The open enrollment period between November 1 and December
15 can be one of the most challenging times of year for HR professionals.
Getting enrollment right in a timely manner is crucial to supporting your
workforce and maximizing the two-way value of employee benefits.
With that said, open enrollment is tricky because it is such
a complex challenge. There’s no one thing an HR leader or department can do to
make the enrollment season go smoothly – it requires proactive planning and
strategizing for a variety of factors and concerns.
Moving forward, we’ll explore:
Introduce five of the biggest challenges,
concerns, and areas of opportunity for HR professionals before and during open
Provide actually strategies HR leaders can use
to navigate or plan for these challenges
Open Enrollment Challenge #1: Logistics
Part of having a successful open enrollment period is having
a very clear vision ahead of time for what that enrollment is going to look
like and how you will ensure success. Without a logistical vision for how
you’re going to pull off enrollment, you’re leaving your ability to have a
successful open enrollment up to chance.
As a department, your first concern is understanding whether
you’ll be leading an active or a passive enrollment. If you’ve recently
rehauled your benefit offerings or you have internal data suggesting that many
employees are on suboptimal plans, then an active enrollment can make a big
difference for your benefits program On the other hand, passive enrollments
work best in organizations with many long-term employees who are generally
happy with their coverage.
If you’re going to leverage technology to streamline your
enrollment procedure (and in 2019, you definitely should) that means your
logistical planning needs to involve your IT team, as they’ll be the people
determining the actual look and feel of the system that your employees will use
to enroll in their benefits. HR and IT must work together to ensure the user
experience is easy, clear, stress-free, and built right into the systems that
employees use for their day-to-day work to maximize accessibility and invite
Open Enrollment Challenge #2: Communication
Communication is the probably the single biggest key to a
great open enrollment season, but it may also be the single biggest challenge.
As an HR professional, it’s your responsibility to ensure
that nobody can forget about open enrollment season. At the same time, however,
benefit election time is also when HR departments can actually harm buy-in and
hurt long-term employee engagement by providing the wrong kind of communication
or using the wrong tone with employees.
For example, weekly email reminders to make benefit
elections are useful for employees who have not completed the process, but they
can seem annoying or impersonal to professionals who were sure to make their
elections early in the cycle. Creating a communication strategy that maximizes
that valuable communication while eliminating repetitive or unnecessary messaging
is key to short-term success during enrollment and long-term success
maintaining a great relationship with your talent.
One of the best ways to be successful is by spreading your
message across multiple platforms. If your organization uses an ERP that all
employees work through, partner with IT to get reminders in highly visible
spaces that your team members can’t help but see. If your company has a
preferred messaging system or bespoke communication app, you can use those
channels to send enrollment reminders as well.
Open Enrollment Challenge #3: Education
Education is your greatest weapon to ensure employees choose
their ideal benefits package, maximizing two-way value for talent and the
organization alike. With that said, out of all these challenges, education can
be the toughest one to truly embrace and hold yourself accountable to because
it takes a lot of work.
In order to provide employees with the information they need
to select the plans that are best for their families, you need to think like a
teacher, providing multiple access points to the information and presenting
things in a variety of ways to make sure that everybody understands the
material, regardless of their personal learning style. That means just passing
along the literature from your provider isn’t nearly enough.
Employees require a blend of independent learning
opportunities (like brochures and manuals), large group learning opportunities
(like formal training sessions), and small group (or even one-on-one) support
from benefits-savvy HR team members to maximize their educational level and
resultant engagement potential. Making time for those initiatives requires
buy-in from senior leadership, but education is truly the difference between
setting up your team for enrollment success and leaving them dangling in the
Open Enrollment Challenge #4: Engagement
Engagement is the special sauce that makes every single
aspect of operations at your organization run smoothly. When it comes to open
enrollment, engagement means a workforce that cares about maximizing the value
of their benefits and getting those elections made in a timely manner.
Health and wellness are crucial points of employee
engagement for any business, but when they are active pillars of the employee
culture, it significantly streamlines the yearly dance of open enrollment. When
talent is engaged in terms of health and wellness, they work toward building
their own understanding of how they’re using their benefits, what they need,
and how they could be making smarter selections. That translates directly into
making the right choices in November.
If that culture doesn’t already exist in your organization,
the lead-up to enrollment season is a great time to brainstorm some incentives
that invite engagement and build a positive, empowered attitude toward
enrollment throughout the organization. The more you can create a positive buzz
for health and wellness, the more active a role your employees will take in
Open Enrollment Challenge #5: Picking the Right Benefits
Of course, the over-arching challenge that hangs above the
other four is the challenge of offering your employees the very best, most
valuable benefits you possibly can.
Many employee benefits providers try to build a standardized
definition of a “great benefits package,” but for your open enrollment to be
successful in the long term for your department, your organization, and your
talent, you should never settle for a one-size-fits-all approach. If you’re a
small or medium-sized business, this can require working with a white glove
service to help you connect with exactly the coverage you need to support your
Partnering with the wrong benefits broker can and will cost
the organization in the long-term, whether it’s over-spend on unused benefits
or employee dissatisfaction with limited offerings. Finding a benefits partner
who understands your organization, your team, and your goals is crucial to
maximizing employee experience and business value through enrollment.
