How to Pick an Effective Group Insurance Plan

For startups and small businesses with fewer than 10 employees, offering group benefits is a double-edged sword.

​As a business owner or leader, you want to ensure you’re taking care of your company’s most prized assets: your employees. That typically involves offering a well-rounded group benefits plan.
 
On one hand, you need to offer your employees health and life insurance benefits to retain and attract top talent to your company and protect your revenues. On the other hand, they can be expensive to offer and administer, and sometimes, the costs associated with them can be incredibly tough to control.

Financially Unprepared Employees Are a Threat to Your Business

Absenteeism, physical illness and stress among employees have a detrimental impact on your company’s productivity and profitability. Stress is the leading cause of mental health concerns in workplaces, and there are many causes of stress, including being financially unprepared.
 
Ergo, it’s wise to consider including employees’ financial health as part of or as a complement to a group insurance plan. Herein lies the value of providing your staff with access to a certified financial advisor and planner.

Balancing Plan Benefits and Costs

The group benefits package you select for your organization needs to be effective now and well into the future. Determining what the cost may be depends on many factors, including:

• The average age of your employees. The lower the average age of your employees, the better premium you will receive. 
• Employees’ dependents. If your employees are married and have children, the cost of insuring their families will have an additional cost. 
• The nature of your business. Is your company an office-based environment? Or is it a manufacturer? Both scenarios present health risks to employees.

Picking a Forward-Looking Plan

​While it’s true the economies of scale theory will apply when negotiating with insurance firms for the lowest possible cost you can secure, for entrepreneurs, startups, and small business owners, it may be more beneficial to establish a Health Spending Account (HSA) as opposed to a traditional group insurance plan.
 
HSAs provide better flexibility for each employee to be reimbursed for eligible expenses. HSAs are effective at controlling costs without stripping away benefits from employees’ plans because they are like spending accounts: if the employee doesn’t use the benefits, the HSA account grows over time.
 
For midsized to large companies, the irony is the larger the group, the better the benefits are. That’s particularly true for the life insurance component because of what’s known as “rate banding”. In other words, it’s similar to buying a product in bulk. The more you buy, the lower the cost.

Managing a Multi-Generational Workforce

Many workplaces have employees ranging in age from their late teens to their late 60s or older. From a group benefits and cost-benefit point of view, it’s advantageous for employers to count younger people among their employees.
 
Appealing to millennials – people born between the mid-1980s and early 2000s – means going beyond offering competitive compensation, a flexible work-life balance, career growth opportunities, and a games room. Do they value health insurance almost as much as older adults? It’s tough to say conclusively. A 2015 report by the U.S.-based nonprofit Employee Benefit Research Institute stated millennials are more likely to value life insurance and paid time off as the most important benefit than health insurance compared to Baby Boomers and Gen Xers.
 
Do you have questions about group benefits for your organization? Talk to one of our professional, certified insurance and investment advisors. We have the experience and expertise to help. Call us toll-free at 1-800-595-2150