Here’s more evidence that supports how important benefits are to employees. Survey results released this week from AICPA* indicate that employees favor workplace benefits four to one (80 percent) over an identical job with 30 percent more salary but no benefits.
This is quite a staggering statistic, but not entirely unpredictable. After all, most employers know the importance of benefits in recruiting and retaining employees; especially considering the unemployment skill-gap trend.
Yet, this is an important new data point, especially when coupled with the fact that three in ten employed adults (29 percent) are considering switching jobs in the next year. And that’s exactly why employers and their benefit consultants should be taking note of just how important investing in their benefits is to their employees and to their company.
Health Insurance Remains King
When asked which three workplace benefits would help them reach their financial goals, more than half of those surveyed cited health insurance (56 percent), or 401(k) match (56 percent), while a third cited paid time off (33 percent). 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 (think back to that 29 percent), and solid health benefits are critical to accomplishing this.
Indeed, building a healthier, happier team allows employees to focus on being their best productive and successful selves at work. It’s important to be aware of employees affected by presenteeism, which is when an employee comes to work while sick or distracted by a health issue These employees may typically be present and engaged, but due to their distraction, are unable to perform at top levels. This can cause huge productivity loss that trickles down throughout the company.
Health Benefits vs. Extra Salary
There are other reasons why employers should consider investing in health benefits instead of putting that money toward boosting salaries or offering bonuses. Here are a few:
• Easy to forget: Salary hikes are typically “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. The right type of health insurance, like supplemental expense reimbursed plans, can give that feeling of being rewarded throughout the year with every Prescription Visa® swipe or direct deposit.
• Tax efficiency**: Health insurance offers a financially efficient way to compensate, especially when you consider the carve-out capability of supplemental expense reimbursed insured plans. That is, the employer can deduct the premium without incurring payroll taxes and fees. Plus, the employee’s reimbursements typically aren’t subject to taxes so it’s a way to provide much more value when compared to a taxable salary increase.
• Majority rules: Give the people what they want. This goes back to the survey. Employees largely prefer extra benefits over extra salary so why wouldn’t employees put their money where their employees will value it the most?
*AICPA Employee Benefits Survey – Of Interest:
The full results of the AICPA survey on employee benefits, along with further analysis on the topic, are published in the AICPA’s 2018 Employee Benefit Report which is available on the AICPA’s 360 Degrees of Financial Literacy website.
**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.