Finance News & Insights

3 must-ask questions about the benefits you offer

Considering the even-bigger bite health insurance is about to take out of most employers’ budgets (thanks, Obamacare), companies are facing many tough decisions when it comes to their benefits offerings.

And many of your peers are taking another look at what they’re offering now – and what they will offer in the future.

But before you break out the hatchet, you’ll want to compare your current offerings and participation rates against recently-released benchmarks from Mercer Consulting.

Based on their findings we’ve come up with three questions you want to ask about the benefits you already offer, as well as the ones you’re considering:

Question #1: Will they use them if we offer them?

The last thing you want to do is set up and administer – and pay for – benefits that employees aren’t going to use to the fullest. Some may not use them at all.

Of course, 100% participation in anything is unlikely, and your specific workplace demographics will influence how much participation you get in a certain benefit.

But before you even think about making changes to your benefits offerings, you’ll want to run some numbers to see what your current participation rates are.

The Mercer survey gives you some great benchmarks. Here’s what companies in the Mercer survey said they’re seeing as far as “take-up” rates, by type of benefit:

  • 401(k) match: 65.7%
  • 401(k) program: 64.7%
  • Employer-paid health coverage: 63.9%
  • On-site medical clinic: 48.2%
  • Onsite fitness center or employer-paid gym membership: 46.2%
  • Incentive for measurable health targets: 43.8%
  • Financial/retirement planning: 43.8%
  • Pre-tax paycheck deduction for public transportation: 37.0%
  • Health-savings account: 34.8%
  • Childcare voucher:  30.5%
  • On-site child care: 25.4%
  • Tuition reimbursement program: 21.7%

 

So how do your numbers compare? If your rates aren’t quite where you’d like them to be, it may be more a matter of promoting benefits more.

Many of your peers have the best luck when they enlist the help of employees who are already participating (especially when they’re seeing a sharable success, whether it’s a nice sized nest egg for retirement or some weight-loss from hitting the gym on your dime).

Question #2: What comes close to cash?

Let’s face it, no matter what some of those surveys say, most people would rather see a bigger paycheck than any other benefit you can offer them.

Still, there are a few things that come close, according to the Mercer study. Yes, you’ll want to survey your own workforce (being very careful not to promise anyone anything – that could cause morale to take a serious dive).

But if you’re company isn’t in a position to boost salaries across the board, or would rather tie it to one of the benefits your company offers, here are your two best bets, according to workers:

  • offer an additional week of paid time off, or
  • provide that $500 in a 401(k) plan increase.

Of course,  an extra week off would likely cost you a lot more than $500 per employee, not to mention the lost productivity, extra coverage required, etc. So this probably isn’t one you’re going to jump on.

But even an extra day could have a big impact on employee morale and motivation, without the same bite in the wallet.

Putting that $500 towards employees’ retirement savings is a great option. For one, you only have to offer it to the folks who participate in the plan. Plus it reinforces a behavior you want: Getting folks to save more money.

Question #3: What are they willing to pay for?

Just because your company offers a benefit to employees doesn’t mean you have to pay for it!

Voluntary benefits are increasing in popularity as there are some things so important to some folks that they’re willing to pay for it themselves — as long as their employers set it up for them.

Yes,  there is some time, expense and administration necessary. Which means you want to do your homework and make sure any voluntary benefits you do introduce are likely to be used.

Once again, the Mercer study offers some intel that can help you gauge what’s most important to most people.

Which voluntary benefits would employees put in their top three that they’d be willing to pay for:

  1. Disability insurance (38%)
  2. Life insurance (34%), and
  3. Auto insurance (34%).

Note: These have a lot to do with your workplace demographics. If you have a lot of employees aged 55-64, especially single and/or high-income ones, you’ll have a lot of interest in disability insurance.  But you may be better off going with life insurance if many of your employees have children and earn around $50K annually. Auto insurance tends to appeal to a young workforce (under age 34).

Print Friendly

Subscribe Today

Get the latest and greatest finance news and insights delivered to your inbox.
  • Joanna

    Not listed above, but good to have, is accident insurance. Group rates are inexpensive and need only 10 employees to start. Since premium is paid for by employees with after tax dollars, benefit when received is tax free. Just like short term disability. UNUM offers it and it’s becoming very popular.

  • Great tip! Thanks for sharing

  • With all the issues employees have in their personal lives including Identity Theft with the IRS, Medical Identity theft (Anthem/Blue Cross) and legal issues with loss of their homes, bankruptcy. We are finding major benefit to offer Legal and Identity Protection Plans. These are a NOW benefit, the more you use, the more you benefit and rates do not go up and employees save money, protect and restore their identity for less than $1.00 per day. Employers see $300-500 increase in productivity (employees present and working) per year per employee when they have these plans.