Risk & Business Magazine California Risk & Business Magazine Summer 2017 | Page 31
Here’s the key point: A comprehensive
and generous benefits package effectively
communicated to employees is a highly
cost-effective way to maximize key
business goals and further reduce
employer costs of benefits, employee-
related taxes, workers’ compensation
premiums, and corporate taxes.
Valuable employer-paid insurance options
include Life, Long-Term Disability, Long-
Term Care, and Off-the-Job Accident
(employer pays 100%).
Many employees prefer a company that
offers a group retirement benefit like a
401(k) plan with an employer matching
A benefits program with lots of employee
choices is an effective tool for recruiting
better employees. There are many
highly affordable voluntary benefits
that employees value, such as Short-Term
Disability coverage that pays cash when the
employee is unable to work due to illness
or accident; Telemedicine plans that allow
employees to access a doctor on the phone
or computer at no out-of-pocket cost to
them; Critical Illness plans that pay the
employee $5,000 or more on diagnosis of a
heart attack, stroke, cancer or other serious
conditions; and Pet Insurance that helps pay
costly vet bills.
MEASURING YOUR RESULTS
After you implement a well-designed
benefits package and complete a high-
engagement employee enrollment, here
are some metrics to help determine an
accurate benefits plan ROI:
• TURNOVER: Quantify the
increase in employee retention after
implementation of the new benefits
• RECRUITMENT: Survey managers
to measure the increase in quality of
COST PER EMPLOYEE: Measure the
average cost of benefits per employee,
which can be below $1 per employee
per hour even with a fairly rich
EMPLOYEE SATISFACTION: Survey
employees before and after enrollment
to measure engagement and
satisfaction with their benefit options.
Below are some case studies from some of
our actual clients.
“$1 IN EMPLOYEE
THE COMPANY 66%
LESS THAN $1 IN
EMPLOYER WITH TWELVE EMPLOYEES
Net/Net: Employer’s benefit cost is just
$.49 per employee per hour.
Nine of the twelve employees enroll in the
established benefits package.
The employer’s contribution totals about
$1,330 per month. Enrollees elect coverage
that includes higher-cost medical benefits
with dental and vision options. Since their
premiums are deducted pre-tax through
payroll deductions each pay period, the
employees’ premium deductions are very
After taking into consideration the
savings in payroll taxes, reduced workers’
compensation premiums (due to reduced
payroll), reduced corporate taxes (due to
allowable deductions for benefits), and
other indirect savings that result from
lower hiring and training costs and fewer
employee morale issues, the company’s
final cost per employee per hour for this
employer is a mere $.49, which translates to
$83 per employee per month.
EMPLOYER WITH SIX EMPLOYEES (ONE
Net/Net: Employer’s benefit cost is just
$1.40 per employee per hour.
Five of this employer’s employees enrolled
in medical benefits, dental and vision,
life insurance, long-term disability,
telemedicine, supplemental accident,
cancer, critical illness, and hospital
Total monthly premiums are about $2,300
of which the employer’s share is about
$1,700 per month for all five enrolled
The employer’s net cost after savings is
about $1,200 per month with a final cost of
about $1.40 per employee per hour.
ALTERNATIVE FUNDING SOLUTIONS
For many employers with the right
employee demographics, the newer
versions of level and captive self-funding
solutions driven by technology-based
pricing and employee engagement can
produce even greater benefit cost savings.
DO MORE BUT PAY LESS
Savvy employers understand that they can
give employees $1 of benefits at a net cost
far less than $1 of wages. By creating the
right mix of employer-sponsored benefits
and employee-paid voluntary benefits, by
leveraging pre-tax payroll deductions and
tax savings, and by maximizing employee
engagement during open enrollment, an
employer can achieve key business goals by
offering great benefits at a much lower cost
than simply increasing employee wages. +
With more than 20 years of industry experience, Rudy Garcia continues to help businesses deal with the
complexities of regulatory compliance, human resources, employee benefits, and systems needed to ensure
every category garners an outstanding benefit and ROI customized to each business client’s needs.
Qandun Insurance Agency focuses on businesses that have 20 to 1000 employees with consulting,
researching, evaluating, and setting up solutions centered on employee benefits and related business needs.
The agency offers defined solutions that result in complete regulatory compliance and benefits, typically
for less than $1 per employee per hour and resulting in a solid return on investment.
BY: RUDY GARCIA
PRESIDENT, QANDUN INSURANCE
* MetLife, 14th Annual U.S. Employee Benefit Trends Study, 2016.