August 2012

If you’re looking for a low-cost, high-value benefits product that can help you attract and retain employees, consider offering Group Life insurance coverage.

Here’s how these plans work: Because the overall risk of death among a group – defined as 10 employees or more – is far lower than that of an individual Life policyholder, the insurance company can offer you a far lower premium rate (the overall rate for your company depends on the group’s size and distribution by gender and age, together with the number of claims filed). You’ll pay a fixed premium for every $1,000 in coverage. Because Group Life is usually bundled with other benefits, such as health plans, your administrative costs will be minimal.

What’s more, unlike individual Life policies, coverage is written on a “guaranteed issue” basis, with no need for plan participants to pass a physical exam.

Group Life policies usually pay the beneficiary the employee’s salary for a full year. This provides a valuable short-term financial cushion for the loss of a breadwinner’s income. Some insurance companies offer extended coverage, with a death benefit of two or three years’ salary (and such add-ons as Accidental Death & Dismemberment and/or Travel insurance) to participants – usually managers or supervisors – who pick up part of the premium. This option also includes a portability feature that allows employees to keep their coverage when they change jobs or retire.

If you offer Group Life benefits, your insurance company will review the rates and terms every five years. It makes sense to re-evaluate your program whenever you’re planning significant changes in your workforce (hiring more employees, raising salaries, and so forth). You might well be able to enjoy improved coverage at lower costs.

As employee benefits professionals, we’d be happy to offer our advice on selecting a comprehensive, cost-effective Group Life plan.

The landmark Supreme Court decision upholding the federal Affordable Care Act (ACA) will encourage more employers to replace direct payment of their workers’ health care premiums under a company-sponsored plan with a lump sum that employees would use to buy the coverage of their choice.

A growing number of smaller and medium-sized businesses have been offering this “defined-contribution” option – similar to 401(k) programs financed by employers making a single tax-deferred payment into a retirement savings account – for years. An employee health benefit plan financed by a lump sum payment can save employers as much as 15%-25%, compared with the cost of a conventional benefit program; that’s a significant advantage, given that the average health care premium for covering workers and their families has skyrocketed by 113% during the past 10 years.

What’s more, defined-contribution plans shift the responsibility for selecting a plan from the business to individual employees, which frees them up to tailor a program to the providers and benefits they prefer, rather than being stuck with employer-controlled, one-size-fits-all coverage (employees can also retain their plan if they move to a new job).

The ACA will simplify employees’ health care choices by setting benchmarks for coverage and creating insurance exchanges on the state level that offer a variety of programs.

The act gives businesses a powerful incentive to offer workers the “choose-it-yourself” health care option by funding high-risk coverage pools in individual states for workers with previously existing medical conditions. As of January 1, 2014, all Health insurers will be required to guarantee coverage for every private-sector employee.

To learn how you, and your employees, can take advantage of these new programs, please get in touch with our employee benefits professionals.

Business is tough. The financial markets are struggling. Layoffs and cost cutting remains the order of the day. Can employee benefit offerings be far behind? At many businesses, obviously not. But does this have to hold true at yours?

Not according to many benefit managers. They say the key to defending – and even expanding -benefit programs is the ability to make the business case for them. It’s not enough to argue that these programs improve quality of life or boost morale. Management needs to see the effect on the bottom line. In other words, they want benefit programs held to the same standards as the company’s other business processes – what’s the return on investment (ROI)?

Our employee benefits professionals can help by providing the bottom-line costs for your programs and the costs of any options you might wish to consider. With this information, you can present hard data to go with your success stories. For example, if you help a significant number of employees to quit smoking, so what? If you can put the answer to our “quit smoking” question in terms of its impact on health costs per employee, annual absenteeism rates, or meeting corporate mission statements about safety and retaining quality employees, now you’re talking about ROI: The language that drives the budget.