David Rodeck

How to Ensure Your Benefits Package Grows With Your Business

When your business was starting out, a simple small business benefits package — some free food, a little paid time off and the chance for employees to buy health insurance from a group plan — might have been enough.
But as you transition from a small business to an emerging growth company, at some point it’s probably a good idea to reassess what you’re offering.

Not only could your expanding business face different requirements, but a more attractive package could help you compete with larger companies for the workers who are essential to fueling your growth. Here are five benefits considerations to keep in mind as your company grows.

1. Meeting Health Insurance Requirements

As your workforce grows, your first priority should be making sure your business meets any requirements for health insurance. Under the Affordable Care Act (ACA), every business with at least 50 full-time equivalent (FTE) employees must offer health insurance to their full-time employees. While employees don’t need to sign up, you at least need to offer them a plan that meets the ACA minimum coverage requirements. If you don’t, the IRS will charge you a tax penalty.

This 50 FTE employee number is right around the point when your company outgrows the label “small” and could be called a medium-sized business — or, in the ACA’s language, an “applicable large employer.” If you don’t already offer health insurance or aren’t sure if your plan meets the coverage rules for your business size, consult an insurance broker.

2. Expanding Other Benefits

Beyond health insurance, new growth could be a good opportunity to enrich your benefits package as a whole — and make it more attractive to talent in the process. Your package doesn’t have to be entirely comprehensive to make retention and recruitment more successful, but consider including group vision, dental, life and disability insurance, an employee assistance program and a retirement plan like a 401(k) in your benefits.

Keep in mind that these benefits can entail more administrative work and costs than something simpler like paid vacation. With a 401(k), for example, you’ll need to file forms with the IRS each year and pay an annual fee to the company managing the plan. This may not have been worth the effort with a small staff, but employees might expect it from a larger business.

3. Paying a Greater Share

A startup might offer voluntary benefits for vision and dental but require employees to pay for the benefits themselves. Larger companies are more likely to pick up some or all of the tab. At small businesses, 34 percent of workers are asked to cover more than half of their premiums for family health insurance plans, according to the Kaiser Family Foundation. At large firms, only 8 percent of employees pay more than half of their family health insurance premiums.

The same logic applies for other benefits, including dental, vision and disability insurance. Offering them is a good start, but paying for them is how you stand out as an emerging growth business.

4. Setting Different Eligibility Thresholds

When you were smaller, it was probably simplest to offer the same benefits to everyone, but the same strategy doesn’t play out quite as well for larger companies. As you get bigger, it may make sense to create multiple packages or eligibility thresholds. For example, employees who have been at the company longer, or who work full time vs. part time, might be able to access more paid vacation days.

But take note: This option only works if you separate benefits in a nondiscriminatory fashion — that means not restricting offerings based on age, gender, race, religion or other protected categories. Divide employees into clear groups based on workplace factors like seniority level or work status, and offer the exact same benefits to everyone in a group.

5. Building Out Benefits Communication

When you only have a few employees, it’s easy to talk to each one personally about their benefits preferences and any changes they’d like to make during open enrollment. This starts to get unwieldy for medium-sized businesses. But communicating with every employee doesn’t have to mean meeting with each member of your staff one by one. Change your benefits communication strategy so that you save time and energy but your employees’ individual needs are still addressed.

Start by sending out an annual survey to see what they like about the current package and what they’d change. Once you’ve finalized your offerings, consider introducing an active enrollment system, which will keep employees from automatically enrolling in the same benefits from the previous year, forcing them to review their options. This way, if you make any upgrades to your package, your employees will notice them.

Chances are, the benefits strategy you used as a startup is no longer suitable for your new status as an emerging growth company. Your employees are what will drive your business forward and make it successful, so be sure your benefits package is drawing in the best talent and keeping your workforce happy, motivated and thriving.

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