Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
business builder benefits
by Sean Williams
If your jaw dropped at the sight of costlier medical insurance this year without a corresponding increase in revenue, it’s time to take a different view of employee benefits.
Despite limited resources, many smaller organizations are not only successfully managing benefits costs, but also finding new ways to save money while offering employees more options. All it took in the following examples was time to evaluate options with an eye to the future and a touch of creativity.
These 10 tips for saving benefit bucks fall into three basic strategies: designing a health plan to fit your needs, decreasing medical utilization, and changing with the times.
As an employer, if you are no longer willing or able to absorb the continual increases in medical costs from year to year, then a change in plan design is probably in order. This may range from moving to a “less rich” plan within your own provider or selecting a new provider to taking an entirely new approach to funding benefits. Different types of plans offer varying levels of choice, flexibility, savings, and administration requirements.
Tip No. 1, offering employees a choice, was important to Relate Counseling Center in Minnetonka. With funding cuts over the past couple of years and staff leaving for better salary, the time was ripe for lowering medical costs with a dual-option plan. This nonprofit contributed to a less expensive primary clinic plan and employees could choose to buy up to the open-access model. This arrangement saved 25 percent on the health plan this year.
To hold the line on medical costs, a Twin Cities law firm moved to a cafeteria-style plan. This helped the firm to Tip No. 2, set a budget, for the total compensation of all employees. It leveled the playing field for employees as all were compensated in the same way, whether or not they had families. With duo-working couples, many employees don’t need health care because their spouses provide it. In this way, employees spent the dollars for other benefits or took cash.
Even medical clinics as employers want to lower medical costs. Metropolitan Internists, Tip No. 3, gave its employees more control over their health care dollars by switching to a Medical Savings Account (MSA) design. The tax-free savings account, similar to an IRA, has helped the clinic to save at least 30 percent over standard medical plans during the past five years. According to Dawn Meyers, “Employees think twice about using their MSA dollars because now they see their medical bills.” She calls it a consumer-oriented approach.
Managing health care costs and making them more predictable from year to year is why one local nonprofit moved to a defined-contribution plan. This move, Tip No. 4, gained more benefit flexibility and equity for its 15 eligible employees. “I estimate that we’ve already saved several thousand dollars in the first year, and our staff has better benefit coverage as well,” said the assistant director of a St. Paul nonprofit. “The new plan is working well for employees, who can tailor benefits to their individual needs. No two employees have elected the same mix of benefits.” He sees it as a good recruiting source.
Tip No. 5, getting creative, helped one mid-size employer in northern Minnesota stay on a fixed health-care budget. At the same time, the employer also provided benefits for one group of hourly employees who had been ineligible. In a town with limited work force resources, the firm decided to make health care an attractive benefit to these hourly workers by creating two classes of employees and funding their health care premiums at different contribution levels.
One of the many reasons for rising costs is increasing use of the health care system. Helping employees to become better consumers can have an impact on premiums.
For example, a St. Paul-based manufacturer started a dedicated wellness program to Tip No. 6, increase awareness of health-care information and associated costs among employees. For example, they learned when to use urgent care versus the more expensive emergency room and when to call the nurse line from home for advice versus visiting the clinic at the first signs of pain or illness.
After nearly a year, the company had a 0 percent increase in its 2003 medical premiums. The HR manager said it was difficult to directly attribute this result to the program, yet a decline in emergency room visits did have an impact on the company’s experience reports.
Another possible way to lower utilization is to Tip No. 7, inject fun into the workplace to reduce stress and improve morale. After all, stress can lead to sickness, affect an employer’s claims experience and, ultimately, its medical premiums. Someone once said that laughter is the best medicine. Scavenger hunts, employee “roasts” and periodic theme parties can help liven up a meeting or an otherwise routine day. Prizes and other forms of recognition don’t need to cost much as long as they are meaningful and in good taste.
Increasingly diverse workforces mean that not all benefits are of interest to every employee. Consider Tip No. 8, offering supplemental benefits to employees through payroll deductions at no cost to the employer, often at a tax-favored basis. These “voluntary” benefits help many employers to provide life, disability, dental, and other coverages at group rates that allow them to offer a more comprehensive benefit package than may otherwise be possible.
As workforces age, many employers may want to consider Tip No. 9, baby the Boomers. For those employees approaching or passing the 50-year mark, long-term care is starting to be offered by large and small employers alike as a way to enhance their benefits package without major cost.
Another way to change with the times is Tip No. 10, getting Web-wise. Web-based technology can save time and streamline human resources processes for administrating employee benefits programs, which ultimately saves costs. For example, companies using online enrollment for their employee benefits realized a 67 percent to 90 percent reduction in cost of administering services to employees.
