But there are four simple questions you can ask yourself when evaluating benefit components, to help gauge their effectiveness and value:
Employer sponsored benefits should be easily accessible without hoops to jump through, waiting periods, applications, review committees and other red tape subtly designed to lower usage rates. Something as simple as a plan that pays for benefits directly, instead of reimbursing employees a few weeks later, can be the difference between a valuable or worthless perk. Low-wage workers in high turnover industries need benefits to help them with healthcare expenses and other insurance products that may make the difference in financial solvency or financial ruin.
Employers also need to beware that many niche players in the voluntary benefits market offer products that cannot be payroll deducted. Some companies offering these types of benefits make the pitch to implement these plans with auto deductions from employees’ credit cards, and that makes it“portable,”another big“benefit”to the employee. This is just another distortion. Going around the payroll provider is typically a sign of razor thin margins and should be a red flag that other inadequacies lay beneath the surface.
Limited Indemnity(Voluntary)insurance is exempted from ACA mandates for major medical coverage. The things that make ACA compliant plans — no lifetime or annual claims caps, for example — do not apply. This means that voluntary insurance products can be provided at a lower cost and the lower cost can be passed on to the employee. Follow the money. If the benefit is expensive with no clear reason, or if the employee could likely afford the plan’s inclusions by saving the premium on their own, then the risk pooling equation is off-kilter and should be questioned.
Employers bring group buying power to the table that employees cannot get on their own in the open marketplace. This gives the employer the ability to provide valuable benefits at even more affordable prices for their employees. Many ancillary products like pet insurance, home, auto, identity theft insurance and legal protection are readily available to the consumer online at the same price. Employees who want these coverages are welcome to get them on their own, but an employer adds no value in these cases.
Be sure to ask these hard questions when evaluating benefit options. By choosing flimsy, niche programs, employers are not only reducing value, but they can also seriously undermine HR operations and employee satisfaction.