Benefits Think

5 steps to improving healthcare benefits ROI

For most companies, heath benefits are a significant financial investment and easily make up at least 30% of overall employee compensation. But many aren’t getting as much as they should in return.

Few employees truly understand the value of their benefits package, and statistics show only about half say they are happy with their health benefits. In no other area would companies spend so much and expect so little in return.

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Certified nurse practitioner conducts a check-up on a patient at a Community Clinic Inc. health center in Takoma Park, Maryland, U.S. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg

The great news is that advances in the benefits market finally make it easy for employers of all sizes to receive more value from this investment. Here are five steps to improving healthcare benefits ROI.

1. Determine the strategic objectives for your health benefits. For most employers, these goals have to do with optimizing their workforce and can be summarized in three goals:

Attracting and retaining the right talent. Today’s job market is more fluid then ever, requiring even small to mid-sized companies to compete with Fortune 100 employers for talent. This means offering the same broad array of benefits. Healthier, happier employees are more likely to stay with the company.

Increasing engagement and productivity. Studies show that healthier, happier employees are more productive and engaged in the workplace. This can be a challenge, especially when 30% of Americans are not satisfied with their jobs, according to a 2016 Pew Research Center study. Furthermore, 86% of employees primarily sit at their desk for work, according to a 2013 survey commissioned by office furniture manufacturer Ergotron; it’s not a secret that being sedentary takes a toll on one’s health. If you’re sick at work, forget it. Presenteeism accounts for 75% of productivity losses, according to a 2010 Journal of General Internal Medicine study.

Improve your culture. If employees like their position but don’t like the office vibe, there’s a greater likelihood they’ll leave.

2. Understand the demographics of your workforces. For the first time in history, five generations will soon be working side-by-side. There has never been more variability in the needs and expectations of the workforce. The one-size-fits-all approach to benefits no longer works.

3. Select a strategic partner. Health benefits selection used to be relegated to an annual review of your benefits package with your broker or insurer. This approach no longer works when competing for talent against companies that have teams dedicated to optimizing employee benefits 365 days a year. Selecting the right partner is a challenge because the market is packed with companies that focus on optimizing one aspect of your benefit needs while neglecting others. The right partner should be able to guide your team through the full process from development of a strategy to year round management of the solution.
4. Determine your level of investment. Traditionally, health benefits have been the tail that wags the dog. The benefit design is fixed and the cost keeps going up. The outcome is a very costly solution that is typically only utilized by 20% of your employees. That means for 80% of your employees, you are overspending relative to the value they receive. A strategic approach to benefits starts with establishing a budget for your employee benefits based on what your company can afford and understanding your competition for talent. Your benefit partner should be able to help you understand the market, your business and establish the right per employee per month budget.

5. Optimize your benefit spend. Best practices in benefits spend now go far beyond having the right health insurance coverage. Employers look to incorporate each of the following to optimize their benefit program.
· Health insurance coverage. Having the right base insurance plan is still key for any employer. However, just as you would not insure a $250,000 house for $1 million you want to be careful to not over insure your employees. A high deductible health plan with a broad network and a reliable insurer will typically provide a strong foundation of coverage. Most insurers now will allow even small employers to offer buy options to richer plans for those employees who would like the additional coverage.
· Health spending accounts. Offering employees pre-tax health spending accounts, such as HRAs, HSAs and FSAs, allows the employee to have more flexibility on the amount of money they put aside for health expenses as well as how they spend those funds. This is done will the advantage of being tax exempt as long as both the employee and employer follow the IRS guidelines.
· Health and wellness accounts. It is common now for employers to offer a monthly gym membership or other benefits to employees. However, benefits are typically poorly communicated and handled through the expense management system, making them cumbersome for both the employer and employee. A post-tax spending account such as League’s Lifestyle Spending Account is a great way to maximize the benefit of these programs.
· Health in the workplace. Employees typically spend more of their waking hours at their place of work than anywhere else. For many, a healthier lifestyle can start in a healthier workplace. A yoga class or on-site massage can go a long way toward creating that spark for a healthier outlook on life. Typically, these services are comparatively low cost with a significant positive impact on the workplace culture.
· A digital home base. Finally, the program should be easy for employers to administer and employees to use. HR teams are typically understaffed and have too much on their plates already. The right strategic partner should simplify the administration work and improve benefits for the employees.

Advances in both traditional benefit offerings and digital solutions for employers and employees have finally made it possible to offer truly customized employee benefits. The first step for many employers is simply finding the right partner to help them implement this solution.

The payoff is healthier, happier employee and a significantly improved ROI on the benefit dollar spent.

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