From a new hire’s perspective, there’s nothing better than working for a company that is not only great to work for but also provides a slew of employee benefits.
From the employer’s perspective… the clouds don’t paint such a pretty picture. Benefits can be expensive, especially when an employee’s health needs include expensive medication or an experimental medical procedure.
Even fringe benefits add up quickly the more employees an organization has. There are hidden costs of employee benefits, costs that organizations providing these benefits should be aware of.
Are you aware of the hidden costs of providing employee benefits?
Health Insurance Affordability
Although companies are not required to provide health insurance for their staff, some employers still provide access to health insurance through the organization.
Employers take on an average of 60% of the total cost of medical services (of a standard population if they qualify for the minimum value standard) of an employee’s health needs when they are enrolled in the insurance plan through the company.
However, in the unfortunate case of cancer, disease, or chronic illness, those costs for employers can rise exponentially. Medication, treatments, and medical procedures can ultimately add a number of zeros to the end of that hospital or pharmacy bill.
Scott Wooldridge, Healthcare Specialist Freelance Writer, said:
“If approximately 30% of specialty drugs costs are paid for by government payers, the private health insurance system is picking up the other 70%. And employer-sponsored plans are often not able to get a clear picture of what those costs are, due to the complexities of billing for such drugs.”
Fringe benefits, as the name sounds, are the outlying, elective benefits employers sometimes offer their teams. While these perks are wonderful additives to an employee’s compensation package, they are a costly expenditure for the organization.
Services like child care, paid time off, life insurance, education assistance, and retirement plans – just to name a few – can cost a pretty penny for employers. Families in Massachusetts pay an average of $16,430 per year in childcare alone.
When employers offer an on-campus daycare for employees with young families, that cost is transferred to the employer. Multiply that cost by the number of employees who use the service, not to mention the cost of the actual $1-2 million daycare service facility itself.
None of this is to say you shouldn’t offer these employee benefits. Not only does it help you recognize employee dedication through fringe benefits, offering childcare can serve as a precursor tactic to prevent employees from missing days during the week due to lack of childcare. Offering paid time off keeps employees fresh and engaged; and even though it’s not a legal requirement for employers to offer these fringe benefits (as the name suggests), employees appreciate the courtesies of these (albeit costly) perks.
Offering paid time off keeps employees fresh and engaged; and even though it’s not a legal requirement for employers to offer these fringe benefits (as the name suggests), employees appreciate the courtesies of these (albeit costly) perks.
You should at least be aware of these cost concerns before you begin to offer them. They are wonderful benefits for your team, can serve as incentives to stay with your organization, and make you competitive with your talent rivals.
Your employees love the little (and not so little) perks you offer. As an employer, however, you need to be aware of the hidden costs. Quality healthcare outside of legal requirements, childcare, paid time off, and health and retirement all add up and add up quickly the more employees you bring onto your team.
These are not precautionary tales of “could have, should have, would have” situations, but rather an enlightenment of the true costs of employee benefits. Employers should be aware of the costs of keeping employees engaged and productive. What are you prepared to pay for your employees?
You don’t have to figure out the best option for your company alone. With The Olson Group you’ll have a true partner in employee benefits planning.