With skyrocketing healthcare costs, how can employers afford employee coverage and still offer dependent benefits? This is a very real challenge facing employers today.
Most companies follow a similar pattern when offering employee benefits. They start off with health insurance, paying 50% or more of the employee premium, and allow employees to add their dependents at their own cost. Some employers will also pay for dental coverage, and then life insurance, vision insurance, and disability coverage – usually in that order, though it can vary based on what benefits the employer thinks are important or believes the employees will appreciate.
Due largely to costs, most employers no longer pay for dependent coverage. The employees’ family members don’t work for the company, and providing benefits to the whole family would be really expensive, so they leave that up to their workers. Plus, we’re even seeing a new trend develop among larger companies to limit participation of spouses in the health plan when other employer options are available.
But, let’s remember most employees get up in the morning to provide for their families. Not including benefits for the ones they love most can leave hard-working employees feeling like an adult stuck at the kids’ table. If a company can figure out a way to extend a few of the benefits to the family members, employees will appreciate the benefits even more, which means the company will see a higher return on its investment.
Of course, it’s not practical to pay 100% of the cost of health insurance for employees, their spouses, and their children. But then again, health insurance isn’t the only benefit out there. So here are a few ideas for companies that want to provide some cost-effective benefits for the whole family…
1. Contribute to a Health Savings Account
Employees can use their HSA funds on themselves, their spouse, and their tax-dependent children, even if they’re not on the health plan. This is a point that brokers and employers should emphasize during the annual enrollment meeting. With the employer HSA contribution, parents can take their kids to the doctor or the dentist, get them glasses, or pay for monthly prescriptions. They’ll appreciate the employer’s benefit plan every time they use their HSA card.
2. Pay for Ancillary Benefits
For some reason, employers get it in their minds that they have to be consistent in the way they pay for the various benefits they offer. However, the truth is that they can leave the dependent health insurance costs up to the employees and pay for lower-cost benefits like dental or life insurance. Dental insurance is about one-tenth of the cost of health insurance and people value it almost as much, so it’s a great benefit for a company to pay for (one with orthodontia benefits for the kids will be especially appreciated). And group life insurance is cheap, so employers can provide a base level of benefits for the employee, spouse, and children and then allow them to buy up if they want.
3. Allow employees to purchase voluntary benefits
Even with no employer contribution, there’s a value in offering voluntary or worksite benefits like accident or critical illness insurance. Why? Because it’s a lot less expensive than health insurance and can help to offset high medical bills. This means that an employee who can’t afford to cover his family members on his health plan can still reduce their exposure with these relatively inexpensive products.
4. Educate employees about CHIP
The Children’s Health Insurance Program offers quality coverage to low-income families at a very affordable price. The cutoff level, costs, and benefits vary by state, but here’s a quick example of how it works. In Texas, families with incomes below 200% of the federal poverty level, or $50,058 per year, can qualify for CHIP. For those who qualify, they can cover all of their children for just $50 per year or less… amazing! Spending a couple minutes explaining the Children’s Health Insurance Program during an enrollment meeting and handing out a free brochure is a great way to help employees at no cost and with almost no effort – why wouldn’t an employer want to do that?
5. Offer freshbenies!
While almost all employee benefits have an additional charge for family members, every freshbenies membership is good for the employee, spouse, and tax-dependent children (and/or tax-dependent parents) – there’s no extra charge! This is especially important for employees who can’t afford to cover family members on their health plan. While freshbenies is not insurance and not intended as a replacement for insurance, it does provide those family members with access to health care. With freshbenies, an uninsured spouse can pick up the phone and call a doctor (for herself or her child), get a prescription if necessary, and then save on the cost of that prescription at the pharmacy. She can also email a specialist to get her medical questions answered, consult with an advocate when searching for lower-cost providers, and get help reviewing, organizing and negotiating medical bills. That’s a lot of benefits for $10 or less.
Ultimately, employers offer benefits to attract and retain employees, and for this to work they need to provide benefits their employees truly appreciate. Any benefits that the employer can make available not only to the employees but also to the employees’ family members will be doubly appreciated. As a broker, keep this in mind when you’re helping your clients design their benefits package. If their goal is to get the most out of their benefits dollar, considering these options is a great strategy.
Now it's your turn! How do you strategize with employers to include options for dependents while still watching the bottom line? Comment below or email me at email@example.com.