Two core truths about benefits offerings create an ongoing challenge. One, benefits are essential to attracting, engaging and retaining employees. Two, their costs are continually rising.
Even amid economic uncertainty, it’s not as simple as cutting costs. As Fast Company magazine notes, organizations that cut benefits to reduce costs in the short term put engagement, productivity, retention and organizational reputation at risk in the long term. And most employers want to avoid passing along higher expenses to employees struggling with inflation and financial difficulties of their own, reports the industry news site HR Dive.
The question becomes, how do you maintain your benefits during challenging economic times?
Strategies to maintain your offerings
2024 will continue the upward cost trend, reports the human resources association SHRM. Employers expect a 7% increase in median health care costs. The anticipated increase comes as economists worry about a potential recession.
The following strategies can help you maintain benefits while navigating financial challenges:
- Identify your nonnegotiable benefits.
- Talk to your employees.
- Evaluate your offerings.
- Explore voluntary benefits.
- Compare providers and networks.
Identify your nonnegotiable benefits
In good times and bad, plan adjustments are inevitable. More than two-thirds of employers plan to change their benefits during the 2024 plan year, reports the industry news source BenefitsPRO.
Plan changes let you zero in on your core offerings. Identify your nonnegotiable benefits. For most organizations, affordable health insurance and retirement plans are essential. These benefits help you land candidates and drive employee well-being, engagement and retention.
But this is also a time to understand your workforce’s unique needs. Whether those are mental health care, financial education, caregiving or family planning, it’s vital to allocate your benefits dollars where they are most needed.
Talk to your employees
To know your workforce, you must foster trust and open communication. Conduct benefits surveys to pinpoint your employees’ most valued benefits. Address their highest priorities, and communicate how to access and use those offerings.
Share employee stories with your company’s financial decision-makers. Real-life examples demonstrating the impact of your benefits will carry more weight than numbers alone. It might be an employee who reversed burnout and increased productivity by using your caregiving benefits and mental health resources. Or it could be an employee who avoided debt by using same-day pay benefits.
These examples show the return on investment of your benefits. Talking to your employees and learning about their pain points can prevent short-term cost-cutting measures. It can also increase benefits usage and appreciation.
Evaluate your offerings
It’s not all about spending or slashing. Reallocating your benefits dollars can help maintain offerings without increasing your spending. Start by identifying your high-value benefits, such as preventive care, primary care, vaccinations, cancer screenings and chronic disease management. By addressing health issues early, these offerings can save plan money in the long run.
As you evaluate the rest of your plan, use the knowledge from your employee surveys to see where you can reallocate your benefits spending. Rather than cuts, you may want to shift more funds to certain offerings and away from others.
For example, you might find low usage of gym memberships and virtual fitness classes. You could reallocate those funds toward increasing the number of allowable visits to mental health providers. Or you might increase virtual care options to engage more employees and better manage musculoskeletal conditions, diabetes care and mental health issues.
The most significant value is often found in reaching employees at higher risk for chronic diseases. Many chronic conditions can be prevented through wellness benefits and lifestyle changes, reports BenefitsPRO.
Explore voluntary benefits
Voluntary benefits, in which employees pay for some or all of the premiums, are another way to deliver value while keeping costs down. With voluntary benefits, employees get the advantage of group rates, vetted offerings and easy payments through payroll deductions. They can also select the benefits they most value.
Common offerings include life insurance, disability insurance, critical illness insurance, hospital indemnity insurance, fraud protection, legal services and pet insurance. These options can protect your employees’ health and finances without adding to your expenses.
Compare providers and networks
Work with your insurance broker or benefits adviser to compare benefits providers and networks. They may find a similar plan with lower costs or higher quality. Or they may be able to help you negotiate with your current providers to reduce expenses.
Also examine your health care, retirement and wellness vendors. You may be able to consolidate solutions, find new vendors, or renegotiate pricing and services. Review vendors’ metrics each year to ensure their solutions are worth the cost.
Your advisers may also have insights into benefits platforms and technology that can lower your administrative expenses. In addition to administrative cost savings, technology solutions can improve the employee experience, enhance awareness of offerings and increase benefits usage.
For more information on balancing your benefits and budget, contact our benefits team at 800-637-4676 or [email protected].
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.
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