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A Guide to
LOVABLE EMPLOYEE HEALTH BENEFITSCreate Affordable Health Benefits Employees Will Love
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
2
The #1 Online Small Business Health Benefits Solution
Successfully transition to a health benefits solution that creates happier employees, reduces costs, and frees up time for meaningful work. Request a Demo.
Health Benefit Solutions Since 1993 Matthews N.C. A Zane Benefits Consultant for the CarolinasBill Peterson/Owner Local: 704-847-3314 Toll Free: 1-888-881-9272E-Mail Me: billpeterson36@gmail.com Website: www.lowestcosthealthplans.com DISCLAIMER
The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.zanebenefits.com.
HappierEmployees
With Zane’s solution, employees choose t
he health plan that best fits their families' needs. Learn more.
Controllable CostsEmployers fix the
ir costs by utilizing a defined contribut
ion approach.Learn more.
More Time forMeaningful WorkOnce implemented,
Zane’s solution takes less than 5 minutes per month to admin
ister online.Learn more.
Easy TransitionZane Benefits’ impl
ementation team will ensure a smooth and fast transition for you and your employees.
Learn more.
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
3
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITSCreate affordable health benefits employees will love
Introduction
For businesses to thrive in today’s economy, finding and retaining the best employees is top priority.
This is especially true for small businesses competing with larger businesses, and larger budgets,
for top talent. Additionally, the landscape of employee health insurance is rapidly changing.
Businesses need new ways to offer the same (or better) health benefits at a controllable cost.
Happy Employees Help Your Business Thrive
Frequent voluntary turnover has a negative impact on employee morale, productivity, and
company performance. Recruiting and training a new employee requires staff time and money.
Every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average.
For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training
expenses.
On the flip-side, retaining employees who are committed, loyal, and embody the business’s
mission are what gives your business its competitive edge.
While some turnover is inevitable, a strategic employee recruiting and retention strategy mitigates
the turnover and associated costs for a small business. Employee health benefits are a key part of
the compensation offered to employees, and therefore vital to employee recruitment and retention
programs.
The New Way of Offering Health Insurance
Businesses are transitioning to defined contribution health benefits because it offers predictable
costs to the business, while providing employees access to quality health insurance.
Defined contribution health benefits reduce the cost and time associated with traditional
health insurance, while maintaining all of the benefits employees love.
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
4
About this Guide
Offering health benefits through a defined
contribution approach allows your business to provide
health benefits that employees love, while staying within
your business’s health insurance budget.
Small and medium-sized businesses are transitioning
to defined contribution health benefits because of:
1) Controllable costs / pg. 5
2) Happier employees / pg. 7
3) Painless administration / pg. 9
This guide provides an overview of these three benefits.
Contact: Health Benefit Solutions Since 1993 Matthews N.C. 28105 A Zane Benefits ConsultantBill Peterson/Owner Local: 704-847-3314 Toll Free: 1-888-881-9272 Fax: 1-888-881-9884E-Mail Me: billpeterson36@gmail.com Website: www.lowestcosthealthplans.com
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
5
1) Controllable Costs
Being able to set, control, and predict all health benefits costs is revolutionary for many businesses.
Defined contribution health plans give your
business controllable costs by offering the following
features:
Define your budget by setting any
contribution amount to employees’ health care.
Give employees tax-free monthly health
care allowances (via an IRS-approved Medica
l Reimbursement Plan).
Employees purchase individual health insurance
policies (or incur an eligible medical expenses) and
submit expenses for reimbursement. The
business reimburses employees on payroll tax-
free.
The business only reimburses employees for
eligible premiums and expenses, up to the amount
of their health care allowance.
At the end of the year, the business decides what
happens to employees’ unused allowances (i.e.
do they carry-over to the next year).
Without annual renewal increases or minimum
contribution amounts, the business is free to control all
benefit costs.
Compared to Group Health Insurance
…Average Employer Cost For One Year of Group Health
Insurance*
Single Employee:$5,615
Up 255% since 1999
Family:$15,745
Up 272% since 1999
*Source: Kaiser Family Foundation, 2012
In the past, group health insurance was the best way to provide quality health insurance to employees.Today, group health insurance is a source of frustration to declining benefits and increased costs.
Businesses need the same quality of coverage, but with controllable cost and sustainable administrative effort.
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
6
How Defined Contribution Health Benefits Work
It’s a simple and effective approach,
But a significant change in how companies offer health insurance…
Set any amount to contribute to employee's health care
Give employees tax-free health
care allowances via
an HRA
Reimburse employees on
payroll for approved premiums
and expenses
Business liability is controllable & Employees shop for policies that BEST meet their
needs
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
7
“61% of employees report that being able to customize benefitswould increase their
loyalty.”
~ MetLife 2013 Study of Employee Benefit Trends benefittrends.metlife.com
2) Happier Employees
In order for a health benefits program to work, it has
to meet the business’s budget and provide value to
employees. The following aspects of defined
contribution health benefits contribute to happier
employees.
Access to the Best Health Care
Because employees choose how to spend their health
care allowance, including which individual health insurance policy to purchase, they can pick
the health coverage that best meets their needs.
