Benefits costs remain a concern and employers are always looking for a way to alleviate the burden from their bottom line and the employee’s pocket. In 2013, the average employee shouldered about $5,000 a year in health care costs — an increase of 150 percent over the past decade, according to a 2013 Aon Hewitt Health Care Survey.
The good news is there are many proven, effective ways to contain those ever-increasing benefits costs — and many can be implemented at no direct cost to your company.
Here are five smart ways you can save money on the benefits you offer your staff.
1. Implement wellness initiatives.
Many employers today are implementing wellness initiatives — efforts to improve the overall health of their employees —to help reduce health care costs and increase productivity. These efforts range from health assessments to onsite fitness centers. Even simple, low-to-no-cost programs such as walking clubs or sponsoring quit-smoking classes can be effective.
2. Move noncore benefits to employee-paid voluntary benefits.
Using voluntary benefits can give employees access to expanded benefits choices that meet their unique family situations and provide coverage that’s typically more affordable than plans offered outside of work. This strategy can also help employees pay for some of the increased out-of-pocket costs that come with higher-deductible health plans. And voluntary benefits add no direct costs to your budget.
3. Conduct a dependent verification audit.
Sure, your company wants to offer great benefits to employees and qualifying family members — but not to those who aren’t actually eligible for coverage. Sometimes employees forget to remove family members who no longer qualify because of age or marital status. Health plan audits, also called dependent verification, ensure you’re investing your benefits dollars where you intend them to be used. The industry average for ineligible dependents in these audits ranges from 5 to 8 percent, and can result in substantial savings for you.
4. Increase employee participation in pretax benefits programs.
Establishing Section 125 plans and maximizing employee participation in pretax benefits programs can save your company and your staff considerable dollars. Pre-taxing benefits gives employees the option to buy qualified insurance coverage with before-tax dollars. This makes coverage more affordable by reducing the taxable portion of their pay, so they pay lower income taxes. Section 125 plans allow employees to make before-tax contributions to personal spending accounts that can be used for qualifying health care or child care expenses.
These plans reduce your overall payroll, so they can also reduce your payroll taxes, including FICA, Social Security and Medicare matching taxes.
5. Customize benefits communication and enrollment.
It’s hard to choose the right benefits if you don’t understand them — or even worse, don’t know what your options are. Educating employees about the myriad benefits choices available to them and how to select the benefits that work best for their lifestyles takes expertise. Understandably, few cities have staff with the time and knowledge to handle benefits communication themselves, and using enrollment firms only adds to their costs.
Fortunately, these services — including one-to-one benefits counseling sessions — are available at no direct cost to the employer from some benefits providers. Employee satisfaction rates with this type of service can be impressive. Ongoing post-enrollment surveys by Colonial Life show virtually all employees (97 percent) surveyed say personal benefits counseling improved their understanding of their benefits and that this type of communication is important (98 percent).
I’ve seen how these solutions have helped cities capture significant savings while providing a stronger, more valuable benefits package for their staff. Many of these solutions can be implemented without a lot of outside support. But when it’s time to reach out to an expert, make sure you choose a benefits partner wisely. Look for a partner with extensive experience in your market, a proven track record of success and a reputation for excellent customer service. Choosing a partner with a long-term relationship in mind can pay for itself both now and later.
About the Author
Judy Bezler is an Independent Representative for Colonial Life and is responsible for marketing Colonial Life’s products and services throughout the Carolinas.
Colonial Life & Accident Insurance Company is a market leader in providing financial protection benefits through the workplace, including disability, life, accident, dental, cancer, critical illness and hospital confinement indemnity insurance. The company’s benefit services and education, innovative enrollment technology and personal service support more than 80,000 businesses and organizations, representing more than 3 million of America’s workers and their families.
For more information call Judy Bezler at 704-559-9323, visit www.coloniallife.com or connect with the company at www.facebook.com/coloniallifebenefits, www.twitter.com/coloniallife and www.linkedin.com/company/colonial-life.