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Small Business Employee Benefits and HR Blog

Top 4 Employee Benefit Challenges - And How to Deal

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As the landscape of employee benefits changes, employers are faced with new challenges. According to a recent employer survey by Benefits Selling, the top four employee benefits issues in 2015 were: increasing costs, handling benefit changes, working with brokers, and dealing with health care reform.

So, how can employers - especially smaller employers - deal with these employee benefits challenges? Keep reading. In this article, we'll cover the top four employee benefits challenges and outline strategies for dealing with these issues on a small business budget.

Top 4 Challenges, and How to Deal

According to Benefits Selling survey, the top employee benefits challenges in 2015 were:

1. Increasing costs of benefits

According to the survey:

  • 1 in 3 employers (35 percent) said health care/benefit costs have increased significantly since last year, while 40 percent said costs have increased some, and 22 percent said they have stayed about the same.

  • Nearly 2 in 3 employers (63 percent) said they expect to ask employees to pay more for their own benefits.

Strategies to Address this Challenge:

My advice to small employers dealing with increasing costs is always this:

Shift your company’s contribution strategy to a defined contribution (instead of a defined benefit). In other words, allow employees to select their benefits with employer-provided (often tax-free) dollars. From health care to retirement - and everything in between - this approach can offer rich employee benefits while saving employers and employees time and money.

Read more about consumerized benefits here.

2. Changes in benefits offerings

According to the survey, employers continue to reduce employee benefits costs by implementing consumer-driven plans or self-insuring, as well as launching health savings accounts, enhancing wellness programs, and increasing voluntary benefit offerings.

  • Nearly half (49 percent) of the survey's respondents said they offered Health Savings Accounts (HSAs), and half (50 percent) offered flexible working benefits.

  • Employees say the most important employee benefit is still health insurance (76 percent), followed far behind by consumer-driven health care (10 percent).

Strategies to Address this Challenge:

There are many approaches to deal with benefit changes and reductions. Ultimately, employee education is key. Communicate with employees why and how the company has decided to offer benefits, reinforcing employees’ value to the company. (Stumped? Read this article - it will help.)

3. Working with brokers

According to the survey, employers are still largely using brokers or agents - though employers are feeling the pressure of PPACA.

  • 65 percent of employers say the PPACA has made them rethink employee benefits offerings.

  • 21 percent of employers have considered moving employees to the public exchanges.

  • 63 percent of employers have consulted with their broker about the exchanges.

Strategies to Address this Challenge:

Brokers and agents can be one of your best resources for information on PPACA and on benefits - use them for information and options. That being said, if your broker or agent is not providing you the information you need, continue to research until you find the information and solutions you need.

Related - The Top 5 Types of Employee Benefits

4. Dealing with PPACA

Lastly, the employer survey highlights employers continue to struggle with how PPACA (aka Obamacare or health care reform) impacts their business and employee benefits.

Strategies to Address this Challenge:

For smaller employers (those with fewer than 50 full time equivalent employees), it may be a helpful reminder that many of the health insurance and reporting requirements do not apply.

My advice is this - work with a broker or health benefits advisor to fully understand your company’s health insurance requirements - and opportunities - under PPACA.

Conclusion

As costs increase, benefits change, and employers feel pressure from new health reform regulations, there are strategies available to deal with these challenges. For example, employers can shift to consumerized employee benefits to deal with cost increases and can minimize the impact of change by clearly communicating with employees and brokers about benefit changes.

What do you think about these employee benefit challenges and strategies? What questions do you have? We’d love to hear from you! Leave a comment below. 

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