Almost 60% of companies saw retention as a top priority last year. Why? Because the turnover epidemic is real. With the unemployment rate at a 19-year low, job opportunities are up considerably, which means more places for employees to turn if they aren’t happy with their current company. This is leading to huge turnover costs.
Voluntary turnover in the U.S. costs employers $536 billion every year, or about $15,000 per employee, or more. Some studies say that replacing senior executives can cost 400% of salary, so for two executives with an average salary of $200,000, the cost comes to over $1.5 million.
Replacement costs aside, employee turnover can have additional, more indirect costs that may not immediately come to mind but create equally—if not more—significant impact. These factors can increase turnover costs:
- Lost business
- Damage to company reputation
- Decreased productivity
- Lost sense of morale for remaining employees
With turnover costs becoming such a burden, many employers are seeking ways to improve their retention rates. That’s where innovative health benefits come in.
The Benefit Boost
For a long time, employers have been aiming to reduce benefit costs by any means necessary because health plan premiums have skyrocketed. But this method can lead to employees who are unhappy with their benefits offerings leaving the company.
Now, what savvy employers are discovering is that investing in powerful, innovative health benefits is more cost-effective and valuable than avoiding health plan costs and then facing those costs (and then some) later in turnover expenses.
On top of the cost impact, companies that use benefits as a retention tool report better overall company performance and effectiveness in recruitment and retention than companies that didn’t invest in such benefits.
Why Innovative Health Benefits?
We mentioned that investing in innovative health benefits is a powerful retention tool. So why benefits as opposed to a raise? Well, 80% of employees would prefer a new benefit as opposed to a pay raise. And why health benefits as opposed to another type of benefit? While benefits in general are the leading factor in an employees’ decision to leave a company, health insurance benefits are #1.
So what makes them innovative?
Many companies tout so-called creative benefits and perks designed to retain high-quality candidates. These can include things like signing bonuses, on-site dry cleaning, company-provided meals and more. Truly innovative benefits support employees in one of four ways by:
- Saving them time
- Promoting wellness
- Providing financial support
- Creating tax-savings opportunities
And the most innovative benefit packages can support employees in all four ways at once to ensure employers get the most return on this investment in their talent. ArmadaCare’s suite of supplemental expense reimbursed insured plans check all four of these boxes.
While health benefits can be costly, investing in innovative health benefits that support both retention and employee performance can be worthwhile, saving your more in the long run. Plus, ArmadaCare’s insured products have the potential to be tax-efficient* for both the employer and the member.
And finally, as excepted benefits, ArmadaCare’s insurance plans can be offered to select employee classes, which means it’s possible to extend these benefits to just those employees who are considered key talent, hard-to-recruit-or-retain or high-risk of flight. This can help keep costs in check because it isn’t required to offer the benefit to everyone.
To learn more about how innovative health benefits work and ArmadaCare’s suite of carve-out products, sign up for our upcoming webinar, Expense Reimbursed Insurance Explained.
*This is not local, state or federal tax advice as each person and company is unique. It is recommended that you seek the independent counsel of a professional tax adviser.