Many HR managers and business leaders have been thinking about benefit plans. Employees’ needs seem to be changing, even as costs continue to rise. How can you ensure your group benefits fit your budget while satisfying your team members?
One of the easiest answers is to move the focus to individual value within employee benefits plans. Why is individual value so important? When the modern benefit plans focus on it, individual value can help you achieve both higher employee use and better budgetary fit. Here’s how.
Your Workforce Is More Diverse Than Ever
One of the reasons behind the demand for different benefits is a changing workforce. Your team likely looks a lot different than it did even five years ago.
You might have a mix of people of different ages. Some of your team members may be nearing retirement, while others are just embarking on their career journeys. Clearly, these people are at very different points in their lives, and they have different needs.
The same is true of gender diversity and even employee backgrounds. One employee may put great emphasis on family. Another wants to retire early, and yet another wants benefits that can help them satisfy their wanderlust.
If your employee benefits don’t focus on providing individual value, at least some of your team will be disappointed by what you offer. That leads to lower engagement with your benefits plan. Some team members won’t make use of all available employee benefits. That, in turn, means you’re paying more for the benefits people do use. You can also see it as budgetary waste—much the same way that buying a printer no one ever uses is waste.
How Group Benefits Plans Can Focus on the Individual
Now that you see why individual value plays such an important role for both your employees and your budget, you’re wondering how you can get there.
Most traditional group benefits plans offer what are known as defined benefits. This means your employees are given so many dollars per benefit use. An example would be an employee who has $250 to spend on vision care every other year. Another is a defined massage therapy benefit of $700 per year, which gives employees a limit to spend on RMT annually.
Some employees will be happy with this. Other employees may not be satisfied. An employee who visits the optometrist biannually and pays $100 for their checkup, but doesn’t need glasses, will never use their full $250 benefit.
Now suppose that employee gets an hour-long massage once a month, for around $100. Their $700 defined benefit will cover more than half of their yearly appointments, but it still means the employee pays $600 out of pocket for RMT.
Wouldn’t it be better if this employee could apply the $250 for vision care to their RMT sessions instead? Better yet, what if they could use their benefits dollars to cover the whole of that $1,200 annual bill?
With a flexible benefits plan, they can. A solution like a lifestyle spending account lets your employees spend their benefits dollars as they see fit. You contribute a maximum dollar amount per year, which your team members spend their way.
That gives each employee the full dollar value of their benefits plan, to cover what they need. It also means they can easily shift their spending to align with their current needs.
Employees Love Flexible Benefits
Group benefits plans that focus on individual value deliver more for every member of your team. These plans also engage your employees. Team members are much more likely to use their employee benefits, which means you’re not just throwing money away.
In turn, you can better control costs. Your benefits will meet everyone’s needs as well as your budget. It really is the best of both worlds.
If you haven’t modernized your group benefits plan yet, it’s time to take the first steps. Discover what a more flexible plan can do for your business—and your team.