Open enrollment is a complex challenge, but when you
understand each individual aspect of the challenge and can formulate a
proactive strategy that addresses each concern, you maximize your chances to
deliver wins for your employees and organization as a whole. Remember…
You must plan ahead in the lead up to
open enrollment and create a roadmap for success
You must communicate positively with your
team in a way that guarantees awareness and provides them with the information
they need to enroll
You must educate your team in a way that
ensures they are able to make the best benefit enrollment selections for their
You must engage your team in a positive
manner that builds their enthusiasm for wellness in general
You must find the best possible benefits
partner for your size and goals
How to Learn More
If you’re an HR professional hoping to lead or support a
successful open enrollment this winter, you can get your enrollment knowledge
up to date with the latest trends, connect with actionable success strategies,
and get coaching from two of Chicago’s top HR and employee benefits
professionals by attending the upcoming webinar “How to Have
a Successful Open Enrollment.”
The free one-hour learning session will take place at 11AM
CST on Tuesday, October 29, but even if that time doesn’t work for your
schedule, you can register for the event to receive a link to a full recording
of the webinar as soon as it concludes.
The webinar will feature insights from Alex Koglin and
Christine Lewis of Launchways, as
they apply their respective backgrounds in employee benefits and HR thought
leadership to walk the audience through seven actionable steps businesses can
take today to improve their enrollment process. Specific discussion topics will
How to create a data-driven approach to
How to set and track reasonable enrollment goals
How to design a successful enrollment
How to leverage technology to streamline the
How to provide education that will lead your
employees toward the right plan
How to identify the right benefits provider
This learning opportunity will be packed with actionable
takeaways for HR professionals looking to improve their organization’s approach
to open enrollment and stay up-to-date on emerging best practices. If you’re an
HR leader recognizing the challenges of enrollment, register for
“How to Have a Successful Open Enrollment” today!
Building and maintaining an effective team is one of the
greatest challenges that growing businesses face. It’s a constant struggle to
hire the right people, keep the team engaged and productive, and keep top
performers from jumping ship. Given that 80% of full-time employees are living
paycheck to paycheck, taking an interest in your employees’ financial wellbeing
can be an effective way to stand out as an employer.
Most people acknowledge the importance of
employee benefits to winning the war for talent. But they frequently
overlook the potential that financial wellness has to attract, engage, and
retain great employees. Let’s explore why investing in financial wellness can
help growing businesses succeed and how to create an effective financial
wellness strategy, including:
The importance of financial wellness
How to effectively leverage 401(k) plans
Which benefits you should consider in addition to 401(k) plans
Importance of Financial Wellness
Financial wellness benefits can have a significant impact on
employee productivity. Seventy-percent of employees currently experience
financial stress while at work, which should be no surprise given the fact that
most American’s don’t have $500 to cover an emergency expense. What comes as
more of a surprise, though is the fact that employees spend an average of 28
hours a month worrying about their finances at work. That’s almost an entire
week’s worth of productivity every month! Addressing these concerns and
allowing employees to focus on their work should be a top priority for any
You aren’t just losing hundreds of hours of productivity each
year from your employees’ financial stress either: you’re also risking losing
your most valuable employees to turnover. Employees who are worried about their
finances, and especially those who feel their current employer is not dedicated
to their financial stability, are much more likely to start looking around for
a higher paying employer. This can be an especially potent threat to growing
businesses who frequently cannot compete with major companies when it comes to base
Luckily, financial wellness is an extremely cost-effective
way to improve your employee’s financial stress and actual financial wellbeing.
Instead of sinking tens of thousands of dollars into increased salaries, you
can invest in financial planners, 401k plans with optional matching, loan assistance,
financial education, and more.
Financial wellness is not just about avoiding the negative
effects of employees’ financial concerns, either. Your benefits package is a powerful
tool to attract, engage, and retain the talent you need to thrive as a
business. Many employees would accept a lower salary in exchange for better
benefits, and that includes wellness benefits. Once again, this is great news
for growing companies who can’t always compete on salaries. Stellar benefits
show employees that you care about them and will go above and beyond for them,
and they will return the favor.
It’s also a good idea to consider not only whether or not to
offer financial wellness benefits, but also what financial wellness approach
will work best for your business. For financial wellness benefits to work, they
have to meet employees’ financial and psychological needs. Which means that
employees have to actually use the benefits. It also means that there is no
one-size-fits-all approach to financial wellness: your strategy should depend
on the specific needs and demographics of your employees.
401K: Taking a Deeper Look at the Cornerstone of
If you had to implement just one financial wellness benefit,
a 401k plan would be a clear choice. According to the 2018 Jobvite
Recruiter Nation Survey, 401(K) plans ranked just after medical and
dental benefits in their ability to attract top talent. That should make them a
top priority for any employer looking to beef up their benefits package and
assuage their employees’ financial concerns.
And the importance of 401k plans makes sense. Almost
two-thirds of employees do not have any retirement savings and those who do
have saved an average of just $40,000. No wonder retirement readiness is a top concern
for employees. But just like any other benefit, 401k plans are only
as effective as employees make them. How can you make sure that your investment
in a 401k plan pays off?
The first thing you can do is implement automatic enrollment
to make sure that all of your employees adopt your new or existing 401k plan:
this removes a major barrier to saving. You can even automatically deduct
contributions from your employees’ paychecks to spur their savings, allowing
them to opt-out if they wish. And if you have the budget for it, 401k-matching
is a time tested strategy that is sure to both encourage your employees to save
and win you major points as an employer.
However, your 401k plan should be just the first step in
your financial wellness strategy. By themselves, 401ks struggle address
employees’ immediate day-to-day financial concerns which are often the cause of
stress and decreased productivity. Many employees are so burdened by debt or
day-to-day expenses that they cannot bring themselves to think about saving for
retirement even if their company offers good 401k benefits. And they are likely
to raid their retirement accounts to pay for emergency expenses without
planning and assistance to give them greater financial stability.
