Healthcare benefits for recruiting, retention and performance
Are you considering adding healthcare benefits to your employee compensation package? That’s great news for your company because there are significant advantages in offering good healthcare benefits. Companies that have competitive benefits packages see boosts in employee recruiting, retention, and performance.
Have you ever wondered how many U.S. private sector companies offer healthcare benefits to their employees? The Kaiser Family Foundation reported that in 2019, 47.4% of U.S. firms provide health insurance to employees. The organization breaks this down by state, placing Hawaii as the leader, with 84.1% of companies offering healthcare benefits.
The U.S. Bureau of Labor Statistics bumps up the nationwide average to a much higher number than what Kaiser found in 2019. In September 2020, the Bureau reported that employer-sponsored medical care benefits were available to approximately 70% of employees in private industry. Diving in a bit deeper, the report showed that as many as 94% of workers in the highest 10th percent wage category had access to healthcare benefits.
Does the size of the company matter? SHRM found that 98% of organizations with fewer than 100 people (both full-time and part-time) provide a health care plan to employees. They say healthcare is consistently ranked the most important benefit category in their annual surveys.
There are several reasons why so many companies offer health benefits, but recruiting, retention and performance are three of the top ones.
The SHRM 2019 Employee Benefits Survey reported that 86% of employers believe healthcare is the most important benefit to their workforce. SHRM cites competition for talent as being a primary driver for them to offer it.
With the cost of healthcare increasing each year, employer-sponsored healthcare enables employees to share the cost of health insurance with their employer. While salary is a top motivator for job seekers, good healthcare benefits are also a crucial part of compensation, and employees are willing to accept a lower salary if their employer helps with medical costs.
A Glassdoor survey looked at the top factors job seekers look for in job ads. Salary came in at 67% and benefits at 63%. The survey also found that 48% said “attractive benefits” would drive them to apply to a particular role. Interestingly, benefits were the number one driver, beating out salary, which came in at 46%.
It is clear that healthcare benefits for recruiting purposes works. If you are looking to hire top talent, you can’t afford not to offer medical insurance as part of your benefits package.
What about the employees you already have? If you haven’t been offering healthcare benefits yet, you can just look at the recruiting statistics to know that benefits still matter. With so many other companies offering medical insurance to their employees, you risk losing your best talent to those companies.
AHIP, a trade association for health insurers, surveyed employees who were currently receiving health care through their employer. Fifty-six percent of them said that their health benefits were a “key factor in deciding to stay at their current job,” and 46% said health insurance was either the deciding factor or a positive influence in choosing their current job.
Can you afford to lose 56% of your staff? While over half of these employees cited health benefits were essential, what about the other half? Do they not value medical coverage from their employer? That’s not likely the case. What’s more probable is that most of these employees are already receiving medical coverage through another source, such as their spouse or parents.
Healthcare benefits and retention go hand in hand.
Let’s look at how healthcare benefits impact your employees’ performance. We know that employees value healthcare benefits by looking at recruiting and retention statistics. That means when you offer these benefits to your employees, you are making them happy and more satisfied with their job and your company. Happy employees are more engaged and productive. They feel greater loyalty to their employer and are less likely to leave.
But here’s another fact: when workers have access to healthcare, they tend to take better care of themselves and their families. Remember that healthcare is expensive. The cost of medical treatment and preventative care can be a barrier for many. However, with health insurance benefits, they are more likely to go to the doctor and have fewer medical complications.
Healthier, happier employees take fewer sick days. One study found that healthy employees reduce absenteeism rates by 27%, and employers who invest in medical coverage and wellness programs see a bump in productivity.
What you need to know before you start
Now that you know how important healthcare benefits are for recruiting, retention, and performance, you probably want to know how to get started. Let’s look at a few things to consider.
Your budget will dictate your plan
First, you need to know your budget. What can you afford? How many employees will participate? Survey your employees so you have a better idea of the participation rate and to learn about what is important to them when it comes to coverage.
Conventional medical insurance plans are typically more expensive than self-funded or level-funded health plans. Shop plans based on cost and coverage.
We recommend level-funded plans for many reasons, one of which is that you can determine the ratio of employee contribution and company contribution. Most employees are willing to contribute to their plan just to have coverage. You can lower your overall costs when employees pitch in to help cover those costs.
Level-funded plans are unique in that they are the only plans that allow you to pay only for actual claims. With a traditional plan, your company pays a set monthly premium to cover your employees. It doesn’t matter if your employees have a ton of claims, expensive claims, or none at all – your costs will be the same whether they use their coverage or not. You may find that you spent way more than what was used at the end of the year.
With level-funded plans, you pay a set amount each month, but you are reimbursed for any amount that wasn’t used towards actual claims at the end of the year. If your claims total more than what you paid in premiums, built-in stop-loss insurance covers the difference. Your costs are “level” and never change, even if there are catastrophic claims or more claims than expected.
You should also make sure you know all of the other costs that could come into play in each plan. For instance, are preventative care services, vaccinations, and telemedicine covered at 100%? What co-pays, deductibles, coinsurance, and out-of-pocket maximum fees are associated with each plan?
Look, too, at what all is covered with each plan. What kind of costs are associated with ER visits, mental health coverage, maternity coverage, prescriptions, and lab work? How much is it to add vision and dental coverage to the plans?
By getting a full picture of all costs associated with the plans, you can better determine what your company can afford to offer.
There are lots of plan types to choose from
When you are choosing plans, keep in mind that you can (and should) offer a variety of plans from which your employees can choose based on their needs and budget. SHRM found that 79% of companies offer two or more types of plans to employees.
Some plans, such as HMOs and EPOs, require members to choose from only “in-network” providers. Any doctors they want to see outside of the plan’s network must be paid out-of-pocket. These plans are restrictive but less expensive because provider costs are pre-negotiated.
Other plans, such as PPOs, do not require a referral when choosing an in- or out-of-network provider, but members will pay more to do so, making them more costly than HMOs or EPOs. By giving your employees options, they can match their coverage types to their budgets.
Sana offers “all-access” health plans that enable members to choose any provider they want without a referral or a hefty price tag. Sana also provides all kinds of online administrative tools to make enrolling employees and managing the plan easy.
Not all states have the same rules
You also need to understand your options for plans based on the location of your company. Some states allow level-funding for companies as small as five employees. Texas and Illinois are examples.
Other states require a minimum of 25 employees to get level-funding; some states, such as California, make it difficult for companies with fewer than 50 employees to get level-funding. If you are looking at self-funded or level-funded plans, talk with the provider to determine if your state has specific laws or requirements for participation.
Business health insurance can be complicated, but it doesn’t have to be if you work with the right provider – one who is willing to guide you through the process and provide helpful materials and technology to make it easier. Your employees want healthcare benefits, and if you choose providers wisely, you can affordably offer them great coverage.