How do you balance the trade-offs between cost and quality in employee benefits design?

Remember first the 2 primary goals of a health benefit plan: 1. Keep the employees happy 2. Do it for less Those elements direct you toward quality programs for employees that contain choices and empowerment for each employee while the plan sponsor focuses the internal mechanics of cost saving, budgeting and control of their benefit spend.

From my perspective, identifying goals is perhaps one of the most crucial steps in designing an effective employee benefits program. It aligns closely with the philosophy of 'Start With Why', as described by Simon Sinek. It's important to ensure your benefits program isn't just a tick-box exercise but is genuinely designed to support, motivate, and engage your team. It should contribute towards your broader business strategy and reflect the culture and values of your organisation. A clear direction, set by well-defined goals, is indeed the foundation of a robust and impactful benefits program.

The design and cost of a company-sponsored benefits offering send a message to employees about how much the company values the health and financial well-being of their employees. If the goal is to send a very positive message to current and/or prospective employees, then pay careful attention to the cost-sharing and plan design process. When armed with the right information, an excellent benefit offering can be achieved.

The first thing to do is figure out what benefits employees want and how you can pay for them. Or get the complimentary (that's FREE). First thing to do is talk to a few professionals in every area and get some advice. I know in the retirement plan space I often tell small business owners to stay away from a 401(k) until they are larger with more consistent cash flow. And I also let them know about free financial education seminars I give to employees. So always ask what extra service comes with the benefit in the way of education. That can be a game-changer.

In the words of the renowned business strategist, Michael Porter, "The essence of strategy is choosing what not to do." By assessing your current situation, you're not just identifying what's working well but, more importantly, what isn't. This involves conducting an 'internal audit' of your current benefits program, understanding its impact on employee satisfaction, and benchmarking your offerings against competitors. This is a fantastic opportunity to reassess your investments and ensure they are returning valuable outcomes both in terms of employee engagement and overall business performance.

In the retirement plan space you should know that there is a scoring system that can tell you how you are compared to companies of similar size in the same industry and region of the country. Kind of like a credit score. Ask you advisor for it and see how you stack up to the competition in your retirement plan.

A focus group comprised of department heads is extremely effective when seeking to guage the satisfaction level of employees and potentially identifying gaps in the benefits offering. Conversely, a company-wide survey asking employees what they'd like to see in a benefit offering may lead to a no-win situation where half the respondents will be pleased and the other half potentially disappointed at some level. With a focus group, there is typically a consensus built amongst company leaders who then extol the virtues of the benefits enhancements amongst all employees.

Benefits are usually used to obtain and retain employee talent. Know your competition and ask new recruits what they were offered for benefits at their previous employer. Over time, you can create a better package than the employers you compete with for talent. This will help pull experienced people from your competitors!

Go out and shop on a regular basis. What was good at one time may not be good now. And shop the provider too as there may be better or less expensive people out there to help with your benefits. I tell retirement plan sponsors to shop as a start-up, at 100K, 250K, 500K, 1 Million and then at every million after that. If you do not have someone willing to shop for your best plan, find someone who can.

Exploring options should involve staying abreast of industry trends, evolving legal and regulatory landscapes, and technological advances in the benefits space. Borrowing from Jeff Bezos' 'Day 1' philosophy, employers should remain nimble, open to change, and constantly explore innovative approaches to enhance their benefits offering. Remember, benefits that mattered a decade ago may not be as relevant today, so keep questioning and innovating to meet your employees' changing needs.

Benefit Communication Statements, aka Hidden Paycheck Reports, are an excellent way to illustrate for employees the total amount of compensation they receive. Often overlooked items include the employer's contribution towards the employee's health, dental, vision, life and disability benefits. Other overlooked items include employer-match on the company's 401k plan, contributions to a health savings account (HSA), paid time off, and many other items the employer provides in addition to monetary compensation.

Most people think exploring options means price shopping between BUCA (Blue Cross, United, Cigna and Aetna). This is exploring traditional options. There are alternative strategies worth considering like paying 100% for primary care needs with an on-site nurse or paying for unlimited primary care needs through local Direct Primary Care Clinics. Major decisions include if you go fully funded, self funded or somewhere in between. There are also "Captives" you can join to pool risk and independent vendors if you want to unbundle your entire healthcare benefits and build your own. It's work, but it allows you to achieve the vision of better healthcare for lower costs. Most of the time this is achieved through independent partners.

It can be tempting to choose a provider based on price alone. However, as with anything in life, you get what you pay for! When it comes to employer sponsored retirement plans, the key is to find a provider who is willing to do the work of actually servicing the plan and educating the employees. If they aren't willing/able to do that then what is the point of having the plan? If you can balance solid service with pricing that is not excessive then you put your business, and your employees, in a very good position.

Following the philosophy of Clayton Christensen's Jobs to Be Done Theory, it's vital to understand the needs of your employees deeply and to recognise that these needs may differ based on demographics, location, or role. The ideal benefits mix should address these varied needs without compromising administrative efficiency. It's an intricate balancing act that requires careful consideration, backed by data-driven insights, to ensure the chosen benefits deliver genuine value to employees whilst maintaining organisational affordability.

