Ontario Electrical Contractor 27 E Top Employee Benefits Plan Mistakes By Jason Ovsenny Employee benefit programs have become a significant cost for today’s employer. As costs have grown, leading employers have realized that a more active governance model is required to best manage their costs and coverage going forward. But it is all too common for employers to have fallen asleep at the controls and put their employee benefits plan on autopilot, not realizing it is headed for a crash-course. When employers “wake up” to the new realities of growing employee benefits costs, they are discovering new best practices to invigorate both their knowledge base and their plan performance. Are you making any of these mistakes with your employee benefits strategy? 1. Not utilizing economies of scale opportunities An employer who has 20 employees will pay close to $100,000 for benefits, with 25-30 per cent of that being carrier administrative costs. Every year. For an expenditure of that size, why are you paying these standalone retail costs? Many firms continue to overspend out of habit. Today’s marketplace has opportunities to greatly reduce these significant excess costs, through well-established association plans (or buying groups) or alternative funding methods. You can cut this portion of your cost in half (or less) permanently, yet still maintain autonomy over your own plan design choices. There is power in numbers. Stop having to change carriers every year to get a “good” price. Reducing administration costs permanently makes sense and builds plan stability. 2. Offering a sickness plan instead of a real health plan Today, employers realize that the majority of their employee benefits costs are driven directly by the health of their employees. Yet the majority of employee benefit plans are built to be reactive – to pay the claim after it happens. Forward- thinking employers are developing proactive wellness strategies to help prevent claims before they happen. Many wellness plans are now being offered on a complimentary basis when included in the employee benefits program. 3. Getting less for more Many plan sponsors complain of routine cost increases year after year – without any benefits improvements. This forces them to cut coverage in order to stay cost- neutral. However, in today’s competitive marketplace, insurers are willing to provide free value-added benefits in order to earn your business. Today, it is not unusual to find complimentary Employee Assistant Programs, Wellness Programs, Trip Cancellation Insurance and other enticements included within the core benefits – at no additional cost. It’s yet another way for an employer to get more value for their dollar without increasing their benefits expenditure. 4. Accepting poor service Traditionally, your firm meets with your benefits consultant once per year to discuss trends, cost increases and review their plan design. As your spending increases on benefits, it makes more sense to review the trends, costs and reporting on a more frequent basis – yet this rarely happens. Today’s smart employer needs to be far more demanding in the level and frequency of customer service required. Written service level guarantees help meet this demand including detailed reporting, quarterly meetings, long-term rate guarantees and establishing committees to ensure good governance and compliance. 5. Your Benefits: Same as it ever was There are a staggering number of plan designs available to the average employer. Yet, for the most part, plans can remain the same for years, sometimes decades. How can a “one size fits all” benefits program address the needs of a multi- generational workforce? Conducting a benchmarking exercise is a good start to determine how your plan compares with the competition – and with the national averages. Understand how your plan stacks up to the competition. From there you can align your plan design with your company goals and objectives. Plan Design Optimization and Benchmarking are good ways to ensure that every penny spent on benefits is a wise expenditure. 6. Lack of employee engagement Employees can be part of the solution.To be an employer of choice is to purchase a cost- effective and competitive benefits plan, and then effectively communicate the value to employees. Yet many employers simply hand out employee booklets and wait for questions. A structured communications program doesn’t need to be complicated, only clear.Top employers know this and create professional communications to all levels of employees. How did you score? For most employers, the status quo is not working anymore. Find a knowledgeable consultant that can correctly steer you and your benefit plan through today’s complex marketplace. Jason Ovsenny is a Senior Consultant at HealthSource Plus, serving the employee benefits needs of Canadian employers nationwide. He can be reached at jovsenny@healthsourceplus.com or 647-938-7303.