Should I Continue My Health Plan?

Should I Continue My Health Plan?

The decision to include benefits as part of an overall compensation package is one that every employer must make. Done right, employers can leverage the value employees place on benefits in exchange for things the employer values in return such as loyalty, positive morale and increased productivity. The hard costs of offering employee benefits must be weighed against the softer but very real costs of not offering them, which will present themselves in factors such as high turn-over, inability to compete for top talent, and reduced employee morale.

The objective of a good employee benefits program is to help protect both employees and their families from the possibility of severe economic hardships caused by illness, disability, loss of life, or unemployment. A comprehensive employer program will also provide retirement income for the employee and their family, as well as suitable assistance such as paid time off from work. While these benefits programs are managed by employers, employees are typically required to contribute small premiums or co-payments to enjoy the added coverage.

Administering and Selecting Programs

Employers offer benefits to employees for one or more of the following reasons:

  • Attracting and retaining a talented workforce.
  • Aligning benefits packages with competitive offers in the marketplace.
  • Promoting higher levels of morale among employees.
  • Providing opportunities for promotion or advancement as workers resign, retire, or move to other positions within the organization.
  • There are two broad categories of benefits offered by employers in today’s work environment: mandated and optional.


Mandated Benefits Programs

Mandated benefits are those required by law. These include federal or state sponsored programs that aim to provide for the most essential needs of employees and / or their families. Examples of three very important, and mandated, benefits include:

  • Social Security
  • Unemployment Insurance
  • Workers Compensation

While unemployment provides help to those that lose their jobs, workers compensation programs provide assistance to those disabled by occupational illness or injury. Social Security protects the aged and disabled against expenses that might otherwise exhaust their entire savings.

In March 2010, the Patient Protection and Affordable Care Act, also known as Obamacare and the Affordable Care Act (ACA), were signed into law. Although it does not mandate health care coverage, the law states that firms employing fifty or more people, and not offering health insurance, will pay a shared responsibility required payment if the government has to subsidize an employee’s health insurance costs.


Optional Benefits Programs

As the name implies, optional employee benefits includes a wide array of programs that employers can choose to offer employees; typical programs include:

  • Health Care Insurance
  • Disability Insurance
  • Life Insurance
  • Dental Insurance
  • Vision Benefits
  • Employee Assistance Program (EAP)
  • Retirement / Pension Plans
  • Flexible Compensation
  • Paid Leave


Employee Benefits Statistics

In July 2012, the U.S. Bureau of Labor Statistics and the U.S. Department of Labor released a report on employee benefits as part of their National Compensation Study. Major findings from that study include:

  • Paid leave was the most commonly provided benefit to employees, including paid holidays which were made available to 77% of employees and a paid vacation time benefit which was also available to 77% of employees.
  • Medical insurance plans were made available to 70% of workers in the private sector while only 51% of workers participated in such plans.
  • Employees with families contributed an average of 32% towards their medical care premiums, while single employees contributed an average of 21% towards this benefit.
  • While 65% of employees had access to retirement plans, only 48% of employees participated.
  • Finally, life insurance was provided to 57% of employees and 56% of workers participated, which translates into a 97% take-up rate.


Paid Holiday and Vacation Time

Perhaps one of the most valued of all employee benefits includes paid time off in the way of holiday pay and vacation time. Nationally, the average number of paid holidays is eight.

Paid vacation time is normally a function of tenure or length of service.


Benefits Valued by Employees

Another study conducted in 2004 by the United States Office of Personnel Management or OPM also delivered interesting results. The OPM is an Executive Branch agency that is responsible for setting policy for United States Federal Government employees.

The survey results were based on the responses of 856 employees, including current and new employees (those with less than three years of service), and the margin of error for the survey was +/- 3%. The survey focused on the following ten benefits programs:

  • Employee Health Benefits
  • Retirement Annuities
  • Thrift Savings Plan
  • Retiree Health Benefits
  • Life Insurance
  • Long Term Care Insurance
  • Flexible Spending Accounts
  • Tele-Work / Telecommuting
  • Child Care Subsidy
  • Health And Wellness Programs

The survey asked the respondents several questions about the above programs. For example, comparing their benefits to those offered to non-Federal employees. However, there was one very important question they asked relative to the role of benefits in employee retention.

Which of the Currently Available Benefits is Important to You to Remain in or Accept Federal Employment?

The following is the percentage of respondents indicating a particular benefit was “very important or important.”

  • Retirement Annuity (Pension Plan)  – 91%
  • Retirement Annuity (Pension Plan)  – 91%
  • Thrift / Savings Plan: 401(k) 403(b) – 89%
  • Employee Healthcare Benefits – 89%
  • Retiree Healthcare Benefits – 87%
  • Life Insurance – 71%
  • Long-Term Care Insurance – 63%
  • Health / Wellness Programs – 53%
  • Flexible Spending Accounts – 45%
  • Tele-work / Telecommuting – 40%
  • Child Care Subsidies – 31%


Most Common Employee Benefits Offered Today

The list below can assist employers in benchmarking their benefit offerings, while employees can determine if their employer is offering a competitive set of benefits.

According to the National Compensation Study conducted by the Bureau of Labor Statistics and published in July 2012, the following is a list of the most common benefits offered in the workplace today, and the percentage of those employers offering them.

  • Vacation Pay – 77%
  • Holiday Pay – 77%
  • Health / Medical Care – 70%
  • Prescription Drugs – 69%
  • Paid Jury Duty – 63%
  • Paid Sick Leave – 61%
  • Paid Funeral Leave – 60%
  • Defined Contribution Retirement Plan – 59%
  • Life Insurance – 57%
  • Employee Assistance Programs – 48%
  • Dental Care – 45%
  • Non-Production Bonus Pay – 42%
  • Short Term Disability – 39%
  • Paid Personal Leave – 37%
  • Healthcare Reimbursement Account – 36%
  • Wellness Programs – 34%
  • Dependent Care Reimbursement Account – 34%
  • Long Term Disability – 33%
  • Paid Military Leave – 33%
  • Vision Care – 25%
  • Defined Benefit Retirement Plan – 19%
  • Health Savings Account – 19%
  • Financial Planning – 18%
  • Long Term Care Insurance – 16%
  • Paid Family Leave – 11%
  • Childcare – 9%
  • Subsidized Commuting – 6%
  • Flexible Workplace – 6%
  • Payroll Deduction IRA – 4%
  • Stock Options (Performance) – 3%

No single program can provide for the needs of all employees. It is usually a combination of benefits that is most effective in meeting the employer’s objectives. For example, many employees value a retirement plan because this is something that everyone expects to benefit from in the future. On the other hand Child Care Subsidies can only be enjoyed by a sub-segment of the employee population, since not everyone will have children or children requiring child care services.

We work with employers to identify the combination that best fits your budget, your demographics and your business objectives. At the end of the day, our job is to assist you with developing the investment in your greatest asset – your employees. Through a comprehensive benefit package we assist in maximizing the return on your investment by helping you create satisfied and productive employees which in turn will make you a success.