Employee retention is just as valuable — if not more valuable — as recruiting and hiring good people for your business. One of the keys for retaining valuable employees is offering a variety of benefits beyond medical benefits. These include vision, dental, life and disability insurance as well as retirement packages. You don’t want to lose a highly valued employee because they received an offer from a competitor with a more comprehensive benefits package.
Insurance and financial services trade association LIMRA has found that a growing concern over the ability to afford health insurance premiums is driving some employers to consider drastic measures. That includes reducing or outright eliminating nonmedical benefits to cut costs to make up for health insurance obligations mandated by the Affordable Care Act (ACA). Before you make such a decision, carefully consider the cost to your company when it comes to employee retention and recruitment.
Employer Reluctance to Offer Nonmedical Benefits
A 2013 survey conducted by LIMRA found that between about one-quarter and one-third of employers would consider eliminating nonmedical benefit programs because of the ACA. When asked what impact health care reform would have on their ability to offer additional benefits in the next 3–5 years, 28 percent of employers answered that they would consider eliminating their accidental death and dismemberment plans and long-term disability insurance offerings. Some employers would also eliminate vision (27 percent), dental (26 percent), and life insurance (25 percent).
Nonmedical Benefits Still Drive Employee Retention
Attitudes toward nonmedical benefits differ between different generations of employees. The Society for Human Resource Management (SHRM) reported that more than half (58 percent) of all employees consider their benefits package an important driver of retention. All age groups shared this sentiment, including baby boomers (born from 1946–1964), Generation Xers (born 1965–1980) and millennials (born 1981–1994). Fifty-one percent of the workers surveyed found that the offer of nonmedical benefits such as dental, disability and life insurance was a very important influence on their feeling of loyalty to their employer.
Deciding not to offer a comprehensive benefits package because of ACA worries may hurt you and other employers in the long run. A broad cross section of workers view all types of benefits as a key factor when choosing where to work — or whether to stay at their current job. Dropping or not offering nonmedical benefits should not be a decision based around meeting your ACA-mandated requirements. You should view the offer of such benefits as an important part of your employee’s compensation package and a necessary expense — not only for employee retention, but to attract the best people for your company.
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.
Donald Parker has more than 20 years of experience in the insurance and financial services industry with several Fortune 500 companies. He holds a life, accident and health insurance license in Virginia. He has been FINRA Series 7, 24, 63 and 65 registered and specializes in the areas of long-term care, senior needs, retirement and employee benefit planning.