Looking Beyond 401k Plans
So what are the other financial benefits that can make you
stand out against competitors?
One of the biggest financial concerns for today’s employees,
especially for younger employees who are especially prone to switching
companies, is student debt. America’s graduates owe a total of over $1.5
trillion in student loans and most Millennials would trade vacation time for
student loan repayment assistance. Now, there are plenty of pros and cons
to repayment assistance, but you would do well to consider offering
these benefits, particularly if you have young employees. Only 11% of employers
provide any kind of help or guidance on student loan repayment even though
about half of workers want help with the repayment process. But when employers
do offer loan assistance, they hire faster and increase average employee tenure
by more than a third.
So how can you help your employees with loan repayment? The
easiest method is to help them set up dedicated accounts with automatic
contributions to make repayment easier for employees to manage. This approach
incurs few direct costs to you as an employer, so it should be a viable option
for just about any growing company. If you have a bigger budget, you can also
match employee contributions to these accounts. Alternatively, you can work
with lenders to refinance private student loans at better rates. Finally, you
can provide educational materials regarding loan repayment and access to financial
advisors so help make management easier for your team members without directly
A robust financial wellness strategy should also include
financial planning and retirement advice. Providing employees with one-on-one
financial counseling can help them build their short-term savings as well as
plan for retirement, holistically supporting their financial well-being. They
can stop worrying about their finances at their desks and put their trust in
the experts who you connect them with. Best of all, this can be significantly
more affordable than matching contributions and other direct benefits.
Financial education is often the most cost-effective financial wellness benefit
and growing businesses can use it to improve employees’ financial wellbeing
with minimal investment.
Today’s employees are having more difficulty saving for
retirement, let alone emergency expenses, than in the past. It is probably no
coincidence that they are also changing jobs at an unprecedented rate.
Financial wellness benefits can be extremely effective at retaining the talent
you need and making your employees as engaged and productive as possible. Just
Your financial wellness strategy should match your employees’ actual needs to minimize costs and maximize effectiveness through utilization
401(k) plans are still the cornerstone of an effective financial wellness package and you can make the most of them through automatic enrollment and contributions, as well as employer matching
Loan repayment assistance is a rare but highly effective financial wellness benefit that can especially increase hiring, engagement, and retention of top Millennial talent
Financial counseling and education provides holistic financial support to remove employee stress and improve wellbeing
As with all benefits, it can be difficult for growing
businesses to provide competitive financial wellness benefits without incurring
excessive costs. The right partners can help you develop a strategy that
minimizes those costs while maximizing the impact on employees wellbeing.
Sean Condon of Windgate Wealth specializes in helping entrepreneurs build a culture of financial wellness by offering their employees unprecedented access to a CERTIFIED FINANCIAL PLANNER™ as well as low-cost 401(k) plans. Part of an employee-owned team, Sean takes an owner’s approach and does his best to understand the many elements of his clients’ own entrepreneurial journeys. Sean has more than ten years of experience as a financial planner & wealth advisor.
Health benefits are important to
everyone. Your employees need them for their well-being and you need healthy
employees who want to stay and work for you. The benefits you offer show how
important your employees are to you. Unfortunately, most employees don’t fully
understand their benefits or what they cover. With open enrollment coming up,
this is the perfect time to educate employees and make sure everyone in your
organization is getting what they want out of their benefits plan.
In this post we’ll present:
Where knowledge about employee benefits breaks
How employees get their information about their
How you can make your open enrollment more
about benefits breaks down
Having good health benefits is crucial
for being a working adult in the United States. And yet, most adults who have
health coverage don’t fully understand it. A poll from Maestro Health showed that 35% – over one third! – of employees
don’t fully understand their healthcare coverage, with some saying they know
nothing about it. For something that is so expensive and that shapes so many
Americans’ employment decisions, this is a concerning blind spot. That ignorance
is not surprising given how complicated the medical coverage process can be.
Where open enrollment could be the
perfect opportunity for educating employees so they can make good benefit
decisions for a lifetime, it often ends up being a time for more confusion and
quick, impulsive decisions to avoid digging deeper for information. If your
employees have made plan choices that don’t benefit them or don’t do so
efficiently, they are in for a whole year of struggling with insurance
companies and providers. That can result in employees needing to spend more
time away from work and possibly getting into debt from poorly managed healthcare
costs. It’s also a miserable process for your employees to experience.
A survey from Aflac shows that 80% of employees say that their benefits package
influences their engagement with their job. It also stated that 57% of
employees would accept lower compensation in a job if it had better benefits.
Clearly the confidence an employee has in their coverage is a very important
part of their employment decisions, so anything you can do to make them more
confident in the decisions they’re making will make you a more attractive
How employees get
If employees don’t fully understand their
benefits, where are they getting their information? The most trusted source for
benefit information for most employees is another person. A recent survey from Colonial Life showed that, no matter what generation they are
from, employees prefer to talk to a trusted person for their benefits
information rather than going to a website. More often than not, that trusted
person is an HR or Benefits professional, but it can also be family members,
friends, or colleagues. The point is, when it comes to something as personal as
discussing employee benefits, people prefer a human touch.
Make your open
enrollment work better
How can your company make open enrollment
the most helpful, educational, and productive time possible for you and your
employees? There are a few things you can do to help make that experience work
better for everyone.
