The most valuable benefits package isn’t necessarily the one with the most benefits. It’s the one that directs employer spending toward the benefits that employees actually need, understand and can afford to use.
Even a substantial benefits investment can miss the mark when employee benefits plan design doesn’t reflect the needs of the workforce. To create greater value, employers need to look beyond adding benefits and focus instead on aligning coverage, cost, choice and accessibility with employee needs and business priorities. The goal is not to spend more, but to ensure that the money you’re spending produces greater value.
Start With What Your Employees Actually Need
Benefits planning shouldn’t happen in a vacuum. Before you can align your benefits with the needs of your employees, you need to figure out what your employees actually need.
Understand your workforce.
Each workforce is unique, so its benefit needs are also unique.
As you assess the needs of your workforce, consider factors such as:
- Workforce demographics and life stages. Do you have many workers just beginning their careers, employees raising families, workers approaching retirement or a mix of different life stages?
- Individual versus family coverage needs. How many employees need employee-only coverage versus coverage for spouses, partners or dependents?
- Geographic distribution. Are your workers living in urban areas with many care options or rural areas with limited care options?
- In-office, remote and hybrid employees. Do your workers commute and have access to on-site programs, or do they work from home?
- Different compensation levels. Can your workers afford higher premiums and out-of-pocket costs, or do higher prices make care inaccessible?
- Recruitment and retention challenges. Do you have difficulty maintaining an adequate workforce, and could better benefits help?
Ask employees instead of assuming.
You can read articles about the top benefits or most in-demand workplace perks, but these benefit trends won’t necessarily reflect the needs of your workers. If you want to know what your employees actually need from their benefits, find out from them via:
- A mid-year survey is particularly useful if you want to see what employees think about their current benefits so you can consider changes for the next year. Post-open enrollment feedback can also be useful since employees are thinking about their benefits.
- Ongoing conversations. In addition to formal surveys, you can pay attention to recurring employee concerns about benefits and costs and include questions about benefits in exit interviews.
- Look at enrollment data and utilization trends to see whether employees are actually using their benefits.
You may not be able to give everyone everything they want. However, when you know what employees want, you can make more informed decisions when allocating funds.
Build Around a Strong Core Benefits Package
Research from Indeed found health insurance ranked as the benefit U.S. workers most commonly said was important when considering a new job. This shouldn’t be surprising. A health insurance plan affects workers’ health, finances and families, so it needs to be solid. Supplemental perks like rideshare reimbursements, student loan reimbursements and wellness programs rate much lower.
Some employers may try to compensate for gaps in their core health plan by adding supplementary perks. However, adding another benefit isn’t always the best use of benefits dollars, particularly if those benefits are less valued by your workforce.
When building a benefits program, start with the core package of medical and prescription coverage. Then expand to retirement, disability, life insurance, dental and vision if these benefits are appropriate for your workforce.
Don’t Overlook the Value of Voluntary Benefits
Once the core plan is strong, voluntary benefits can give employees additional choice without requiring employers to fund every benefit fully.
Depending on the needs of your workforce, you may offer:
- Supplemental life insurance
- Accident insurance
- Critical illness insurance
- Hospital indemnity insurance
- Legal insurance
- Identity protection insurance
- Pet insurance
Because many voluntary benefits can be offered with little or no direct premium contribution from the employer, companies may be tempted to offer every benefit option available. However, this approach could overwhelm workers and lead to lower participation rates. Instead of offering products just because they are available, focus on a strategic menu of benefit options that caters to the needs of your workers.
Identify Gaps Across Different Employee Groups
One employee doesn’t necessarily represent the entire workforce, even if that employee represents an average or typical worker. When you design your benefits program, consider how it will affect different groups of employees.
For example, a benefits plan may meet the needs of your higher-paid workers while leaving the needs of lower-paid workers unmet, or it may serve workers in one geographic region well while failing to provide care access to workers in other regions.
You can also look at groups of workers with minimal health care needs versus workers with ongoing health care needs, workers who are single versus workers with families, and workers in different stages of life.
If your analysis shows that some groups of workers have unmet needs, consider what plan changes or options could help fill in those coverage gaps.
Balance Choice With Simplicity
Employers may try to help as many employees as possible by providing options, often in the form of multiple employee health plans and additional voluntary benefits.
Sometimes it’s good to have options. For example, if you have a mix of young, single workers and older workers with families, you may want to offer both a high-deductible health plan and a plan with lower deductibles but higher premiums. This works because the employees have two meaningful choices that address different needs.
But sometimes options create unnecessary complexity. If workers have multiple health plan options and the differences are not clear, they may not know which plan to choose, leading to confusion and frustration. If employees can’t easily understand why they should choose Plan A versus Plan B, either the plan lineup needs adjustment or the communication strategy needs improvement.
