The Evolving Landscape of Group Benefits - Sutton Benefits & Pension

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The Evolving Landscape of Group Benefits

We recently interviewed Andrea Hansen to learn how employers are structuring their companies’ group benefits programs as part of their broader talent management strategies.

What Is The Biggest Trend Facing Employers?

Employers have to do more with less. When Saskatchewan’s economy was in a boom period, companies desperately needed talent and budgets increased for group benefits and retirement savings programs. It’s a significant cost. Businesses pay roughly 14% of their payroll expense on benefits.[i]

How Do Employees See The Situation?

Employee expectations are rising. People don’t just want to know they have a plan, they want to know it will be one they can use. I don’t think employers realize how dissatisfied many employees are with their current plans. A recent study in our industry showed that only 11% of employees feel the current level of coverage in their health plan is adequate.[ii] That study referred to all five major areas of benefits: prescription drugs, basic dental services, major dental services, vision care, and paramedical services.

Does This Mean Employer Costs For Group Benefits Programs Will Increase?

Not at all. It’s just not sustainable for employers to just keep increasing the coverage available to employees. Very rarely when I start working with a client will the business need to spend more money. Usually they need to reallocate their budget. Sometimes the plan was designed when programs worked differently than they do today. Overall, employers are looking for more value.

What Sort Of Changes Are Companies Making To Their Group Benefits Plans?

The design of the plan may not be hitting the mark and is simply not relevant to employees. Maybe the plan has not adopted the innovative structures that have emerged in the past few years and employees are frustrated. I still come across many traditional structures. For example, dental plans used to have a $50 family deductible because at one point it affected the premium and was a cost containment feature. That’s not as common today because it really doesn’t save much and just annoys the employee.

There is also a desire for more flexibility in benefits programs and voluntary options. It’s possible to have four different generations in a workplace and you’re not going to find one cookie-cutter plan that meets the needs of everyone. More employers are now incorporating a health spending account where employees choose where to spend a portion of their allocated funds, but it’s still a lower percentage that have adopted Health Spending Accounts and it’s a simple strategy to add the flexibility employees want.

What Areas Of Health Are Employers Focusing On?

If an employer sees that short-term disability or health and prescription drug rates are going up by 25% or 30%, there is only so much cost containment you can do in a plan design until you have to go back and look at the root causes and how to prevent or minimize the high claims that are driving the rate increases. Smart employers are putting programs in place to improve general wellness and also mental health in the workplace.

For example, we have employers that know some of their staff have lifestyle risk factors such as obesity, smoking, and alcohol abuse. This is a real cost to the business because it contributes to absenteeism and can increase prescription drug and disability costs. What can we do with our total rewards program to invest in education and wellness? Some of our clients have brought in a dietician to provide information on how food choices affect how people function throughout the day. It’s surprising how people respond to this. It’s more than just information for employees. People take this knowledge as information for their kids and other family members too.

Can You Provide An Example Of Innovation You’ve Seen?

We have clients engaging in a program on financial education. At Sutton, we partnered with READ Saskatoon to take to workplaces a course called Strength in

Numbers – Growing a Strong Foundation of Employee Wellness. When employees live beyond their means they are under a great deal of stress and are likely not taking care of their health. This can lead to lifestyle problems, which show up in the workplace in terms of reduced productivity, presenteeism, and poor performance. The Strength in Numbers workshops help put the fundamentals in place, such as knowledge of banking, savings, credit, and budgeting.

There are many good reasons to help your employees in this way. Really, it comes down to helping employees take care of their health for a better quality of life, which then leads to improved employee performance and also reduced healthcare costs.

What Is The Impact On Recruitment And Retention?

If you do everything I’ve talked about and design a flexible group benefits program that is meaningful to employees, you will simply be meeting basic expectations. To have a meaningful impact on recruitment and retention, your program must directly align with your workplace culture. Take a strategic view and identify all costs you incur related to engagement, health, and wellness of employees. Are you spending that budget wisely?

Employers try to create a sense of belonging and contribution. I find that businesses don’t look at this as a whole often enough. They do things like organize social events, buy their staff t-shirts, and set up a benefits program but none of these decisions are coordinated.

Here’s an example people can understand. If you pride yourself on a family-friendly corporate culture, do you invite children to your Christmas party? Are you offering flexible working hours when parents need them? Do your benefits include orthodontic coverage for children? I’m not trying to say these are necessarily the right policies for your specific company. The point is that as an employer, with guidance from your advisor you should first define how your group benefits program will support your mission and values. Then design the program around that knowledge and in a way that is transparent and also valued by employees.

Any Final Words Of Advice For Employers?

Explain the cost of group benefits and total rewards to your employees, involve them and seek input in any changes. Otherwise they focus on just their salary. They can easily forget about free parking, social events, and the company’s group retirement savings plan. Employers need to optimize that investment, it’s like mortar that holds your company’s value proposition together for your team. Bottom line, it helps you attract and retain the talent you need to drive your company forward.

First published in the May 2018 edition of The Business Advisor.