Not all employees have the same benefits needs, so it rarely makes sense to offer just one health plan. Low utilizers may elect an economical "base" plan with higher deductibles/copays and coinsurance in order to be covered for unexpected costly health situations while having less come out of their paychecks. Conversely, higher utilizers may opt to pay a bit more towards the cost of a richer "buy-up" plan with lower deductibles/copays, and little to no coinsurance.

Yes, employee benefits include a tremendous amount, but you need to major in the majors. That's why I go back to healthcare benefits. If you get that right, meaning you are offering great benefits for lower costs, then the company has more discretionary income to provide ancillary benefits and culture-related benefits. You have to get medical right first and then build on that foundation before considering adding anything else to the mix.

OVER COMMUNICATE!!!! If you think that people heard the message the first time, guess again. Also, do your best to bring in people that can help explain the benefits more than annually. I recommend to clients that have retirement plans to have financial education seminars every 3, 4 or 6 months in addition to the mandatory retirement plan meeting to help employees be better with their money.

An online benefits administration system will enhance the benefits experience of the employees and employer. A well-built system will afford 100% paperless onboarding and open enrollments and be optimized for use with smart phones. Employers can use the system as an intra-net for company-wide communications, welcome emails to newly hired employees, as well as many other notifications. Many systems can include an HR resource tool, PTO tracking, and ACA reporting capabilities.

Effective communication is the key to maximising the impact of your benefits program. Drawing inspiration from Stephen Covey's principle of 'Seek First to Understand, Then to be Understood,' it's vital to explain the purpose and value of your benefits program to your employees. Furthermore, soliciting their feedback not only helps in increasing their engagement but also empowers them, making them feel heard and valued within the organisation.

Benefits communication and education is one of most over looked parts. Companies spend an enormous amount of resources on plan design. But if an employee is not aware of the benefits or does not understand how each component can work to their health and financial wellness the quality of the benefit is significantly diminished.

Oddly enough, communicating benefits is extremely difficult. One tool I have found effective is called Smart Brevity. A wonderful book by the founders of Politico and Axios. Think short not shallow. Also, I've used custom cartoon videos to help communicate new employee benefits that have surprised and delighted clients. Just put yourself in the employee's shoes and try to think how you would like this information communicated. The Golden Rule works all the time:)

In line with Peter Drucker's principle of "What gets measured gets managed," monitoring and adjusting your benefits program is an ongoing necessity to ensure it remains effective, relevant, and aligned with your organisational goals. Keep in mind that the needs of your employees and the market conditions are fluid, not static. So, your benefits program should mirror this dynamism by incorporating continual innovation and improvement. Regular monitoring, reviews, and adjustments are, therefore, not just desirable but essential.

Regularly analyze employee feedback, utilization patterns, and market trends. Integrate technology to streamline benefit administration and communication. Continuously assess the competitive landscape to ensure your benefits align with industry standards. This will allow your company to stay agile and adjust benefits proactively.

Most companies lock in benefits on Jan 1st and let it ride for the year. However, we don't do that with any other part of our business! Can you imagine launching a product and not tweaking it until 12 months later and expecting it to be a home run on launch date? Yes, the majority of plans will be in place but you can modify. For instance, one time, I added a concierge service to an employee benefits plan three months in, and it was a game-changer for employee health and well-being. So let's be brave leaders and willing to embrace change even in employee benefits.

This is all great. Good information and things to consider. But, it does not start with the #1 factor - what is the employer going to spend, overall, for compensation? Maybe that is part of setting the goals for the benefits, but the benefits part should not be in isolation - we have been talking about Total Rewards for decades now but we still seem to think of the components in separate buckets. The steps about monitoring the mix and effective communication begin to address the distinctions too - but they often seem to be afterthoughts.

This question is loaded with false assumption. As Deb Ault said, there are no trade offs when quality steerage is done right. High value results - HIGHER quality and LOWER cost.

There ARE NO TRADE OFFS BETWEEN COST AND QUALITY WHEN IT COMES TO GOOD BENEFIT DESIGN!!! This thinking is WRONG. There is a DIRECT INVERSE RELATIONSHIP between cost and quality. The higher the cost = the lower the quality (and vice versa). Many years of doing guided/vanishing deductible/FREE CARE health plans have proven that if plan sponsors will simply guide patients to the right care (evidence based clinical guidelines adherence) at the right time (solve the provider obstinacy leading to access issue) in the right place (based on objective quality scores reflecting actual OUTCOMES) that right price (lower cost) is the INEVITABLE result. There DOES also have to be a cost containment component, especially around buy and bill drugs.

In today's state of rising premiums and deteriorating quality, how can we increase the sense of value? Having a partner that helps you navigate these challenges, leveraging market knowledge and wellness/cost containment strategies, can have a great impact on not only your benefits package, but on your company's culture. A Broker/Employee Benefits Consultant should be that partner but it's important to find the right one and to assess that relationship regularly to ensure you are getting the level of service you need.

Figure out first what your budget is, factor in turnover and overall participation in this(most providers will tell you what their average participation rate is), what other big projects are going in. Don't rush this, but it can be done quicker with the correct preparation.