Your Employee’s Benefit Allowance

Written by: Kristy Kwan, Benefits Administrator

Cost is always a major concern for employers at healthcare renewal time. How can you control costs while keeping up with the industry standards? There is a fine line between remaining competitive and offering too much; on the one hand you may lose employees to a competitor that offers something better, while on the other you risk wasting money on something that the employees take for granted.

What you may not realize is that certain factors, such as the level of participation, and the health of your employees, can greatly impact the ability of your company to acquire competitive rates. There are also additional plans that you can use to enhance your benefits package; they will help your employees utilize their benefits more effectively, while keeping costs manageable for you as the employer. In all aspects, the key is balance. Offer enough to keep benefits attractive, desirable, and competitive, but keep your contribution reasonable so the benefits still carry value.

Participation and Health

Participation is the number one requirement for obtaining health insur2ance; three out of four employees must be enrolled in the plan, and that includes you, too, as the employer. Employees who are enrolled on other group plans through their spouses don’t count against the group, but you’ll still need most of the remaining employees to enroll. Use the tips below to encourage participation:

• Give a decent contribution towards at least one plan. There needs to be at least one plan that employees can enroll in for little to no cost, even if it’s just hospitalization coverage. For those employees who feel they don’t need medical coverage, it’s a hard sell to get them to pay a lot of money out of pocket.
• Don’t allow your contribution to have a cash value. If employees have a choice between receiving an additional $200.00 on their check or using it towards medical insurance (and having to pay an additional amount), the tendency is to take the cash and run. This, in turn, drastically affects the number of enrollees in the plan.
• Specify that your contribution can be used only on medical insurance. If you leave your contribution open-ended, employees may choose to buy a number of other insurances instead of the medical insurance. For example, an employer’s contribution may not entirely cover the medical insurance, but may cover the dental, vision and disability insurance plans in full. If employees are using your contribution towards alternative plans, they are opting out of the medical plan, which is affecting your participation levels.

The health of your employees is not entirely within your control as an employer, but there are ways to encourage better prevention and self-care. Insurance carriers don’t penalize a group for controllable issues such as high blood pressure, endocrine disorders, cholesterol, etc. These are all well documented and monitored health problems that are easily controlled with medication. The health issues that raise a red flag are those that result in week long hospital stays, chronic emergency room visits, or endless diagnostic testing. Usually these incidents are due to a failure of the employee to go in for an annual check-up, or see a doctor at the first sign of a complication. How often have you heard, “oh, I haven’t gone to see the doctor in years. I just don’t have the time.” Use the tips below to keep your group free of large claims (as much as possible):

• Make time for employees to get annual exams. Remind employees to set their wellness appointments and suggest times that work with the company’s schedule.
• Give incentives. Incentives can be large or small, depending on your company’s budget – an additional 2 hours off for the purpose of wellness exam visits, or a “reward” for those who get an annual exam, such as premium parking for that day, movie tickets, or a gift card for frozen yogurt. If you need to really stretch those budget dollars, set a specific time limit for employees to get their exams and raffle off one prize.
• Encourage overall wellness. Make small positive changes around the office. Try to bring in bagels instead of donuts, provide water instead of soda, and trek mix instead of chips. Have your vending machines changed out with healthier alternatives. Walk at lunchtime. Use the stairs instead of the elevator. Lead by example.

Optional Benefits

There are many optional benefits that you, as an employer, can provide at little or no cost to you. If employees are educated properly on these benefits, they can enhance the current offerings and allow for greater savings, both for the employee and the employer.

• Voluntary Plans: these plan offerings include insurance for hospitalization, accidents, cancer, life, and disability, among others. Some policies, such as the cancer and hospitalization policies, offer cash back incentives for wellness visits and screenings. This can make the total insurance cost very minimal, and a plan like this could supplement a hospitalization-only medical plan.
• Health Savings Accounts: these accounts offer tax incentives for employees to save for healthcare expenses not covered by insurance. They can only be used in conjunction with a high deductible health plan, which generally has lower premiums.
• Flexible Spending Accounts: these accounts also offer tax incentives for employees to save for healthcare expenses not covered by insurance. If you are an MMC Client, this plan is already offered to your employees at no cost or risk to you.

It is important that the employer provides a minimum level of benefits in order to keep rate advantages, however, above that level, there should also be some cost sharing between the employee and the employer in order for the benefits to have value. Paying for the Cadillac of plans doesn’t help your bottom line if a Honda will do.

If you should have any questions regarding your contribution, or would like to discuss contribution options, please feel free to contact the MMC Benefits Department at (800) 899-6624 or benefits@mmchr.com.