Ahead of enrollment, ask your employees
what they want from their benefits. This can be a general question posed to all
employees, or a survey with specific questions on each benefits offering. You
may find that your benefits program is either missing out on a needed area or
is offering plans that aren’t relevant to your workforce. If you find a need
for significant changes to your plans, you’ll want to start this process well
before you kick-off the enrollment period.
bombardment of information
One possibly counterintuitive answer to
solving the open enrollment puzzle is to limit the amount of information you’re
giving your employees ahead of enrollment. This doesn’t mean keeping them
deliberately in the dark about their options.
Instead, this means not bombarding employees
with everything remotely related to their health benefits and all possible plan
options. Without any guidance to prioritize that information, your employees
will have no idea what’s relevant to them. This can be overwhelming for
employees that are already stressed about picking the right plan options.
Instead, start with general information that should apply to all employees.
Explain confusing benefits terminology. Walk people through the process step-by-step.
Remember that you’ll be educating your employees over time.
Make sure they
have the basics
While having information from printed
material and online is crucial, most employees don’t find this information
useful when they have a question specific to their personal healthcare needs.
That doesn’t mean you shouldn’t make this content available, just that it should
be supplemented with other channels for benefits information. Make sure to
provide all employees with:
A schedule for open enrollment, including all key
dates and deadlines.
A statement of their current coverage.
Summaries, changes, and rates that are specific
for each individual plan.
An open enrollment guide and forms.
Contact information for knowledgeable sources in
HR/Benefits for specific questions or
You don’t want open enrollment to be the only time your employees think
about their benefits and health coverage. Set a communications plan for letting
employees know about changes, deadlines, and general information throughout the
year. This can be tailored around changing seasons, birthdays, employee
anniversaries, or any other signpost that’s a good time to examine and learn
about their benefits. If learning about tackling advantage of their benefits is
on your employee’s radar all year long, they’re going to be in a better
position to retain what they learn and use that knowledge effectively during
open enrollment season.
Let them know
about non-traditional benefits
If your company offers non-traditional (more than standard medical)
benefits, communicate that to your employees. Many companies are attracting top
talent with benefits like tuition assistance or telehealth programs. If
benefits like these are options during open enrollment, make sure your
employees know about these offerings and help them sign up for what makes sense
for them and their families.
Voluntary insurance is becoming more important to employees. These are
policies that cover periods of disability, critical illness, or accidents where
major medical insurance may not cover costs like deductibles or copays. Again,
if this is something you offer your employees, this should be advertised to
them along with guidance on how to sign up.
modes of distributing information
Employees learn in a variety of ways, and sometimes benefit from
multiple sources of information. Some companies use online articles forwarded
via email; quizzes and contests on benefits information; brown-bag lunches with
speakers; or town-hall meetings to field individual questions. You can schedule
these throughout the year, increasing the amount of time people are actively
thinking and learning about their benefit options.
worked when you’re done
Once your open enrollment is over, take a hard look at what worked well
for you and what didn’t. This is the perfect time to solicit feedback on how easy
(or difficult) the process was, how accessible needed information was, and what
people would like to see in the future. Similarly, check with your management
and HR staff to see what could be done to make things easier for them for the
next enrollment. Look at that feedback and figure out if the issues are with
the processes for getting people informed and enrolled, or if there are bigger
issues with the policies your company has available. Also look at your initial
survey information to see if there are gaps or surpluses in what you offer
currently. The best time to make changes in your plans is well before the next
Get a hands-on
employee benefits broker
This entire process can be made much
easier through partnering with a proactive, hands-on employee benefits broker. A
great broker is knowledgeable about all the different employee benefit options available
so they can build plans tailored to your workforce’s unique needs and
effectively educate your teams to take advantage of those plans. This process
is done through in-person education sessions (usually on-site), interactive webinars,
and one-on-one phone calls with employees who may have specific questions.
Your next steps
There’s a lot your company can do to make
open enrollment the most successful it can be:
Ask what employees want
Limit the bombardment of information
Make sure employees have the basics
Communicate all year long
Let employees know about non-traditional benefits
Use alternative modes of distributing information
Analyze what worked when you’re done
Work with a great employee benefits broker
Your employees will be happier knowing they have the right coverage. The sense that their employer is concerned about their health and well-being goes a long way as well. And employees with a well-fitting health insurance plan will also cost your business less in the long-run. Your employees are the most important asset your company has. More than that, they’re the people who want to make your company thrive, so help them engage with a benefits plan that allows them to thrive too.
As we approach 2020, businesses are more concerned than ever
with being scaled and built for profitability. Teams are leaner than ever,
superstar talent carry greater workloads, and businesses that aren’t built for
sustained growth are disappearing fast.
In that quest to trim the fat, controlling employee benefit
overspend should be a major goal for all growing businesses. Even with
responsibly scaled salaries, employee benefit offerings that aren’t well-selected
can cause an organization’s compensation costs to balloon, significantly eating
into opportunities for profitability.
Moving forward, we’ll explore:
How benefit overspend can happen to any
Why monitoring benefit overspend is especially
relevant for growing organizations
How to understand which benefits are actually
How to bring finance, HR, and senior leadership
together to make benefits work for everyone
Why Benefit Overspend is Such a Common Problem
Employee compensation is one an organization’s strongest
tools when it comes to talent acquisition and retention. That means that the
quality and value of your benefits program is indeed crucial to building a
great team that’s fit, happy, and productive.
