The Business of Better Benefits
Why Benefits Matter
Patrick Carragher, director of benefits for CheckPoint HR, a firm in Edison, N.J., that provides human resources management, payroll services and employee benefits, offers expert insight on small-business benefits challenges.
What's new on the benefits front?
Companies are running on leaner budgets and many have cut back their human resources departments, but there is still market competition for the best employees. And those employees' needs have changed dramatically, so they are demanding consumer-driven cafeteria plans that may have multiple options for health coverage, vision coverage and other benefits. Employees have the ability to use a fixed amount allotted to custom-design a package. Five years ago, if that was 5 percent of the market, it was a lot. Today, it's 50 percent of our client base.
How can small businesses offer plans that are competitive with those offered by larger firms?
They must keep looking at the needs of their employees. Many companies purchase plans and stay with them for years, simply watering down the benefits to save money. Instead, they should be looking at which benefits are used and which aren't. There may be too much benefit in one section of the plan. For example, if a hospital confinement benefit is only being used by 4 to 5 percent of the population, then eliminate it and offer it on a voluntary basis to employees for a very small premium that may come out of the overall allotment they have to choose and customize benefits.
What are some of the more popular optional benefits in cafeteria plans?
Child-care benefits, disability insurance, long-term care insurance and critical-illness insurance, which pays a benefit if the covered employee gets a debilitating illness like cancer, are increasingly important to employees.
What else should a small business consider when administering employee benefits?
Compare your benefits program to those of other companies. Look at companies in your industry and those of similar size in your geographic region to determine how you stack up against the people who are competing for talent. Often, industry associations or other independent organizations or consultants conduct benchmarking studies for this purpose.
The Flex Option
While it may not be possible for every business, a flexible workplace can provide an important benefit without driving up hard costs. Recently the Society for Human Resource Management (SHRM) and the Families and Work Institute (FWI) launched Moving Work Forward, a partnership to advance workplace flexibility.
In a recent FWI survey, 87 percent of employees reported that flexibility in their jobs would be extremely or very important in deciding whether to take a new job. Eighty-nine percent of HR professionals from organizations with flexible policies said that this workplace benefit had a positive impact on retention. Some hallmarks of flexible workplace policies include:
- Flextime, where employees can set hours within a range periodically.
- Time off during the workday to address family matters, when needed.
- Paid time off to care for sick children or other family members.
- Desirable and predictable work shifts.
- Control over work schedules.
- Regular breaks allowed when needed, instead of at a predetermined time.
- Working at home, if the position allows it. SHRM has published information about the partnership and resources for adopting flexible workplace policies at weknownext.com/movingworkforward.
87 percent of employees reported that flexibility in their jobs would be extremely or very important in deciding whether to take a new job.
Who's paying for which benefits these days? The Bureau of Labor Statistics' latest National Compensation Survey includes some interesting findings.
- Employer-provided retirement plans were available to 74 percent of all full-time workers and 39 percent of part-time workers in private industry.
- Medical care benefits were available to 71 percent of private-industry workers.
- Employers paid 82 percent of the cost of premiums for single coverage and 70 percent of the cost for family coverage for workers participating in employer-sponsored medical plans.
As of last year, thanks to the Patient Protection and Affordable Care Act, small businesses providing health insurance to their employees may have become eligible for a tax credit to offset some of the premium cost. In general, the credit is available to small employers who paid at least half the cost of single coverage for single employees in 2010. Through tax year 2013, the maximum credit is 35 percent of premiums paid.
This may be welcome news for some business owners, but it can raise new questions about tax credits and increased compliance requirements, says Dorothy Miraglia, a principal of strategic benefit solutions with AlphaStaff, a human resources outsourcing firm for small to midsize companies based in Fort Lauderdale, Fla. Employers may wonder whether it's best to deduct their individual benefits expenses or to opt for the tax credit. In general, Miraglia says, companies with 11 or fewer employees would be better off with the Health Care Tax Credit, but you should consult your accountant before making a decision.
For Your Benefits
Looking for an employee benefits provider? These firms range from soloist consultants to divisions of multinational insurance companies. Use the resources and information available from these organizations to help you find the right option for you.
- Employee Benefit Research Institute: Offers information on providing sound, robust employee benefits programs.
- National Association of Employee Benefit Administrators: A trade association of third-party benefits administrators.
- International Foundation of Employee Benefit Plans: An independent, global source of employee benefits information.
Get Wellness Soon
Before you dismiss wellness programs as touchy-feely endeavors with no real results, consider this: A survey by New York City HR consulting firm Buck Consultants, a subsidiary of Xerox Corp., found that of the 40 percent of U.S. employers who measured how wellness programs affect the cost of providing healthcare benefits, nearly half reported success in slowing healthcare cost increases, typically as much as 2 to 5 percent per year. The study also found that technology was the fastest-growing component of wellness programs, including smartphones and apps that support programs.
If you're interested in launching an in-house wellness program, here are a couple of tools to get you started.
Small Business Wellness Initiative: Funded by the Department of Health and Human Services, this site offers free downloads of workplace wellness plans.
Workplace Wellness Grants: The Patient Protection and Affordable Care Act provides up to $200 million in grants to businesses with fewer than 100 employees that launch new wellness programs.