Risk & Business Magazine California Risk & Business Magazine Summer 2017 - Page 31

EMPLOYEE BENEFITS 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 contribution. 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 package. • RECRUITMENT: Survey managers to measure the increase in quality of new hires. • • 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 benefits plan. 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 BENEFITS COSTS THE COMPANY 66% LESS THAN $1 IN EMPLOYEE WAGES.” 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 affordable. 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 PART-TIME INELIGIBLE) 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 insurance. Total monthly premiums are about $2,300 of which the employer’s share is about $1,700 per month for all five enrolled employees. 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. 31