Not only do employee benefits play an important role in recruiting and retaining employees, but they also have a significant financial and administrative impact on a business. Most employees have come to expect a comprehensive benefits program. Indeed, the absence of a program or an inadequate program can seriously hinder a company's ability to attract and keep good personnel. Employers must be aware of what employees need and want, and be ready to make informed decisions when they select employee benefits.
Designing the right benefit plan for your employees is a complex task. There are many issues to consider, including tax and legal aspects, funding, and finding the right vendors or administrators.
A good employee benefit plan:
Protects employees and their families from economic hardship brought about by sickness, disability, death or unemployment.
Provides retirement income to employees and their families.
Provides a system of leave or time off from work.
Certain benefits are mandated by law. The employer must pay in whole or in part for certain legally mandated benefits and insurance coverage.
A comprehensive benefit plan should include some or all of the following elements:
Flexible compensation (cafeteria plans)
To help you in deciding what type of benefits you want to offer, answer these questions:
- How much are you willing to pay for this coverage?
- What kinds of benefits interest your employees?
- Do you want employee input?
- What do you think a benefits plan should accomplish?
- Do you think it is more important to protect your employees from economic hardship now or in the future?
- Is a good medical plan more important than a retirement plan?
- Do you want to administer the benefits plan, or do you want the administration done by an insurance carrier?
- What is your employee group like today?
- Can you project what your employee situation might look like in the future?
Finding a benefit plan that meets your budget constraints and fills the needs of your employees is not easy. Here are some places to check for rates and availability of plans:
Your local chamber of commerce
Independent insurance agents
Trade associations of your business
State departments (or commissions) of insurance
Community business leaders
Benefit consultants or actuaries
Service Corps of Retired Executives (SCORE)
To reduce risk, select insurance underwriters with top BEST ratings. HMOs and Blue Cross/Blue Shield are not rated by Best, but are regulated by state governments. Check with other users and state regulators on the history of the particular plan you are considering.
Rising costs are prompting small business owners to take a look at a form of health care coverage previously considered an option only for big business: self insurance.
Once you have narrowed the possibilities down to a few plans, ask each agent to provide information on the following items:
- Who is the insurance company?
- Is it committed to small business?
- How solvent is it? What is its rating?
- What is the carrier's reputation for customer service?
- What is the choice of doctors and hospitals?
- How does the company manage health care costs?
- Who administers the plan?
- What information must the employer provide?
- How are the employees enrolled?
An adequate benefit program has become essential to today's successful business, large or small. With careful planning you and your employees can enjoy good health and retirement protection at a cost your business can afford.