By Joel Johnson and Kurt Buursma
According to a recent study, employer sponsored health, dental, vision, life and disability plans are the most highly valued benefit among employees, accounting for almost one-third of the value prospective employees place on a benefits package. (1) As a business owner, this probably doesn’t surprise you. Offering group sponsored employee benefits is practically required to attract and retain talent nowadays.
However, buying that coverage can be a daunting task for many small business owners, and they tend to make a lot of mistakes. Here are some of the biggest mistakes business owners make when buying group benefit plans:
Forget To Consider Employees
It’s easy for businesses to jump into a plan without actually considering what their employees really need. You may be drawn in by the price, the availability of services, or another great feature. But does that feature really matter to your employees? Is it a good fit for your workforce?
A cost-effective health plan with a narrow, local network may be great for employees with young families or few serious health concerns. But what if your people travel a lot for work? Or support dependents that live out-of-state? Will they be able to get the health care they need? This could also be a problem if they need specialized care that isn’t available locally.
When shopping for group employee benefit plans, it is invaluable to get employee input. Taking the time to sit down and find out what they really want could save you a lot of time and money in the long run. When employees feel like their voice is appreciated and their needs are met, they will be more fulfilled and do better work.
You do need to be careful how you go about getting your employees’ input, though. You will never be able to please everyone, and you want to guard against leaving people feeling slighted or misled because their first choice wasn’t chosen. Forming a committee to filter ideas through the lens of your company’s goals and objectives is a good way to avoid this pitfall.
As a successful business owner, you know that it all comes down to the bottom line. You don’t want to get yourself locked into a plan that you can’t afford and will be unsustainable in the long run. You need to work the numbers to see what your company can afford before you start shopping.
There will almost always be more features than you can realistically afford. Knowing your budget ahead of time will help you prioritize and choose the best features for your employees. You will also avoid wasting time researching options that are out of your reach.
Group employee benefit plans can be expensive, but you need to make sure you are allocating enough of a budget to be able to get one that meets your workers’ needs. You may be tempted to cut costs, but having good coverage will save money in ways you probably haven’t considered. Employees with health coverage are more productive, have higher retention rates, and take less sick days and extended medical leave.
Don’t Research Options
There are a lot of different products available today. Most business owners are only familiar with a handful of them and fail to take the time to learn about other options. Funding structure is one area where many business owners have limited knowledge. Have you considered self-funded or partially self-funded plans? You may be able to find a great deal in one of them.
Don’t shy away from high-deductible health plans (HDHPs), either. When paired with a health savings account or flexible spending account, they can be an affordable way to meet your employees’ needs. They usually cost $782 less per individual and $1,689 less per family than a traditional PPO. (2)
You can also make parts of your plan optional for employees. It doesn’t have to be an all-or-nothing deal. Different workers have different needs. You can provide a core offering that you can afford, with optional add-ons for those who need more coverage.
Fail To Consult An Expert
You have a business to run. You don’t have time to become an expert in a whole other industry. Hire a qualified agent, broker, or consultant who already is. They can help you navigate the plethora of options to find the one that is right for your company. A specialist can also help you develop a customized plan that will save you significant time and money in the long run.
You won’t want to hire just any old specialist, though. Take your time finding one that you trust that understands your unique company’s needs. Do thorough interviews of multiple experts so that you find one that you will enjoy working with long-term. A lot of time and money will be going into this relationship, so you don’t want to rush into it.
How We Can Help
We have a passion for small business and know group employee benefit plans. We would love the opportunity to help you figure out what plan is best for your company. Is your current plan still competitive? We can sit down and review it to make sure it still is. Are you currently shopping for a plan? We can help with that too. Email Joel @ firstname.lastname@example.org or contact our partner Buursma Agency directly at Kurt@buursmaagency.com or 616-392-2105 to set up a complimentary consultation. Together we can come up with a plan that meets both your company’s and your workers’ needs.
Joel Johnson, AIF® is a partner with DeLong & Brower, a Holland, Michigan accounting, retirement consulting, insurance, and financial services firm. He specializes in providing comprehensive wealth management and retirement plan consulting for individuals, families, retirees, and business owners. Along with more than 15 years of industry experience, Joel is an Accredited Investment Fiduciary® and a Chartered Federal Employee Benefit Consultant. To learn more, visit www.cpaholland.com.
About Buursma Agency
Kurt has been a licensed insurance agent since 1987. He specializes in group benefits, including health, life, dental, short and long term disability, vision, long term care and Medicare plans. Working with and helping businesses grow as well as navigate the sometimes-confusing world of insurance has been a career long goal. In addition to employer groups, he works with individuals for life, disability, Medicare plans and Long Term Care. Kurt has been an enrolled agent with the Healthcare.gov Marketplace, assisting individuals with seeking subsidy assistance, choosing the most appropriate plan available, and enrolling individuals and families into a health plan. Kurt has been a lifelong resident of West Michigan. He and his wife Molly, have four children and four grandchildren. They enjoy life in West Michigan and riding their scooter around for fun!
Rachel Keur, Business Sales Coordinator is responsible for employee benefit plans, plan administration, and benefits coordination for small to large employers. Rachel began her career with the Buursma Agency January 2003, and is a licensed Life and Health Agent since 2004. Rachel has been heavily involved with the Sales and Marketing of Group Benefits, New Client Acquisition, and establishing on going Client Relationships/Retention. Rachel’s goal of creating growth in the community through supporting small businesses in their benefits and HR functions is evident in her strong customer service ability to meet and exceed each of her client’s expectations. She continues to pride herself on the level of knowledge and service she can bring her clients. Rachel is hands on with each client to help them better understand COBRA, HIPAA, FMLA, ADA, Health Care Reform, Wellness, as well as many other areas as an extension of their HR Department. She also plays a vital role in helping clients analyze their benefit costs and project the impact of their health plan changes to their overall cost structure. Rachel, her husband Marty, and their 2 children live in Zeeland. In her free time, Rachel is an avid Crossfitter/fitness enthusiast and enjoys reading and relaxing in the outdoors with her family and friends.