Unfortunately, however, scaling and aligning those benefit
offerings is a complex task. In fact, compensation plan design is probably one
of the most difficult tasks HR has to manage. That intimidation factor, paired
with the fact that human resources professionals don’t always have the
background in finance they need to correlate the direct connection between
employee benefits compensation and the bottom line, is why benefit overspend
happens in so many organizations.
More is Better, Right?
The biggest mistake businesses (especially new businesses)
make when they design a benefits plan is trying to include every form of
inclusive coverage and access to any valuable program. In the increasingly
competitive war for talent, that kind of an approach can be attractive at face
value, but year-to-year, it can become a burdensome anchor on business
Both benefits professionals and individual consumers
frequently make the mistake of assuming benefits are like a stockpile of food
for emergencies: it’s maintained in case you need it and provides peace of
mind, but it’s not a part of your daily, weekly, or monthly life. If that’s
your paradigm, then of course you’re going to assume more is better.
Here’s the truth, though: Impactful benefits programs aren’t
the emergency food in the basement; they’re the dry and canned food in the
pantry – they’re there for use in a pinch day-to-day. True “benefits” are the
offerings that provide value, security, and convenience to employees’ and their
families’ everyday lives.
Once you understand that, it quickly becomes clear that
bigger isn’t better; usefulness and accessibility improve benefits programs.
Over-Emphasis on Industry Competition
One of the most common ways new or growing businesses fall
into benefit over-spend is over-reliance on industry benchmarks to help guide
their benefit plan design. While benchmarking is a great tool to help you
understand and plan relatively fixed expenses like base salary, benefits
packages must be scaled to the individual business and workforce.
Without an incredibly deep and granular understanding of
your competition or goal competition’s complete financial picture, you can’t
reasonably predict that their employee benefit practices will translate to
success in your organization.
Studying the competition’s benefit offerings certainly has
value and can inform your planning, but if it’s the main guiding light for your
benefits program, you’re making the classic mistake of focusing on the
competition rather than yourself. Finance, HR, and overall leadership must work
together to articulate a vision of the business, its blueprint for success, and
how benefits can be scaled to make that happen.
Lack of Understanding Means Lack of Alignment
Another classic mistake businesses of every size and sector
make is that they create their benefits plans for a hypothetical team of
theoretical employees instead of letting the real needs of their actual employees
shape the process. While that can be quite difficult at outset, after a year or
two of benefit program usage, you should have enough data available to create a
rich understanding of what people within your organization need to build that
daily health and security we’ve discussed.
If you’re not working to optimize your offerings to what
people actually use, you’re likely creating or fostering overspend. At the same
time, however, your benefits program must also answer and scale to finance
goals. In just a minute, we’ll explore how you can leverage HR and finance help
create that alignment.
Why Benefit Overspend is a Potential Pitfall for Growing
Early-stage businesses are incredibly dynamic, but that also
means there is the potential for vulnerability. A disappointing quarter or
behind-schedule development project can quickly erode a business’
profitability, and without the secure cash holdings of an established company, bloated
employee benefits spend can turn into a big red number for a given financial
In order for an organization to grow continuously, with an
expanding staff and increasingly complex human capital structure, an employee
benefits program must account for not just costs at the program’s launch but of
the way those costs might balloon, expand, or creep as the company grows. That
means benefits plans aren’t just about the design that will land talent right
now, they must be plugged into and built with short- and long-term financial
and organizational plans in mind.
When benefits are well-scaled and well-aligned, they support
an organization’s internal team, maximizing their ability to do great work
while also maximizing the organization’s chances for profit as well as their
ability to make informed financial projections. Finance leaders, HR leaders,
and CEOs must come together to create that robust, clear vision, or they’re not
really thinking about or planning for growth.
Defining “Benefit” in a Way that Makes Sense for Everyone
Increasingly, employers and employees alike are aware of the
fact that employee benefits are actually an opportunity to create mutual
benefit. The old way of thinking was that businesses offered benefits to be
competitive and benevolent. Now, however, the cards are on the table, and
people understand that part of the benefits game is keeping employees present
That doesn’t mean the pendulum has swung back and benefit
plan design can be all about making the books look good, however. Medical care,
prescription drugs, and hospital visits are only increasing in cost, and more
people than ever have complex, potentially expensive medical needs.
Creating an approach to benefits that works for everybody
and supports growth truly requires finding a balance between the needs of the
actual people within your organization and the financial needs of the
organization as a business. You can’t serve either purpose exclusively and
expect to solve the problem in a satisfying way; both sets of values must be
Understanding What People Really Need
As we’ve said before, one of the best ways to understand
your actual organizational healthcare/benefit needs is to understand your
employees’ actual healthcare/benefit needs. There are two main ways to do this:
by asking them using surveys or other tools or by reviewing your carrier’s
usage reports. The best approach involves using and weighing both.
Too often, employers are scared to talk to their team
members about benefits because they’re scared all they’ll hear is that the programs
aren’t good enough. While there’s sure to be a certain degree of that feedback,
the discussion can also provide the best-possible understanding of what people
actually want, need, and value. If you can get the buy-in you need to build an
authentic data set, a lot of your most important questions can be answered for
Those usage reports from your carrier will fill in the
quantitative data to help you understand which offerings are most accessible
and well-used (which, remember, means “valuable”). You can also build a very
strong understanding of where the dead weight in your benefits program might be.
Understanding What the Business Can Bear
Once you have a strong grasp on your human needs, the next
step is to determine what kinds of plans and packages your organization can
reasonably offer. Obviously, the goal is to create packages that deliver
consistent, satisfying offerings while still leaving yourself the best chance
to predict and achieve business growth.
