Effectively managing an employee benefit is much more than managing and filing the massive amounts of paperwork that can be associated with them. I am not saying that the paperwork does not need to be managed, it does because many of the benefit programs that are offered have time sensitive dates in which the paperwork must be completed to meet specific eligibility guidelines. My tips on managing an employee benefits program are: determine what types benefits should be offered, Define the funding model and budget the cost of such benefits, determine the pricing mix or cost sharing percent to employees, identify and contract with benefit program companies, educate the employees about the benefit programs, then reassess the success of the benefit programs offered, and then last but not least ensure, that there are sufficient administrative procedures in place to handle the paperwork that these benefit programs generate.
There are many benefits that could be offered to your employees, the key is determining which ones are most important or most beneficial to the majority of your employees. Benefit programs are generally broken down into seven main categories, Health benefits (Medical & Dental), Welfare (Life & disability insurance), mandated benefits (Unemployment, worker's comp, social security), retirement (pensions / 401ks, 403bs), Paid Time Off (vacation, sick leave, maternity), Supplemental benefits (Flexible spending accounts, Pet insurance, accident insurance, Long-term care insurance), and employee discounts (company product discount, outside company discounts). With this many choices that could be offered to your employees, it may be wise to conduct an employee survey to identify the benefits that your workforce cares about and wants the most. Once you have defined the benefits offering you must define your benefits funding model and budget the cost of the selected benefits.
The two funding models that you need to consider are a Self-Insured or a Fully Insured plan. These types of models generally only apply to you health benefits. A self insured health plan is one where the employees pay their premiums to the company, and when they use their insurance, the claims are paid by the company. A fully insured plan is where the employee pays the premiums to the insurance company and the insurance company pays the claim when the employee uses their insurance. There are many pros and cons to each funding approach that will not be discussed here. Another factor that needs to be decided with whether these will be pre-tax or post-tax deductions. Pre-tax deductions saves both the company and the employees tax dollars, however they have restrictions as to how frequent changes to the plan can occur, (generally only once a year.) After-tax deductions are more advantageous to employees for wellness programs because the IRS taxes the benefits paid out for premiums that are deducted pre-tax, but not the benefits paid out where the premiums were taxed. Once the funding model is selected and budget the budget is determined, a pricing mix and cost sharing percents should be determined.
The pricing and premium cost sharing that needs to be determined is based upon the company's budget and strategies. The there are different cost sharing strategies that can be utilized, from 100% employer paid premiums to 100% employee paid premiums. There can be a huge amount of variations to these pricing models that can be utilized, but I would suggest it would be beneficial to identify cost sharing mixes that are competitive in the market for your industry. These market mixes can be readily determined by using benefits surveys. The next step is identifying benefit companies that can provide the benefits that you want to offer.
The most efficient way to identify and select the companies to provide the benefits that you have decided to offer is to conduct Requests For Proposals (RFPs) for each of the type of benefits that you plan to offer. Through the RFP process you will identify the companies that can best provide the benefit that fits within your pre-defined budget. One thing that I would highly recommend, is writing performance guarantees into the contract with your vendors. These performance guarantees are designed to ensure that certain quality standards are met, as far as customer service, claims payments, etc, and if they are not met, the benefits vendor refunds a portion of their administrative fees. In order for all of the steps discussed up to this point without educating the employees about the benefit programs.
Many companies call this step employee communication instead of employee education. I prefer to call it education because that implies the transference of knowledge whereas communication implies the transference of information. Transferring information doesn't mean that the employees know how to use the benefits programs, however educating employees about the benefit programs ensures that not only do they have the information about the programs, but also know how to use them. There should little differentiation on educating new and existing employees, because since the messages that you are communicating are the same for both groups and it is not wise to assume that an employee knows all about the benefits programs just because they have been with the company for a long time. Once the benefits are in place, and the employees are fully educated, reassessing the benefits annually is crucial.
The reassessment of your benefit programs on an annual basis not only helps you control costs, it also helps ensure that you are still getting the best deal from your benefit vendors by holding them accountable to the performance guarantees in their contracts. During the reassessment, you need ask, did your benefit programs meet their objectives? Are the costs still affordable? Are these still the benefits that we want to offer? Are the benefit programs being fully utilized by the employees? If not why? Lastly you need to implement administrative procedures to ensure all the benefits paperwork is processed in a timely and efficient manner.
As previously discussed, benefit programs generate a large amount of paperwork that primarily consists of enrollment forms beneficiary forms, that are time sensitive especially if your plans are on a pre-tax basis. In order to process these forms both timely and efficiently, you need to have strong administrative procedures in place. This step is crucial because if an employee's paperwork get's "lost in the shuffle", they will not get the benefits as they intended. Then it is highly probable that both you and the employee will be surprised that they "have no benefits" when they go to the doctor or the hospital. Loss of Life insurance enrollment could have even more dire consequences. One process that every benefit program needs to have is an appeals process. This process can be for enrollment, claims or any other benefit plan rule that an employee may question. Fortunately you don't necessarily have to manage these benefits all on your own, for a little money there are many companies that are more than willing to lend a hand, from third party administrators, benefit brokers, benefit outsourcing companies, and benefit consultants.
As you can see, effectively managing employee benefit programs can be a highly complex job, but is essential to ensure that your company and its employees achieve the greatest benefit from their benefit programs.