Sailing the seas of employee benefits enrollment can be a scary task for any business owner. The process has complex terms, tight deadlines, and a need to save money for the company and its employees.
We understand that these challenges are serious. Payday HCM has assisted many businesses with their enrollment processes, saving money and providing a great experience for their teams.
In this article, we’re going into what a successful enrollment looks like and how it can be a cost-saving venture for your business.
Below we are going to explain:
- The Average Price of a Successful Benefits Enrollment Process
- The Most Expensive Option
- The Cheapest Option
- Applying the Best of Both Worlds
The Average Price of a Successful Benefits Enrollment
The cost of a successful benefits enrollment can vary widely depending on the size of your business, the benefits offered, and the administrative fees involved.
Small to mid-sized companies typically spend a few hundred to several thousand dollars per employee each year on benefits.
This doesn't account for the additional administrative costs, which can also range considerably. View these costs as an investment. Making it easy for employees to enroll in benefits can boost satisfaction and keep them longer, saving money.
According to industry estimates, the average cost per employee for health benefits can range from $6,000 to $15,000 annually. Including dental, retirement, and other extra benefits, the total cost per employee may exceed $20,000 annually.
Administrative fees for managing these benefits can also add 2-5 percent to these costs. It’s important to remember these are average figures and can fluctuate based on your location, industry, and plan choices.
Don’t be scared — although these numbers might seem steep, the return on this investment is significant. We’ve seen firsthand — companies with strong benefits packages experience up to 50 percent lower turnover rates, resulting in cost savings from reduced hiring and training expenses.
Paying Top Dollar for a Successful Benefits Enrollment
The most expensive scenarios in benefits enrollment typically involve premium healthcare plans with low deductibles and a broad range of additional perks. This includes comprehensive dental, vision, and mental health coverage.
In such cases, the annual cost per employee can skyrocket to upwards of $30,000 or more. Employers also might opt for high-end retirement contribution matches, tuition reimbursement programs, or extensive paid leave policies, which can further inflate costs.
And remember, the administrative and management fees for these top-tier plans can add an additional 5-10 percent to the overall budget.
Large corporations in industries like technology and finance often offer high-end benefits to attract top talent because losing an expert employee can be more expensive than these benefits.
Watching the Budget
Choosing a cheaper benefits package doesn't mean you lose quality or employee happiness. Various affordable options, such as High-Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs), can offer valuable coverage while keeping costs low.
Smaller businesses and startups can get affordable benefits packages that cover essential needs. These packages cost between $3,000 and $6,000 per employee annually.
Younger employees may find these cheaper options appealing, as they don't need as many medical services. This helps balance costs and employee needs.
A cheap benefits package might help a company's finances but won't keep employees happy or loyal in the long run.
Affordable packages often come with higher deductibles, limited services, or smaller networks, which may not meet the diverse healthcare needs of your workforce.
Many employees see benefits as a big part of their pay, and not offering well rounded benefits can cause more people to quit.
According to a Society for Human Resource Management study, 92 percent of employees indicated that benefits are essential to overall job satisfaction.
Over time, if more people leave, finding and teaching new workers can cost more. This might cancel out any short-term savings from choosing less expensive benefits.
7 Ways to Applying the Best of Both Worlds
You can have good benefits without spending much money on enrollment. The company must balance what it can afford with what the employees value.
#1: You can use a tiered system. It lets employees choose from different packages, such as basic or premium. This gives them the flexibility to pick what suits them best. This is one of Payday HCM’s biggest pieces of advice. Base it on your company's budget.
#2: Involve employees in decision-making through surveys or meetings to determine which benefits are most important to them.
#3: Regularly reviewing the benefits package and negotiating with providers can yield more competitive rates. Technology can further ease the process; modern enrollment tools often provide analytics that helps you evaluate the cost and effectiveness of your benefits strategy.
#4: One cost-effective strategy example is adopting a high-deductible health plan paired with a HSA or a Flexible Spending Account (FSA). This allows employees to contribute pre-tax dollars for medical expenses, giving them a sense of ownership and control over their healthcare spending.
#5: Another approach could be to offer voluntary benefits like dental, vision, or life insurance. Usually, employees pay for these, but they can get them at a group discount rate. This adds value without increasing the company's benefit expenses.
#6: For retirement benefits, consider a match program where the employer matches a percentage of the employee's contributions to a 401(k) plan up to a specific limit. This encourages employee participation without overly straining the company's finances.
#7: Smaller perks like gym memberships, discounts on public transportation, or professional development courses can be offered. While these benefits might not be as significant as healthcare or retirement plans, they can enhance employee satisfaction and retention without breaking the bank.
Start Enrolling Your Knowledge into Success
Don't forget, a good benefits package is important for attracting and retaining staff. It's about balancing employee satisfaction and your company's financial health.
Exploring cost-effective options like high-deductible plans, HSAs, FSAs, and voluntary benefits, can create a win-win situation for your team and your bottom line.
Payday HCM specializes in helping businesses like yours design benefits packages that make sense for everyone involved.
Contact our team for a personalized consultation on creating a benefits package aligning with your company's needs and budget. Or read how Payday can handle your employee benefits administration.
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