If identifying and eliminating overspend is your primary
goal, this is really the most important point in the process. HR needs a clear
picture of the finance goals so that they can create plans accordingly. At the
same time, finance requires HR’s understanding of day-to-day employee needs in
order to do their work in an accurate manner. Bringing those two data sets and
approaches together can seem incredibly challenging at first, but it’s actually
your best chance to get benefits right in a way that works for everyone.
Embracing the Push-Pull
The intersection of HR and finance can be tricky to navigate
because both sets of professionals come from very different backgrounds and
come equipped with what some might say are competing sets of values. With that
said, they share the most important common ground of all: they’re responsible
for setting up operations for success.
Getting your employees the benefits they need while keeping
the business lean and scaled for profit and growth is a tall task, and frankly,
no one person can make it happen. It takes a major commitment from leadership
and a willingness between finance and HR to work together, plan together, and
commit to seeing things through each other’s lenses (at least some of the
When your organization can articulate an approach that makes
HR, finance, and the executive suite or boardroom happy at the same, that’s how
you know you’re onto something really great.
Employee benefit overspend is rampant across business, and
part of the problem is that many organizations don’t understanding how or why
their approach to benefits isn’t aligned with their employees’ needs or
business goals. In order to create impactful benefits packages that delight
your team and drive business, it’s important to remember:
More is not better when it comes to benefits because overspend can be devastating to potential profitability
In early-stage or growing businesses, benefit overspend can be especially damaging
Overspend usually happens because organizations either lack a strong understanding of employees’ actual needs or feel the need to offer exhaustive benefits in the name of competition
To truly be “beneficial,” offerings must be impactful and see actual use
When it comes to determining which benefits are actually essential, ground-level employees (and their usage data) are your best resource
Part of getting benefits right is learning to manage the dance between humanistic priorities and business priorities
Most businesses begin their employee benefit journey fully-insured for good reason. Early in a business’ growth cycle, it’s highly advantageous to keep monthly healthcare expenses predictable and under control, with any variation squarely the carrier’s problem.
However, once a business has grown past that developmental stage and stabilized with a properly scaled workforce and projections of continued success, self-funding becomes increasingly attractive. When businesses self-fund, they gain more granular access to their bottom-line healthcare expenses and can potentially save money in the long term by assuming increased benefit management responsibilities and opening themselves up to a little more risk.
Moving forward, we’ll explore:
• Why growing businesses should transition toward self-funding
• First steps for businesses looking to self-fund
• Important planning considerations for organizations hoping to self-fund
• The advantages and disadvantages of level funding
Why Transition Toward Self-Funding? Shifting toward a self-funded benefits program is a major decision for any organization and not something that can be accomplished without a great deal of planning and follow-through. While the process may sound daunting for HR and finance leaders accustomed to fully-insured processes, there are tangible benefits available for those brave and organized enough to make self-funding a priority.
Leveraging Your Business’ Stability to Reduce Overspend Self-funding uses organizational size and stability to reduce average monthly costs, as the employer significantly lowers overhead by paying a variable monthly fee based directly on employee claims (healthcare usage).
While there are increased internal management responsibilities for benefits professionals on the HR team in self-funded scenarios, there are also significant gains, as organizations reduce administrative fees and take power back from carriers when it comes to dictating monthly costs. That kind of overspend reduction can help tighten up an employee compensation budget for HR departments looking to stay streamlined for company growth, even if headcount begins to rise.
Businesses don’t need to be large to benefit from self-funding, either. In the right scenarios, self-funding is possible at almost any scale, as long as the employer truly understands what their employees need and will use in terms of healthcare.
Why Variable Cost can be Preferable to Fixed Premiums Many risk-averse planners might be tempted to stick with the predictability of fixed-rate, fully-insured plans because the number you know is much less daunting than a worst-case-scenario figure. However, stop-loss and excess-loss coverage are specifically available to limit the financial blow of catastrophic claims scenarios, which means that a month of coverage for a healthy workforce could, in many situations, be significantly cheaper than a month at the fully-insured rate.
Furthermore, if the employer maintains a healthy workforce where daily wellness and preventative medicine are values and priorities, expensive trips to the emergency room and invasive procedures are minimized through plan design and education. That means self-funded companies can exponentially increase their benefit if they establish a (or take advantage of an existing) meaningful culture of wellness.
Leveraging a self-funded plan might seem like a risky and costly expense, but it’s actually a long-term investment in the company’s ability to grow and work better. In the same way, the potentially increased cost of self-funded insurance is mitigated by the opportunity to reduce inefficiencies and overspend in most cases.
Providing Exactly What Your Employees Need Of course, in any conversation about employee benefits, the benefit of the employees needs to be a central focus. Working for a company with self-funded insurance is beneficial to team members throughout the organization, as the savings from reduced administrated costs can be passed down from the employer to individual policy-holders.
Additionally, self-funding means the employer has more specific control over benefit offerings and, with a strong understanding of employee needs, can design plans in a more thoughtful, specific, and employee-focused way than ever before. Of course, businesses can only achieve that if they have a rich, detailed knowledge of their employees’ and their families’ medical needs, claims-related behaviors, and emerging trends and technology that connect employees with medicine and medical professionals in innovative and cost-effective ways.
Maximizing a self-funding transition requires incredible preparation and a robust base of knowledge about both plan design generally and each individual organization’s specific finance picture, needs, and goals.
Preparing to Self-Fund Achieving self-funding is a journey unto itself that forces HR and finance to work together to establish the best-possible understanding of needs, possible solutions, and the impact of each on the bottom line.