Make Affordability Part of the Plan Design
Low enrollment or utilization sometimes indicates an affordability problem. Employees have access to benefits, but they cannot afford to use them. As a result, the employees do not gain any value, and the employer’s investment is wasted.
This can happen when the employee premium contributions are too high. Employees may decide not to enroll, or they may drop coverage if they are allowed to do so.
However, even if employees enroll in a workplace health plan, the out-of-pocket costs may make the plan too expensive to use. Employees have coverage, but they avoid seeing the doctor or filling prescriptions because their deductibles and copays are too high. They do not see real value from their benefits, and they may resent having to pay for coverage they can’t use.
Workers can also be priced out of HSAs. For low-wage workers with high-deductible plans, an HSA is often touted as the key to affordability, allowing workers to enjoy tax advantages while saving for out-of-pocket costs. But when wages are low and budgets are tight, workers may not have any extra funds to save. As a result, employees may receive less value from the benefit, while the employer’s investment may not achieve its intended impact.
Benefits don’t provide value if they’re not affordable, so affordability has to be part of the plan design.
Make Benefits Easy to Use
Affordability is only one element of accessibility. Other factors can act as barriers, making it difficult for employees to utilize their benefits and obtain value from them. This can lead to low utilization as well as higher workloads for HR teams who have to deal with more questions and concerns from employees.
For example, a provider network that’s restrictive or frequently changing can make it difficult for workers to find primary or specialist care. In rural areas, distance can also be a factor if in-network specialist providers are far away. Employees may need help navigating their coverage, costs and networks, and a lack of member support or digital tools can make this difficult.
Plan value isn’t determined solely at enrollment. Employees form their opinion of their benefits when they actually need care, based on how easy it is to access that care.
Help Employees Understand Their Benefits
The employer’s job does not begin and end with open enrollment. Employees may need help understanding their benefits options, especially when they have multiple health plan options or additional voluntary benefits to choose from.
- Do workers understand all of their benefit options? Provide plain-language benefit summaries as well as enrollment meetings or education sessions where employees can ask questions.
- Do workers know how different plan options compare? Provide side-by-side plan comparisons, decision-support tools and realistic scenarios to show how costs and utilization will work.
- Do workers know how to use their benefits once they are enrolled? Maintain year-round benefits communication to help workers navigate networks, handle claims issues and make full use of their benefits.
Evaluate the Employer Side of the Equation, Too
A sustainable benefits strategy has to work for the business as well as the employees.
Employers should consider:
- Total benefits budget. How much money is allocated for benefits, and are funds being used wisely? The goal is not necessarily to maximize benefits spending by adding as many benefits as possible. Instead, the goal is to get more value from the dollars the employer is already investing.
- Employer contribution strategy. What share of the total cost is funded through employer contributions, and is this in line with industry norms?
- Broader compensation goals. How do employee benefits fit into the overall compensation strategy?
- Administrative requirements. How much work is required to administer benefits, from selection and open enrollment to ongoing participation, and are the administrative requirements a burden on the company?
- Predictability of costs. How predictable are benefits costs, and does the level of predictability match the employer’s risk tolerance and cash flow reality?
- Recruitment and retention objectives. Does the benefits package help the employer meet employment-related goals?
- Long-term sustainability. Can the employer continue to offer the benefits program, or are rising costs making this more difficult?
Questions to Ask Before Finalizing Your Benefits Strategy
Before you finalize your benefits strategy ahead of open enrollment, verify that it’s optimized for your needs by asking the following questions:
- What benefits do our employees value most?
- Where are employees experiencing affordability problems?
- Are there important coverage or access gaps?
- Are we offering meaningful choice—or unnecessary complexity?
- Can employees easily understand and use their benefits?
- Are we spending money on benefits that employees neither value nor use?
- Does our package support recruiting and retention?
- Is the plan sustainable for the company?
- How does our offering compare with relevant competitors?
- What could we change that would create the greatest improvement for employees?
Focus on Value, Not Volume
A strong benefits strategy isn’t about offering the longest list of benefits. It’s about putting employer resources where they can create meaningful value for employees.
Employers can improve that value by understanding their workforce, addressing affordability, providing appropriate choices, closing meaningful gaps and making benefits easier to understand and use.
If you’re preparing for your next renewal or open enrollment, consider what employees are actually getting from your investment and whether a different plan structure could deliver greater value for both your workforce and your company.
Health2Business helps employers work directly with local providers to develop plans that balance the needs of the business with the needs of the workers. Learn how direct provider plans work.
