For several years, businesses have watched their group medical insurance coverage premiums increase 10 to 20 percent per year. But a recent report finds that it's getting worse-the increase jumped to 20 to 30 percent since just last November.¹

These increases have been attributed to such drivers as insurer premium "catch-up," pressure on health plan profitability, expensive medical technology, drug prescription costs, aging baby boomers, federal government legislation/regulations and even terror-induced mental health costs.²

Companies have responded by increasing deductibles, co-pays and out-of-pocket maximums. In addition, employees are sharing a larger portion of the premium costs.  Some companies have dropped benefits, such as vision, and streamlined their dental plans. By reducing other insured benefits, companies have been able to offer a decent medical plan.

Employers will continually be challenged with offering a cost-effective benefit plan while medical benefits costs continue to soar. Before spending thousands of dollars on elaborate and costly benefit plans, take stock of which plans are getting the most "bang for the buck."

Most companies know that offering a medical plan is crucial to employee retention. But the Cadillac of medical plans may not be necessary.

USE A FOCUS GROUP

Your first step is to figure out what's important to your employees. Schedule employee focus groups to gather some information about what they want. Choose a diverse population that accounts for age, marital status, dependents/no dependents, salary level, interests and hobbies.

While you could just gather the information by a written survey, employees will take the focus groups more seriously. They will also be able to explain their answers so that the "whys" behind the answers are clear.

Figure out how many dollars you are spending per employee for each benefit plan.  Make a list of each benefit with the associated cost and a total amount for all benefits. The accounting department is a great resource for these numbers. Share this information with each employee during the focus group meetings.

Then ask the following questions:

·        If you had (employee's total benefit cost) to spend on your benefit package, how would you prioritize which benefits are important to you? Why?

·        How do you use these benefits? (Don't ask for specific health information: This is considered protected information.)

·        How often do you use these benefits?

·        Are there any benefits that are not being offered that you would replace with existing benefits?

In analyzing the information, you will see trends of benefit utilization depending on the demographics of your employee population.

BE FLEXIBLE
Most employees may only consider insured benefits as part of the benefit package. These normally include: medical, dental, vision, long-term disability, life insurance, accidental death and dismemberment, 401(k) plans, and profit sharing.

But there are many other benefits that you can offer with minimal cost. Ask your employee focus group which of the following items are important and why: work hours, work days, work location, time off, management style or employee get-togethers.

Based on the responses, there may be some very cost-effective benefits that you can easily add to the entire package for employee retention. These benefits may even be more valued by the employee than the expensive insured benefits.

I do not recommend directly asking your focus groups if they are interested in adding any of these benefits. The answer would be "yes" and mentioning them would only create rising expectations.

LOW-COST BENEFITS
Here are some more ideas for low-cost benefits.

·        Combine sick time and vacation time into personal time off that employees can use for any reason. Obviously, the more time off for unscheduled sick days, the less time off for vacation.

·        Customize work hours to employees' personal life. It may be impossible to have each employee on a different work schedule, but every employee shouldn't be locked into one work schedule just because it made sense in the past.

·        Be creative with employee schedules for the work week. Try a four-day work week or mix up 8- and 10-hour work days.

·        Consider teleworking or working from home for suitable jobs. For those jobs that can be performed off site, it may be a manager's control hang-up that is preventing it.  

·        Offer anniversary dinners with family members instead of those dreaded holiday parties and picnics.

·        Bring in monthly lunches for employees.

·        Allow employees to leave early on some Fridays.

·        Enhance the tuition reimbursement plan.

·        Offer a subsidized health club benefit. 

ENSURE VALUE

Offering some of these benefits will only be beneficial if the employees value them. It is important to first gather information from the employees to evaluate what it important to them. The younger, Gen X employee may be looking for more flexibility in work schedules, while baby boomers may be looking for more retirement security with an enhanced profit sharing plan.

Knowing the demographics of your employee population is crucial in offering the right mix of benefits in your company. Carefully gather the information and don't assume that you know which benefits employees value and use based on your own preferences.

Once you summarize the information, you can beef up the benefit package and implement solutions without breaking the budget.

References

1.        Market survey by The Council of Insurance Agents & Brokers. May 2003.

2.        Mercer/Foster Higgins National Survey of Employer Sponsored Health Plans. 2001.

Sue Romero is a human resources consultant and facilitator specializing in employee relations issues, manager coaching, management and team training. She has over 20 years experience coaching managers on enhancing their effectiveness. Her Web site is  www.romeroconsulting.com.