here's some further advice on how to approach setting up a group benefits plan.
Traps to avoid
There’s no such thing as a free lunch, and nothing worse than building a benefits plan where everyone’s paying but no one is getting real value. Watch out for these pitfalls you’ll run into with insured health and dental benefits.
Discounted Rates
If a deal feels too good to be true, it probably is! Insurance companies have taken to slashing their premiums to get new clients to sign up, only to hammer businesses with 20% premium increases at renewal. Businesses find themselves stuck swallowing the new rates, or shopping around and repeating the same mistake over again.
Shared Costs
Insurance companies will tell you to offer more but pay less by using deductibles, co-pays, or service maximums. All these options add the perception of value for plan members but force them to pay out of pocket anyway. You’re better off setting a budget you can afford and sticking to it.
Your blended benefits solution
If you came here looking for what percentage of revenue to allocate to benefits, or the average health and dental premiums insurance companies charge we’re sorry, there are no hard and fast numbers.
What we can give you instead is a promise – your situation is unique, and we can help you understand how group benefits can fit your organization.
Get in touch with our Growth Team. They’ll get a handle on your situation, discuss your budget, and make recommendations on benefits that pack a ton of value. Best of all, whatever kind of plan you set up, you’ll be in control of your costs with no surprises at renewal.