Employees say they no longer want a one-size fits all healthinsurance plan. Rather, they want the options to
customize their health benefits.
With defined contribution plans, employees select:
Any type of plan, from any insurance carrier.
The network of providers and doctors they want to see.Coverage to fit their health needs (maternity coverage,
prescription, HSA-plan, etc.).
The level of deductible, co-pays, co-insurance, etc.
Tip: Because some employees may not be comfortable selecting an individual health insurance
policy on their own, you may want to designate an insurance professional to help employees select
individual policies. This also shows employees you care about them and want to improve their health
benefits.
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
8
Coverage for All Employees
Starting October 1, 2013 all employees (regardless of health conditions) will be able to purchase
an individual health insurance plan (effective January 1st, 2014) that is equal or better for them
than existing group health insurance options.
Access to Health Insurance Subsidies
Starting in October 2013, employees can use their health care allowance to purchase policies from
the new health insurance marketplaces. This gives them access to federal health insurance tax
subsidies (starting in 2014) to lower the cost of their premium. Eligibility for the tax subsidies is
based on income and household size. Households with income up to 400% above the federal
poverty line (FPL) will be eligible (up to $45,960 for an individual in 2013, or $94,200 for a family of
four in 2013).
Tip: Employees will only be eligible for the tax subsidies if the business chooses not offer
group health insurance. Read more on the individual health insurance subsidies here.
Predictable Costs for Employees
Employees have a clear budget to spend on health insurance. Individual plans are, on average,
30% cheaper than the same group coverage. And if an employee doesn’t spend their full allowance
on health insurance, they could use it on co-pays, prescriptions, etc. (as the employer’s plan
allows).
Easy to Use
Lastly, employees value health benefits that are easy to
understand, and easy to use. Similar to the transition
from pensions to 401(k) retirement plans, the defined
contribution health benefits approach requires
employees to take more control of their health benefits.
Defined contribution administration software provides
employees easy access through an online portal where
they can see benefit information and submit requests
for reimbursement (“claims”).
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
9
3) Painless Administration
Every small business owner or HR manager wants to spend
more time on strategic issues, and less time renewing
health insurance plans.
With defined contribution health benefits,
administration becomes a payroll function. Once set
up, it takes 5-10 minutes a month.
Once the plan is set up, the business’s
administrative activities include:
Adding approved reimbursements to payroll.
Enrolling new employees online.
Terminating employees from the plan when they leave the company.
Providing education to employees about the benefit.
Connecting employees with an insurance agent for insurance questions.
Tip: Defined contribution health benefits software is key
to managing these administrative aspects in a painless,
compliant, and efficient way.
* Source: Talent Management Magazine, “Make HR Happy.” http://talentmgt.com/articles/view/make_hr_happy. July 12, 2013.
Most HR Managers spend less than 10% of their time at the strategic level.
Rather, 50-65% is spent processing HR transactions.
Heavy transactional
workloads make recruiting and retaining top
managerial talent increasingly
difficult.*
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
10
Next Steps
For a business transitioning to defined contribution health benefits, or for a business using
defined contribution to offer health benefits for the first time, here are the next steps:
Set a date to cancel your group health insurance plan (if you have one).
Define any amount you can afford for health benefits.
Use a Defined Contribution Software provider to:
o give each employee a fixed dollar amount to use on premiums and/or
medical expenses,
o develop a customized transition and on-boarding plan, and
o educate employees on their new plan.
Select any insurance professional to give employees a resource in selecting the best plan.
Conclusion
We hope this guide has given your business the foundation for creating health benefits
that employees love.
Because of the unsustainable costs of group health insurance, and the new individual health
insurance opportunities with health care reform, educated businesses are transitioning to
defined contribution health benefits to give employees access to equal or better health
insurance, at a controllable cost, with less administrative time.
The Result?Employees Love Their Health Benefits Again!
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
11
ADDITIONAL HEALTH BENEFITS RESOURCES
View our full library of health benefits tools, on-demand webinars, and eBooks at: www.zanebenefits.com/health-benefits-resources
A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS
12
The #1 Online Small Business Health Benefits Solution
Successfully transition to a health benefits solution that creates happier employees, reduces costs, and frees up time for meaningful work. Request a Demo.
DISCLAIMERThe information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.zanebenefits.com.
Contact: Health Benefit Solutions Since 1993 Matthews N.C. 28105 A Zane Benefits ConsultantBill Peterson/Owner Local: 704-847-3314 Toll Free: 1-888-881-9272 Fax: 1-888-881-9884E-Mail Me: billpeterson36@gmail.com Website: www.lowestcosthealthplans.com
HappierEmployees
With Zane’s solution, employees choose t
he health plan that best fits their families' needs. Learn more.
Controllable CostsEmployers fix the
ir costs by utilizing a defined contribut
ion approach.Learn more.
More Time forMeaningful WorkOnce implemented,
Zane’s solution takes less than 5 minutes per month to admin
ister online.Learn more.
Easy TransitionZane Benefits’ impl
ementation team will ensure a smooth and fast transition for you and your employees.
Learn more.
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