By: Jennifer Schaefer, MBA, ChFC, CLU, RHU, REBC, SHRM-SCP
Founder & CEO, JS Benefits Group | Forbes Business Council Contributor | Co-Host, Executive Leaders Radio
When employees are doing well, benefits can sometimes fade into the background. They enroll in their health plan, collect their insurance cards and move on with their work. But when life gets difficult, benefits suddenly become much more important.
A serious illness, a growing family, an aging parent, financial pressure or uncertainty about the future can change the way an employee looks at their employer. This is where employee benefits strategy becomes part of a much larger conversation about the employee experience.
I’ve worked with employers for many years, and one thing I have learned is that employees don’t experience benefits as a line item on a company’s budget. They experience them when they need them.
Benefits Become More Important When Life Gets Complicated
It’s easy to talk about employee benefits when everything is going smoothly.
The real test is what happens when an employee needs them.
Someone may have a child who needs ongoing medical care. Another employee may suddenly find themselves responsible for an aging parent. Someone else may be dealing with an unexpected diagnosis or a prescription that costs far more than they anticipated.
Those employees aren’t thinking about the employer’s benefits budget.
They’re thinking about whether their health plan will help them get through a difficult period.
That is why employers should think carefully about the actual employee experience behind their benefits package.
A plan may look competitive on paper, but employees need to be able to understand it, afford it and use it when they need it.
The Employee Experience Matters
Employers spend a significant amount of money on benefits, but employees don’t always understand the full value of what their company provides.
What they usually notice are the things that affect them directly.
How much comes out of their paycheck?
What is their deductible?
How much will they pay for a prescription?
Can they see the doctor they want?
Is their family covered?
What happens if they have a major medical issue?
These questions can shape how employees feel about their benefits and, in turn, how they feel about their employer.
That doesn’t mean benefits are the only factor in retention. They aren’t.
Leadership, compensation, workplace culture, career opportunities and flexibility all matter.
But benefits can become particularly important when an employee is under financial or personal pressure.
Employers Shouldn’t Wait Until Open Enrollment to Communicate
One of the biggest mistakes employers can make is treating benefits communication as an annual event.
Open enrollment is important, but it shouldn’t be the only time employees hear about their benefits.
People don’t necessarily remember everything they were told six or twelve months earlier.
And when they suddenly need a benefit, they may not know where to turn.
Employers can make the benefits experience much easier by communicating throughout the year.
That might mean reminders about preventive care, explanations of how to use telehealth, education about HSAs and FSAs, information about prescription savings or simply making sure employees know who they can contact when they have a question.
Sometimes the most valuable benefit is having someone available to help an employee understand what they already have.
Cost Matters to Employees
Healthcare costs have become a major concern for employers, but they are also a very personal issue for employees.
An employer may be focused on controlling the company’s total healthcare spend. Employees may be focused on whether they can afford to take their child to the doctor or fill a prescription.
Those perspectives aren’t necessarily in conflict.
In fact, a thoughtful benefits strategy should consider both.
Employers need to manage costs in a way that keeps the benefits program sustainable. At the same time, they need to understand how changes to deductibles, copayments, employee contributions and provider networks affect the people using the plan.
Simply shifting more costs to employees isn’t always the best long-term solution.
Sometimes the better opportunity is to look at what is actually driving the cost of the plan.
Look at Where the Healthcare Dollars Are Going
Before making employees absorb more of the cost, employers should understand where their healthcare dollars are going.
Is pharmacy spending increasing?
Are there high-cost claims that need better management?
Is the plan design still appropriate?
Are employees using the healthcare system efficiently?
Are there opportunities to improve provider access or steer employees toward higher-value care?
These questions can reveal opportunities that aren’t obvious from the renewal percentage alone.
Healthcare cost management isn’t just about cutting expenses.
It’s about understanding the expense.
When employers have better information, they can make decisions that are more thoughtful and potentially more sustainable.
Alternative Funding May Be Worth Exploring
For some employers, controlling healthcare costs may also mean looking beyond traditional fully insured health plans.
