Even as the national legislative spotlight shines on employee benefits, small businesses should take time to consider how they might improve their approaches to the benefits challenge.
As legislation mandating that small businesses provide benefits for their employees - and exempting many other small businesses from it, as well - continues to make its way through the political process, Ashok Subramanian suggests that whether employers are currently providing benefits to their employees or soon will be, owners can take steps to significantly improve what is largely considered an expensive and difficult process for all involved.
Subramanian is co-founder and president of Liazon, a consumer-centric employee-benefits company.
"While the outcome of proposed legislation mandating that small businesses provide employee benefits remains unknown [as of this posting], it’s clear the government would like employers to remain in the ‘benefits business.’ This means small businesses will likely be providing employees with benefits, as most business are now doing, for the foreseeable future," Ashok says.
"The hurdle, then, is providing employees with benefits options that are both affordable and consistent with their needs, without breaking the proverbial bank," he says. "This is absolutely doable. Small-business owners need to do is include three critical elements in their benefits plan, all of which are available," he says.
Ashok maintains that the following three elements constutute all that’s required for small businesses to provide employee benefits – whether mandated or not – without compromising employee needs or facing insolvency:
Adopt a Defined Contribution Model
What has worked for retirement benefits works just as well for healthcare benefits. The switch from a defined-benefit model to a defined-contribution model has enabled employers to decrease their retirement-benefits spending and better manage their budgets for the same. Adopting a defined contribution approach to all benefits, including healthcare benefits, allows small-business owners to spend what they can afford – rather than drop benefits altogether or go bankrupt trying to keep pace with double-digit increases in healthcare spending. Defined contribution lets employers escape the budget-crushing consequences of ever-increasing healthcare costs and better budget their employee benefits costs over time.
Take a Consumer-Driven Approach
It’s an accepted business maxim that competition and choice drive down costs. This truth holds for healthcare benefits - as the consumer-driven healthcare movement has demonstrated - and the government is now beginning to consider it as a means of slashing ever-higher-spiraling healthcare costs. A consumer-driven model is one in which the end users – employees – are self-selecting the benefits that best meet their individual needs; not using what their employer has chosen for them. The hurdle is selection. For choice to be effective, employees need (a) real options, including low premium, high-deductible health plans coupled with a health-savings account (HSA), (b) education to help them understand their benefits and how to use them, and (c) tools that enable them to effectively use and manage their benefits.
Provide Real Consumer Advocacy
Making present-time decisions about future risks is a complex and difficult task. At present, benefits consumers have few, if any, good options for obtaining knowledgeable, bias-free information. Without qualified, decision-making support, new benefits consumers are much like deer caught in headlights: paralyzed from making a move. It’s important to bear in mind that how employees use their benefits drives the cost of benefits companywide. Altering traditional behavior requires a high level of engagement and informed support.