Benefits a must-have in business: Invest in your employees to make the cash register ring

Many business owners fear that offering a benefits plan to their employees will be too expensive, too complicated, or simply too much trouble — especially for a smaller operation. I’m usually not a disagreeable person, but in this case, I must happily do just that.

I believe there are many excellent ways that an employee benefits program can be cost effective, easy to understand, and easy to manage. In fact, it can be a far simpler undertaking for a small company that only has a handful of employees.

AN INVESTMENT THAT’S WORTH EVERY PENNY

As a financial planner and adviser, I work with many of the area’s independent business owners. Regardless of the industry they work in or the service they provide, they all share at least one common goal: they want to make that cash register ring. For that to happen, a small business owner might need a prime location, or a fleet of delivery trucks, or tools and equipment, or office supplies and computers, or all of the above. But most importantly, he needs employees who share his interest and have the necessary skills, education, and knowledge to do the job—and do it in a way that builds the business. Plus, it doesn’t hurt if the employees are as passionate about the company as the owner is.

If you own and operate your own business, you know that bricks, mortar, equipment and inventory can all be purchased, rented, or leased. But skilled employees who are loyal to your company and committed to its long-term success can’t be bought off the shelf. You have to go out and find them. Then you have to give them a reason to stay. Next to a salary and a safe working environment, a benefits program is a very powerful incentive when attracting new employees.

Here’s why: it’s a competitive world. If we don’t give employees an opportunity to grow in their job skills, we risk losing them. If we don’t, over time, give trusted employees greater responsibilities so that they feel challenged, involved and valued, we risk losing them. And if we don’t look after their personal needs and the needs of their families, we are running the risk daily that our good employees will look for more attractive opportunities elsewhere.

That could be with your competition. Or they might venture out on their own and become your competition. Think about it. You’re an entrepreneur, isn’t that exactly the kind of thing you’d do if you were in their spot?

Your business will benefit from:

  • A competitive edge in the job market
  • An affordable way to protect employees and
    their families
  • A tax-effective form of compensation
  • Quality of work and productivity tied to
    employee satisfaction

MY BESTADVICE: TALK TO A PROFESSIONAL FINANCIAL ADVISER

The first step is one of the easiest. I suggest you make an appointment to speak with a qualified financial planner about your personal and professional financial needs and goals.

You are far too focused on the day-to-day running of your company to do it all on your own, so the best advice I will ever give you is this: if you don’t already have one, find a qualified, professional financial adviser and get him or her working for you.

If appropriate, your financial adviser might suggest that your company is ready and able to sustain a group benefits plan.

JUST LIKE THE BIG PLANS, ONLY SIMPLER

A program that has been built to meet the needs of small employers will offer all the same core requirements that larger companies offer—health, dental, life, critical illness and disability insurance—only with a simplified approach to plan design, plan member education, and overall plan administration.

As your business grows, you’ll be able to expand the list of benefits that you offer your employees. Enhancing the plan over time rewards your long-term employees and makes your company even more attractive to new hires. For the plan to successfully meet the
business owner’s goals, it’s very important that you involve your employees in decisions that affect the plan. Find out what your employees want. Ask which features are considered most valuable, and which might not be seen as desirable. Typically, younger employees will have different needs when compared to more mature plan members.

Some employees will appreciate the ability to purchase optional coverage through their plan, at their own expense. Others might value the control and flexibility that a product like a health care spending account gives them.

Health Care Spending Accounts:

These allow the plan members to direct funds towards the type of coverage that’s most important to them, while giving the plan
sponsor control over the cost of the feature. Health care spending accounts are ideal for smaller employers who can begin with
allocations as low as $250 per employee.

With a lengthy list of cost-sharing and cost-containment options available to you, offering a benefits plan might not be as expensive as you think, and the direct cost of the plan will be offset by the value enjoyed in terms of employee loyalty, commitment, health and productivity. This is especially true if your plan members are willing to be involved in the plan, making choices that offer the best value for themselves and the program.

There are many questions that people have regarding health insurance. For the average consumer, it is easy to become baffled by the learning process, but educating yourself gives you much more purchasing power.

WHAT IS THE DIFFERENCE BETWEEN GROUP/INDIVIDUAL INSURANCE?

The major difference between group and individual insurance involves evidence of insurability. To purchase individual insurance,
a person must generally answer a health questionnaire and undergo a medical examination to provide evidence of insurability to the insurance company.

An insurer may decline coverage on the basis of the applicants’ personal habits, health, medical history, age, income or any
other factors that bear risk on acceptance. Or, the insurer may issue a policy with limitations on coverage. Most group insurance, however, is issued without medical examination or other evidence of individual insurability because the insurer knows that it can cover enough individuals to balance those in poor health against those in good health.

The risk of an insurer failing to achieve this balance is diminished as the size of the group increases, or as the insurer underwrites additional group policies and increases the total number of individuals covered. This is known as the law of large numbers.

THE ADVANTAGES OF GROUP OVER INDIVIDUAL INSURANCE

For an employer that intends to provide insurance protection to its employees, the group approach ensures that all employees,
regardless of health, can be covered. Those with known health problems, who might otherwise be unable to obtain individual
insurance, can be covered automatically upon employment without evidence of insurability.

Although some limits may be imposed on new hires for certain conditions that predate their enrollment in the plan, most employees can receive coverage as soon as they are eligible. Typically, group insurance offers a lower cost per unit of protection than individual insurance, because the economies of scale resulting from selling, installing and servicing one plan covering many individuals.

WHAT TYPES OF GROUP PROTECTION DO MOST EMPLOYERS PROVIDE?

Although there are many variations of each, the following are the major types of insurance coverage provided by employers to their employees are life, accidental death and dismemberment, disability, critical illness, health and dental.

YOUR FIRST PLAN

Your plan adviser will help you work through the aspects involved in launching your first benefits program. In my experience,
when a business owner is able to see how an employee benefits plan can contribute to making that cash register ring, all those earlier worries about cost and complexity just naturally fade away.

Things to have in your first plan:

A qualified adviser can recommend a carrier
that offers:

  • Core benefits at an affordable price
  • An easily understood and executed program
  • Fast and fair claims payment
  • Easy access to plan member and plan administrator information online
  • Fraud prevention services to save your money

Posted by Robyn Latchman