The Importance of Preparation In short, if a self-funded employee benefits program is not designed and scaled correctly, it can significantly harm the company’s ability to maximize profitability. On the other hand, though, getting self-funding right opens the door to a variety of gains for both the business and its employees. The difference between those two outcomes is good planning.
Altering a benefit funding model is a paradigm shift that no one professional or department can make happen on their own. Cross-department planning and collaboration must occur in order for all relevant decision-makers to get a full picture of current healthcare costs, the possible impact of transitioning toward self-funding, how benefit offerings will change, etc. That means input from HR, finance, the boardroom, and beyond is necessary to plan for a strong, positive transition.
When HR, finance, and senior leadership have a shared understanding of how self-funding will reduce overspend without tying the company’s hands in a way that impacts profitability, then the real design work starts.
Understanding and Planning for Risks One of the reasons self-funding is such a cost-saver is because, in self-funding, a business assumes a great deal more variable risk. In a fully-funded scenario, a catastrophic accident or life-changing diagnosis to an employee impacts a company’s healthcare fees very minimally – that security is part of what businesses pay for. Once a business is self-funded, however, a major uptick in claims or a string of big-ticket claims can certainly eat into profitability for the month or quarter.
Minimizing those risks requires researching stop-loss and excess-loss coverage and determining how that coverage should be scaled to your workforce and its needs to provide the business with the profitability protection it requires. Reducing the risk of such high-cost events from occurring through employee health and wellness offerings (which are significantly cheaper than the cost of reactive medical care) is another crucial proactive planning measure.
Maximizing the Data Available to You Designing a self-funded plan requires a rich understanding of the benefits and services employees absolutely need. By studying the healthcare utilization data available through their providers, HR leaders and CFOs can get a very clear, specific understanding of what kind of services employees are using regularly and what their actual costs are.
That data is incredibly valuable in planning what a standard “month” of real expenses in a self-funded scenario might look like compared to current fully-funded costs. Again, the transition toward self-funding cannot be made or even attempted until that data story is fully understood, or else the company is simply self-funding for the sake of self-funding, rather than making an educated, profit-minded decision to improve healthcare efficiency.
Scaling Your Benefit Plans to Your Funding Goals Once a commitment to self-funding has been made and HR and finance have worked together to understand how the transition will support company growth and translate to more efficient spending, the next step is to think about how the change in funding model will affect specific benefits offerings.
To be blunt, plan design is more important than ever for HR to ensure self-funding is efficient at scale and supports growth. Armed with utilization data and other measures of employee need such as surveys, internal leadership must work with a benefits broker who understands the transition plan and the importance of plan success in order to create benefits packages that are highly valuable to team members while remaining mindful of the bottom line.
To guarantee success, no HR leader or department should be working on their own during this period. Input from leadership, finance, and your benefits broker can be incredibly useful to ensure proper perspective is maintained and the transition plan is well-aligned with short- and long-term company goals.
Meeting in the Middle: What about Level Funding? Some organizations looking to transition away from a fully-funded approach without completely losing their safety net may be interested in what is known as “level funding.” Level funding provides a middle ground between fully- and self-funded benefits programs, in which the carrier and the employer share responsibility.
What is Level Funding? In a level funding scenario, an organization pays a set monthly fee to an insurance carrier, as in traditional fully-funded plans. However, the carrier tracks actual employee usage and claims throughout the year so that at year’s end, the difference between the actual claims and the monthly fees can be determined.
If the employer organization’s monthly spending equals more than the total of the claims at the end of the year, they are reimbursed the difference. However, if the value of the claims is greater than the amount the employer paid in, they must pay the carrier the difference.
Level funding can be highly beneficial for businesses who understand their utilization picture extremely well and can predict with great certainty that they will be will not stray an acceptable percentage from the projected payments. On the other hand, if an organization goes into a level funding situation without truly understanding their employees’ needs, it can lead to an additional payment at year’s end.
In short, level funding protects businesses from many of the administrative challenges of self-funding but doesn’t carry the same cost-saving benefits as a well-planned, well-executed self-funded approach.
Key Takeaways The transition from fully-funded insurance offerings toward a self-funded program is one of the biggest and most important adjustments an HR department can oversee. Pulled off successfully, a self-funding initiative can streamline healthcare costs while keeping the entire team productive and well-supported. Scaled, planned for, or executed incorrectly, however, self-funding attempts can put a major strain on a business’ month-to-month profitability.
If you’re an HR professional or finance leader starting to consider whether your organization is ready to begin the journey toward self-funding, remember: • Self-funding is a great way to reduce healthcare overspend by embracing variable fees month to month • In a self-funded model, employer healthcare costs are based on actual usage, not projections • Transitioning toward self-funding is a crucial shift that requires organization-wide commitment and extensive planning o Healthcare utilization data can be valuable in this work o Understanding risks and connecting with the coverage needed to mitigate them is crucial • Partnership with finance is necessary to ensure benefits offerings are scaled with company capabilities and objectives • Level funding offers a blend between self- and fully-funded approaches that eliminates both the best- and worst-case scenarios for self-funding failure/success • Working with the right employee benefits broker can help your business smoothly transition to a self-funded strategy
Addressing diversity and inclusion within your workplace is
more than just giving trainings and seminars and sending informational emails. Only
with true action will employees know that you’re addressing their concerns, and
it can take time to show them just how committed your business is to diversity.
Updating your employee benefits package to ensure that your
offerings are designed for the diverse workforce you’re looking to create and
foster is a crucial step in your business’ diversity efforts.
