Why Invest in Better Health Benefits

Complementary Benefits Executive Health August 29, 2018

Investing in better health benefits may seem counter-intuitive when one of the top HR priorities is controlling benefit costs. But another top operational priority is recruiting and retaining top talent, and good health benefits are critical to accomplishing this.

Health Benefits v. Sign-On Bonus

You may be asking yourself: Why not invest in something other than health benefits that is less costly to recruit and retain top talent? Let’s consider an alternative.

A sign-on bonus, or a similar raise in salary, is another option often considered for recruiting and retaining top talent, but it comes with several drawbacks.

  • Risk insult to current employees: Awarding new employees with sign-on bonuses as an incentive to join your company can be offensive to current employees in the same position. They may feel as though they deserve a similar reward for remaining at the company.
  • Easy to forget: While it may work to incentivize an employee to join, this benefit is “one-and-done,” so it’s easy to forget. Soon employees will be thinking, “What have you done for me lately?” and then you’ve got a retention issue on your hands.
  • Treated as ordinary compensation: A sign-on bonus is like giving employees additional compensation that they likely won’t treat any differently from their typical paycheck. Also, 4 out of 5 employees would prefer a new benefit to a pay raise.
  • High Cost: After you factor in taxes, a $5,000 bonus can cost the company a lot more and give the employee much less value than originally intended.

Health Benefits v. Other Benefits

Now you may be wondering: Why invest in health benefits as opposed to other benefits or perks? The most simple answer: It’s what employees want. Consider these statistics:

  • 56% of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay with their current employer.
  • 84% of employees with high benefits satisfaction report high job satisfaction.
  • #1 Benefit as ranked by employees is health insurance.
  • Over half of U.S. workers have left jobs after finding better benefits offerings.
  • Organizations that use benefits as a strategic tool for recruiting and retaining talent reported better overall company performance and above-average effectiveness in recruitment and retention compared with organizations that did not.
    • Company performance: 58% vs. 34%
    • Effectiveness in recruitment: 19% vs. 8%
    • Effectiveness in retention: 28% vs. 11%

Cost-Effective Health Benefits

While health benefits may be vital to recruiting and retaining talent, the cost issue still remains: primary health plan premiums are expensive, and costs are still rising.

That’s where supplemental expense reimbursed insurance comes in. This type of supplemental health insurance is powerful in several ways. It can be the key to solving your health benefit cost/recruitment and retention dilemma.

  • Carve-out coverage: This type of insurance qualifies as an excepted benefit so ACA nondiscrimination rules don’t apply. That means that these plans can be offered to select employee classes as determined by the employer. So, it’s possible to keep the primary health plan the same for all employees, and boost health benefits for just those positions that are difficult to recruit and retain.
  • Powerful supplemental coverage: Unlike indemnity-based voluntary supplemental plans, expense reimbursed insurance provides valuable coverage without disease- or event-driven limitations. So there’s coverage for routine health expenses and beyond. ArmadaCare’s expense reimbursed insured products range from $5,000 to $100,000 in annual coverage, so there is an option for all needs and budgets.
  • Tax-efficiency*: Because premium is not taxed like compensation, these plans cost less and provide more value than a similar bonus or pay raise. Employees also receive reimbursements tax-free.
  • Constant reminder: Expense reimbursed insurance serves as a constant reminder of the employer’s appreciation each time it’s used throughout the year.
  • Loyalty program built-in: It’s possible to utilize ArmadaCare’s products to create a multi-tiered loyalty program. Coverage levels increase as employees remain with the company. The plans can work similarly for a sales incentive program.

With ArmadaCare’s suite of supplemental expense reimbursed insured plans, the decision to invest in better health benefits is easy. Reach out at solutions@armadacare.com for more information.

Fast Company
HR Drive

*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.

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