Alternative funding arrangements can give certain employers additional ways to approach their healthcare spending and, depending on the structure, gain greater insight into their claims experience.
That doesn’t mean every employer should move away from a fully insured plan.
The right approach depends on the organization, its workforce, financial position and tolerance for risk.
But employers shouldn’t assume the current arrangement is the only option.
The annual renewal can be a good time to ask whether the way the company is funding healthcare still makes sense.
Benefits Can Help Employees Feel Supported
There is also a human side to benefits that is easy to overlook.
Employees want to know that their employer sees them as people, not simply as positions on an organizational chart.
A company can’t solve every personal problem an employee may face.
But it can provide benefits and resources that help employees navigate some of life’s difficult moments.
That might include health insurance, mental health resources, employee assistance programs, wellness programs, disability coverage, flexible work arrangements or other forms of support.
The specific benefits will vary by organization.
What matters is whether the overall package reflects an understanding of the workforce.
A One-Size-Fits-All Benefits Package Doesn’t Work
Every workforce is different.
A company with mostly young, single employees may have different needs from a company with hundreds of employees supporting families.
A professional services organization may have different priorities than a manufacturing company.
A company competing for highly specialized talent may need a different benefits strategy than an employer competing primarily on wages and location.
Employers should understand their own workforce before deciding what benefits to add, remove or change.
That starts with listening.
Employee surveys can help. Conversations with HR can help. Benefits utilization data can help. Claims information can help.
The goal isn’t to offer every benefit available.
The goal is to offer benefits that employees actually value.
The Cost of Losing Good Employees Is Real
Retention isn’t just an HR issue.
When a good employee leaves, the company loses more than a person.
It loses institutional knowledge. It may lose relationships with customers. Other employees have to absorb additional work. Recruiting begins again. Training begins again.
There can be a significant cost associated with replacing someone who already understood the business.
That is why employers should look at the entire employee experience when thinking about retention.
Benefits won’t keep everyone.
But a benefits package that employees understand and value can be one more reason for someone to stay.
And when an employee is going through a difficult period in their personal life, that support may matter even more.
Benefits Should Be Evaluated as a Business Investment
Employers don’t need to spend the most money on benefits to have a strong benefits program.
In many cases, the question is whether the money being spent is producing the right value.
That requires looking at more than premiums.
Employers should consider employee satisfaction, utilization, healthcare costs, plan design, communication and the company’s broader workforce objectives.
This is where healthcare cost management becomes part of a larger business conversation rather than simply an exercise in reducing the insurance bill.
The objective is to build a benefits program that is financially sustainable for the employer and meaningful to the people who depend on it. Employers can evaluate their current program, claims experience, plan design and employee needs together rather than making decisions one piece at a time.
When Employees Need Their Benefits, That’s ssWhen They Matter Most
The true value of employee benefits isn’t always obvious when an employee is healthy, financially comfortable and having a good year.
It becomes much clearer when life gets difficult.
That’s when employees find out whether their healthcare coverage is affordable. Whether they understand how to use it. Whether someone can help them navigate a difficult situation. Whether their employer has thought about what employees and their families actually need.
Those experiences stay with people.
An employer may never know exactly which benefit convinced an employee to stay. But employees remember how their company treated them when they needed support.
That is why benefits deserve to be considered as more than a cost of employment.
They are part of the relationship between an employer and its people.
And when employees are under pressure, that relationship can matter more than ever.
About the Author
Jennifer Schaefer, MBA, ChFC, CLU, RHU, REBC, SHRM-SCP is the Founder and CEO of JS Benefits Group, an employee benefits consulting firm that helps employers develop competitive benefits programs, manage healthcare costs and make informed decisions about their workforce.
Jennifer works with employers on employee benefits strategy, health plan design, healthcare cost management, cost containment, employee retention, benefits technology and compliance. She is a Forbes Business Council Contributor and Co-Host of Executive Leaders Radio, where she discusses employee benefits, leadership, workplace trends and the future of work.
