Offering an employee benefit plan can be great option to boost morale, remain competitive in the marketplace and attract and retain talent, but they can also be a costly business expense. However, there are several plan design options that you can use to manage the cost of your benefits plan more effectively.Below, we've outlined four affordable employee benefit options for small business.
Premium contribution
Although a group benefits plan is seen as a perk for employees, it is important to ensure that they share in the responsibility of managing the plan and its costs appropriately. Having employees pay a portion of the premium will help in developing a mindset of shared accountability and avoid abuse. Most insurance companies require an employer to pay at least 50% of the benefit costs but some employers choose to pay more as part of their overall compensation and benefits strategy
Deductibles
Including a deductible for extended health coverage (EHC) and dental benefits is one way to reduce the cost of the benefits program. The deductible is the amount the plan member must pay before any benefits become payable under the plan. There are, however, more effective ways to have employees share in the cost of the benefits plan – coinsurance is a good example.
Coinsurance
Coinsurance represents a fixed percentage of the total cost of the claim that is payable by the plan member. Incorporating a coinsurance amount for EHC and dental expenses helps employees understand the value of their benefits plan by participating in a small part of the cost of each claim. Depending on the type of benefit, coinsurance levels can range from 50% to 100%. Orthodontics claims, for example, are typically paid at 50% coinsurance. This really helps to reduce the expense of offering this type of high-cost coverage.
Caps/Maximums
Most plans will include a maximum for certain types of coverage. A good example would be vision care or paramedical coverage. A maximum helps to keep costs at an acceptable level for these often expensive and recurring services. Incorporating a dispensing fee maximum in the drug plan helps to make employees smarter consumers by giving them incentive to shop around for the most competitive dispensing fees.
