Why is employee benefits program planning so difficult?
FrankCrum PEO advises small and mid-sized businesses on a better way
CLEARWATER, Fla., Jan. 8, 2015 /PRNewswire/ -- Mention employee benefits and many business owners and managers turn and run for the door. But it doesn't have to be that difficult, according to David Peasall, human resources director at FrankCrum, a national professional employer organization.
"Employers offer benefits because they want to provide a well-rounded compensation package," says Peasall. "However, concerns about costs, changing regulations and compliance issues have overshadowed the beneficial aspects of benefits programs in the minds of many employers. Yes, these are important issues, but we mustn't lose sight of the value a robust compensation program brings to the business and its employees."
Peasall offers the following insights to employers trying to navigate through the difficult benefits landscape:
- How much will benefits cost? Why is my renewal cost so high?
Renewal rates are based on coverage and value, with utilization and participation being key drivers. If employee participation in your organization is low, it's likely that the sickest employees (those who may have the highest and/or most frequent claims) are those who have enrolled. Insurers also need healthy employee participation to balance their risk and keep rates at a manageable level. So, one of the best ways to keep your renewal rate low is by increasing your participation to as close to 100 percent as possible.
Other factors that have an impact on rates – factors that your business cannot control -- include national/local trends and community rating factors, as well as carrier expectations of ongoing increases in healthcare costs due to new procedures, technologies and drugs. Although you can't control these, you can ask your carrier whether these have contributed to higher rates and to what extent. Negotiating about the significance of these factors can result in a reduced renewal rate.
- What about changing regulations and compliance issues?
Most employers feel buffeted by an unending stream of changing regulations and compliance issues, whether at the local, state and/or federal level. The best tools an employer can use are awareness of these issues, correct interpretation and correct application. These are also directly related to the cost of benefits: you must understand the regulations to know the cost that is attached to them.
This issue is particularly timely in light of the current confusion and changes to the Affordable Care Act (ACA). ACA regulations related to the numbers of employees and their hours have gone into effect, and you should check with your professional employer organization to see what changes have an impact on your business.
Few small-to mid-sized employers have in-house staff with the time and background to stay current on regulations and compliance, which is one reason why so many of them choose to work with a professional employer organization.
- Will the employees value their benefits program?
Great employees, regardless of whether they actually enroll, want a great benefits program available in addition to their compensation. Employers that spend a little time selecting from a prepared list of options can capitalize on hiring and retaining these great employees and have an advantage over their competitors who don't value the employees' interests. Having a benefits specialist as a business partner makes it an easy process to design and communicate the employee benefit program thoroughly, frequently and inexpensively.
"People start and manage companies because they know their industry and want to make a profit; not because they want to learn how to understand, interpret and apply benefits regulations," says Peasall. "We advise them to focus on their core competencies as well as what their employees value, such as a positive corporate culture, good working conditions, competitive wages and benefits programs. The employer who keeps an eye on these will be better able to recruit and retain great employees, and can then outsource tasks such as benefits planning, payroll and workers' compensation to an outside provider."
About FrankCrum:
Founded in 1981, FrankCrum is a pioneer in the Professional Employer Organization industry, providing outsourced human resources, payroll, employee benefits, risk management and workers' compensation. The company supports more than 3,000 businesses nationwide that collectively employ more than 50,000 people. The FrankCrum family of companies includes FrankCrum, FrankCrum Staffing and Frank Winston Crum Insurance, each focused on the business success of small and medium-size employers. For more information, go to www.frankcrum.com.
Media Contact:
Suzie Boland
RFB Communications Group
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SOURCE FrankCrum
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