Small Firm Solutions: What to Do About Employee Benefits Post Pandemic

Employee benefits are often defined as compensation paid by an employer to an employee over and above regular salary and wages. Employee benefits come in many shapes and sizes and are an integral part of an overall compensation package offered to employees. Employee benefits are essential in keeping current employees happy and loyal and have become an important ingredient to attracting new and highly skilled employees to a firm. The landscape has changed considerably over the last several years as the pandemic drove employers to allow employees to work remotely, have flexible work schedules, and reconsider what benefits are important to their employee’s

Some employee benefits are required by law. For instance, an employer is required to make payments on an employee’s behalf for Social Security and Medicare benefits, as well as make unemployment benefit payments on behalf of employees. Small employers must now gauge what employee benefits are now important to their employee’s post pandemic and whether those benefits can fit into the budget of that small frim.

There are a wide range of employee benefits available to small firms. In many instances, the benefits will not create a financial burden for the employer as many are paid for by the employee.  These are referred to as voluntary benefits, and by making them available, you are providing a benefit for your employees.

The following is a listing of the many types of employee benefits available in the marketplace today, including both employer-funded and employee paid – and some that may be either:

• Major Medical Insurance
  • Health Savings Accounts (HSAs) (employee-funded)
  • Health Reimbursement Accounts (HRAs) (employer-funded)
  • Mental Health Coverage
  • Telehealth services
• Flex Spending Accounts
  • Medical/Dental
  • Dependent Care
• Employer Funded Plans:
  • Group Life Insurance
  • Group Dental and Vision Insurance
  • Group Disability Insurance (Short and Long Term)
  • Leave benefits
  • Family Care
  • Flexible work benefits (Work-Life balance)
• Workplace Voluntary Benefits (Employee typically pay for these benefits)
  • Life Insurance
  • Disability Insurance
  • Cancer Insurance
  • Critical Illness Insurance
  • Accident Insurance
  • Dental and Vision Insurance
  • Pet Health Insurance
  • Legal Plans
  • Identity Theft Plans
• Retirement Plans
  • 401k Plans
  • Profit Sharing
  • Pension programs
• Employee Wellness Programs
  • Mental Health Coverage
  • Health Club Discounts
  • Flu Shots and vaccines
  • Tele-Medicine and Telehealth programs
  • Smoking Cessation Programs
  • Employee Assistance Programs (EAP’s)
• Paid Time Off (PTO)
  • Vacation Days
  • Sick Days
  • Paid Holidays
  • Leave Benefits
• Educational and professional development Assistance
  • Tuition Reimbursement
  • Student Loan Consolidation and Debt Refinancing
  • 529 College Savings plans
  • Industry Association dues
    • Registration Fees for Professional Meetings
  • Parking and Transportation reimbursement

Generally, the top Five Employee Benefits offered to Employees include:

1. Health Insurance including mental Health Coverage
2. Paid time off (PTO), sick days and vacation days
3. Life Insurance
4. Disability Insurance
5. Leave and Flexible work benefits

It is important to note that all benefits are now individually viewed as more important for businesses to offer than they were prior to the pandemic. Leave and Flexible benefits are now considered very important for the work life balance of employees. While you may not be expected to provide every one of the benefits available, depending on where your firm is located and what is valuable to your employees, you will be required to offer some of these programs to retain and attract the skill level of employee that fits your culture and delivers on your firm’s customer commitments.   It’s important to remember that some of these plans can simply be made available to your employees with the employee paying 100% of the cost.

How Do I Figure Out What to Offer?

One of the best ways to determine which benefits you should offer is to survey your employees to find out what is most important to them – and then design your plan around the survey results and what they tell you about your employees and their families’ needs.

It would also be prudent to do some market research on what comparable small firms are offering in your area, to ensure you are being competitive in your benefits offering.

Making Employer Contributions to Employee Benefits

The answer as to how much you, as the employer, should contribute to defray the cost of employee benefits inherently lies in your firm’s financial position.  However, there are ways to help contribute towards your employees’ cost of benefits. One approach is to pay a portion (%) of their cost for certain benefits and allow them to purchase the rest on their own.  Another approach is to provide a Defined Contribution program, whereby you provide each employee a set amount of money per month and allow each employee to choose the benefits that are most important to them and their family.  The Defined Contribution approach has become popular as of late in response to the ever-changing health insurance market.  This approach allows the employer to budget and cap their contribution while also providing their employees with choice versus a one-size-fits-all approach.  There are specific tax regulations governing how to administer such a program, so if you pursue this approach, seek the advice of a reputable insurance broker or consultant and tax advisor.

Finding the Right Benefits Broker

A broker should understand your needs well enough to find innovative and valuable solutions to your firm’s specific needs. In an era of health care reform and confusing compliance issues, a strong broker relationship is worth every dollar your broker earns. A good broker will help guide your firm through the changes and help you plan ahead to handle the changing landscape and responsibilities. It’s important to look for more than a transactional broker who will only assist you during open enrollments and may not provide the comprehensive insight and guidance that your firm needs. Instead, look for a broker who takes a consultative approach and focuses on finding solutions to your firm’s unique needs while delivering the knowledge, tools and advice to help you manage your benefits plans, cost and communications plans to your employees.

Summary

Post pandemic employee benefits are a critical component of the overall real and perceived compensation of your employees.  Benefit offerings must be meaningful to attract and retain top talent, while also being managed to control costs for the firm.  Seeking the assistance of an insurance broker or consultant can be very helpful in navigating the many choices of different plan offerings.

For More Information

AIA Trust healthcare resources including a webinar about the ACA impact on firms and fact sheets about grandfathered plans, Health Savings Accounts, and more.  (link: https://theaiatrust.com/healthcare-coverage/national-healthcare-reform/ ) NAHU represents