Employee benefits play a huge role in attracting the right employees to your company. Beyond tangible rewards such as pay, businesses can keep their employees happy, and thereby more productive, by providing a generous benefits package.
The provision of a generous benefits package is not a new concept. In fact, the existence of benefits programs predates even World War II. According to this article by Villanova University, “non-wage benefits plans arguably predate income tax itself in the United States.” Over the years, due to the implementation of tax laws, macroeconomic changes and more, the nature of benefits that companies provide have changed dramatically. A company car, for instance, is a fringe benefit that was completely unheard of back in the day.
Today, providing employee benefits in addition to salary is more the norm than the exception. In a previous article, we mentioned that “more than half (66 percent) of employees said they would like their employer to help them deal with certain problems or issues encountered outside of work.” For HR professionals, this means early intervention in medical and stress-related matters is very important. This could take the form of direct help as part of a wider benefits package or access to covered specialist services.
As an HR professional, it is your job to build the best possible benefits package for your company’s employees. Obviously, insurance is a big part of any benefits package. Here’s how to build the best insurance package for both your company and its employees:
Health Insurance: Which Plan?
There are thousands of health insurance plans to choose from. When evaluating your options, the four elements you will want to review are coverage, cost, restrictions, and reimbursement. Let’s go over the four main type of plans, and the benefits and drawbacks of each:
Health Maintenance Organizations (HMOs): HMOs are probably the most common option out there. An HMO limits where an employee can get medical care. Employees are expected to choose a primary care physician and generally need referrals to see specialists within the HMO network. The employees pay a copayment for each doctors visit, and the insurance company takes care of the rest. In theory, HMOs are often preferred as they give employees some amount of freedom at a low cost, though today HMOs are no longer as cheap as they once were.
Preferred Provider Organizations (PPOs): PPOs are the most expensive option you can choose and provide the most coverage for your employees. They do not require referrals and allow employees to see specialists outside of the network for a fee, giving employees the most freedom. PPOs are generally used by big corporations and might not be the best option if your company is still growing due to their high premiums.
Point of Service Plans (POS): POS plans come with a choice, allowing the employee to an in-network provider or get a referral before treatment. Their premiums are more reasonable than PPOs, and they are easier to use than HMOs.
High-Deductible Health Plans (HDHPs): These are plans with high out-of-pocket costs, so they are often paired with other tax-free savings options. These plans offer much lower premiums than PPOs and POS plans, but might not be the best for your employees due to the high deductibles they warrant. However, they do often allow employees to keep their own doctor as opposed to switching to an in-network care provider.
Another option that has grown in popularity is self-insurance. With self-insurance, companies cover their own costs and work with a self-insuring company, (which is not technically an insurance company) to set up coverage. The main benefit of self-insurance is that the coverage is highly customizable — meaning that you as an HR professional can decide whether you want a limited plan to be fiscally cautious or an expansive one that shows a higher commitment to employee wellness.
Ultimately, although the cost to you and your employees will be the biggest factor in your decision, don’t forget to consider the level of coverage the policy provides.
Dental and Vision Insurance: Yes or No?
Unlike health insurance, which the law requires companies (with 50 or more employees) to provide to their workers, dental and vision insurance are not mandatory provisions. However, providing these as part of your benefits package allows your employees to access important preventative care.
Medical plans usually only cover dental work that is deemed “medically necessary.” According to Growing Family Benefits, the definition of medically necessary may include “dental care arising from non-biting accidents, certain diseases, and treatments deemed integral to other services included in the plan.” However, for other dental work, an employee will usually have to pay out-of-pocket, which is extremely expensive.
Dental insurance allows employees to take care of dental problems before they escalate into bigger issues. For example, plaque buildup can easily turn into gum disease if left untreated. A dentist can help prevent this from occurring, and in turn save employees from the costly expenditure required to treat gum disease. While this sort of care would not be deemed medically necessary, and would therefore not warrant coverage under regular health insurance, its preventative nature will save the employee lots of money.
Like dental insurance, vision insurance also allows for great preventative care. Additionally, according to a study by the HCMS group, “employers that offered their employees stand-alone vision benefits experienced $5.8 billion in cost savings over four years. This was due to reduced healthcare costs, a drop in productivity losses, and lower turnover rates.” So providing these additional insurance perks can actually save you money in the long run.
Today, many employees expect preventative care to be included within their benefits package. Providing dental and vision insurance can help attract top talent to your company.
Workers Compensation Insurance: A Safety Net
Finally, you will want to consider worker’s compensation insurance. This is beneficial for both the employee and the employer. Unlike general health insurance, worker’s compensation insurance covers an employee’s wages, provides rehabilitation benefits, and may even cover funeral costs in the unfortunate event that an employee is injured (or dies) due to work.
According to The Hartford, “Without Workers’ Compensation Insurance, employees might be more inclined to make claims against their employer to pay the costs of work-related injuries and illnesses.” So, providing this insurance is a win-win for both you and your employees. Depending on the type of business, risk factors, and your budget, you can choose from different type of worker’s compensation insurance.
So there you have it — the three different types of insurance you should include in your employee benefits package. Providing these alongside additional benefits and perks is sure to help you attract and retain top talent.