Employee Benefits

Why Businesses Should Keep Insurance Benefits

HC reform

Business leaders and the news media have invested considerable time discussing health care reform and employee insurance benefits. Some speculate that once health care reform is fully integrated in 2014, most employers will drop employee insurance benefits and pay the fines the federal government will impose for not offering coverage, because the penalty will be less costly.

Here’s something new to consider: It may be smarter for employers not to drop health care insurance. An article published on twincities.com in July 2012 explores the costs associated with offering insurance benefits and the value of being considered an “employer of choice,” as compared to the savings of cutting benefits and expecting employees to pay more for health care plans.

For example, if an employer typically pays 80 percent of a $15,000 annual premium for family insurance coverage per employee, it may seem cheaper to drop insurance benefits and save the $12,000 per employee premium cost, and pay the government penalty. Another option employers may consider is to continue to fund employee insurance benefits at the same rate, but significantly increase costs for dependent coverage.

The article points out that with either scenario, employees quickly will realize that this reduces their salary. As a result, employee performance may drop and dissatisfaction levels increase.  And employers may face higher levels of turnover as employees switch to other businesses that provide better benefits. So businesses also need to consider the cost of training new employees and how high turnover impacts their customers’ service experience.

Read the article and share your thoughts.

Insurance premiums continue to increase. Should employers fund a significant portion of the cost for employees only, or should they continue to assist with the costs of family plans? What is the value of being considered an employer of choice?

 

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