provided by
Sherry Finkel Murphy MS, RICP
The ability to grab and hold on to the best talent is crucial to the long-term success of any business.
One of the most effective ways to keep employees engaged and motivated is by offering them a carefully crafted benefits plan. Along with salary, it’s what employees look at most carefully when deciding whether to join and stay with a firm.
When you give your employees the benefits they value, they’ll likely be more productive, miss fewer workdays and have a higher commitment to helping you build your business. In fact, the LIFE Foundation reports that three in four workers consider benefits a decisive factor in weighing job opportunities.
The challenge for many closely held businesses, however, is finding a way to offer the same options and benefits that larger companies enjoy, particularly when it comes to providing competitive health insurance coverage.
Pain or panacea?
Much is being written about the Patient Protection and Affordable Care Act and its impact on workplace health benefits. One thing is pretty clear: the Affordable Care Act is likely to shift the relationship between employers and employees as it relates to the selection and use of health insurance coverage.
From a business perspective, the new health exchanges widen the selection of plans available to smaller businesses. They also enable you to decide how much you can afford to contribute towards employees premium costs, thus giving you greater control over your company’s health care spending.
Equally important, the Affordable Care Act takes some of the burden off employers to provide a plan that’s right for all their employees.
By offering a choice of plans from the new health exchanges, employers can step away and let their employees decide which plan is right for their needs. In doing so, business owners can give their employees the resources and tools they need to take greater responsibility for their health and wellbeing decisions.
Self-insurance as an option.
As business owners consider their new health insurance options, some are taking a completely different approach to providing coverage. Rather than shopping for carriers on the health exchanges, they’re opting to self-insure. In certain states that permit small plans to buy stop loss insurance, self-insurance can provide business owners cost savings and more control than a fully insured option.
What about other benefits?
Closely held businesses have plenty of options when it comes to building a benefits plan, each offering tradeoffs between flexibility and affordability. The key is to select benefits your employees will value most. After all, a workforce comprised of 20- and 30-year-olds will have very different priorities than one made up largely of 40- and 50-year-olds.
Other commonly offered benefits include group term life insurance, group disability income protection and, increasingly, long-term care coverage. However, after health insurance, qualified retirement plans appeal to the broadest cross-section of employees.
Saving for the future.
Retirement is a growing priority for business owners. In fact, there has been a sharp increase in business owners offering a retirement plan, up from 10 percent in 2008 to 24 percent in 2013.
One reason for this uptick is that business owners increasingly recognize that any size business can have an affordable plan. In fact, closely held businesses have access to a broad range of retirement plan choices, including defined contribution plans, such as 401(k), SIMPLE IRA and Simplified Employee Pension Plans, which provide eligible employees with a benefit based on the value of their accounts at retirement.
Protecting income.
As a business owner, you’ve invested a lot of time and resources in growing your business.
What would happen if you or one of your key employees suddenly became disabled due to an unforeseen illness or accident? The impact could be devastating to your business and your livelihood.
Still, many entrepreneurs underestimate the chances that disability will strike. That’s why protecting you and your employees’ ability to earn an income is a valued component of a complete benefits program.
The good news is, group disability income insurance is often far less expensive than many business owners assume, and it’s often one of the most cost effective benefits an employer can provide.
Income protection may also be increased by combining a group policy with individual policies. Insurance companies often exclude a portion of the group coverage when employees apply for an individual policy, thereby increasing the total amount of available coverage.
Premium discounts and simplified underwriting may also be available on the individual policies depending on the number of employees who apply.
Protecting assets.
Long-term care can present physical and emotional challenges for an entire family, and it may require services that are not covered by health insurance or Medicare.
Nearly one in five Americans have provided or are currently providing long-term care for a family member or friend, and 59 percent of those caregivers cited increased levels of stress as one of the top challenges in providing care.
A long-term care plan can provide extended care either at home, in the community or in an assisted living or nursing home facility.
As part of your business’ overall benefit program, a long-term care plan can foster continuity of productivity and reduction of employee absence if a family member requires care and distinction of your benefit program from that of competitors.
Having a comprehensive, written plan.
More and more, business owners are offering financial wellness programs as part of their overall employee benefits.
This recognizes that many employees need help with the full spectrum of financial planning issues, from improving day-to-day money management and budgeting to setting and achieving retirement readiness goals.
Often this service is offered by a financial professional and includes one-on-one counseling and the creation and continued updating of a comprehensive written financial plan to help keep employees on track.
The value of partnership.
No matter what benefits you want to offer, it makes sense to enlist the help of a team of legal, accounting and financial professionals to help you identify your specific needs and understand and evaluate your various options and their costs.
Once a benefit plan is created, it must be effectively communicated to your employees. A financial professional with expertise in creating employee benefit programs can help ensure your employees understand and appreciate their benefits. He or she can also help ensure that, whatever benefits plan you create, it will continue to evolve over time with your business.
Murphy is a financial advisor with Northwestern Mutual.