Here’s what you need to know about the different ways your
office can be inclusive, and how to design your benefits package for a truly
Types of Workplace Diversity
The term “diversity” doesn’t just refer to one thing, and it
takes many forms in the workplace and elsewhere. Types
of workplace diversity to consider when taking a look at your company data
and updating policies are:
Race and ethnicity
As you can see, diversity is more than ensuring half of your
employees are women, or that people of color are represented, though those are of
course important considerations. It’s also about avoiding any form of discrimination
based on age, gender, race, religion, or disability.
There are many factors to think about when creating your
diversity plan and updating business elements like benefits packages and
employee handbook policies.
What to Include in Your
First of all, remember that some applicable workplace laws
are made on a state-by-state basis, not on a federal level. Some attorneys recommend
going with the
most comprehensive protection plans out there, even if you’re not required
to do so in your state. This means you should update your policies to be in
compliance with these regulations.
One example is the protection of discrimination against sexual
orientation, which is not one of the included categories of Title VII of the
Civil Rights Act of 1964. However, sex discrimination is protected under the
act, and workers have been known to file lawsuits that argue their sexual
orientation cases under these protections instead.
As such, it’s a good idea to include in your policies that
discriminatory actions such as firing an employee because of his or her
mannerisms, or not treating a female employee fairly because she isn’t
“womanlike,” are prohibited, as they are forms of sex discrimination.
Other ways to update policies accordingly is to develop or
include gender-transitioning resources for employees, or to include the most
current, acceptable, and inclusive terminology in employee materials.
Designing Benefits For
a Diverse Workforce
The most important aspect of updating your benefits package
is making sure that the benefits offered are fair and equitable to all employees.
Let’s take a look at the ways in which you can revamp your benefits
offerings, in addition to your company policies. Think through these areas to
get started with building a more diverse and inclusive workplace.
for Different Generations
Analyze the financial benefit offerings your company
currently provides, such as retirement contributions, student loan debt
assistance, and savings accounts. Are they more geared toward a younger
audience, or an older audience?
For example, student loan debt is an affliction that impacts
generations across the board, but research from Experian showed that Generation
X, who are between 39 and 54, has the
most student loan debt, with Baby Boomers in second (ages 55 to 73) and Millennials
third (ages 23 to 38). Although it may seem like the younger generations would
want benefits related to paying off their student loans, this is clearly an
issue that all generation struggle with.
Another financial consideration here is retirement benefits.
Baby Boomers are the closest to retiring, but research from the Insured
Retirement Institute (IRI) shows that 45% of people in this age group don’t
have any retirement savings. As such, retirement savings assistance
shouldn’t just be catered to the long-term. In addition, benefits like phased
retirement plans and medical programs for retirees can help this generation better
prepare for life after work.
Another way to address diversity within benefits is what you
offer for families. Important considerations in this category are:
Benefits for Same-Sex
Couples and Domestic Partners
Spousal healthcare coverage and other benefits have long
been offered to heterosexual couples. It’s now important to offer these benefits
for same-sex couples, in addition to couples who are in domestic
partnerships. This also means that parental or family leave benefits should apply
to these couples, even if they’re not legally married.
Because there are so many different perspectives,
experiences, and abilities that exist within your workforce, a crucial benefit to
provide is flexibility. Whether due to having children, a disability or
illness, or caring for a sick family member, flexible work options allow
employees to adapt their schedules and their location based on their personal needs.
However, this means that the flexibility benefits must apply to all employees
that require a different working arrangement, and cannot be implemented
unfairly. Employees should feel comfortable and never feel guilty about using
these benefits when they need them.
A major part of your benefits package is time off for
holidays. This has typically only included the major American holidays, both
religious and political. However, think about the employees within your company
that don’t celebrate the “mainstream” American holidays, who instead celebrate
holidays from their own cultural background.
Implement benefits that allow employees to take off the
holidays that are important to their culture or religion, and make it simple
for them to request these days off. One effective way to implement these
benefits is to offer “floating holidays” that employees can use however they
Ask Your Employees
Even with the best intentions, you won’t completely satisfy
your diverse workforce unless you allow them to speak up. An easy way for your
company to gain invaluable information about what workers care about and what
they want in their benefits packages is simply to ask them.
Send out surveys and ask for feedback. Ask them if they feel
like their needs are being recognized and respected, whatever they may be. Companies
often make a mistake when they assume that employees have certain wants, needs,
and beliefs, so it’s important to avoid those dangerous assumptions when
updating your benefits package. Instead, let employees tell you what’s most
important to them.
As you’re strategizing to create a more diverse and
inclusive workplace, making tangible within your benefits package is one
important way to keep your company on track. Remember:
There are many “types” of diversity within any
Create policies that offer the most protections
possible against discrimination, regardless of whether your local laws require
all of them.
Different generations have different financial
Offer family benefits like paid family leave and
dependent care assistance.
Make sure health insurance and other applicable benefits
are also offered for same-sex couples and domestic partners.
A range of flexibility options, like remote
working or flexible schedules, can help employees with family, disability, or
Not all employees celebrate the same holidays,
religious or not. Floating holidays can ensure that they take time off when
it’s applicable to their beliefs or culture.
Ask your employees directly what they want or
what they feel they are missing from their current benefits package.
Remember that your employee benefits package will only be designed for a diverse workplace if the offerings are applicable to everyone on your team. Avoid making assumptions about what’s important to your employees, and you’ll quickly be on your way to an inclusive, satisfying benefits package.