By Dan Eisner, Employee Benefits Advisor
Employee benefits plans are an important part of any organization’s total rewards strategy and these plans play a key role in attracting, retaining and engaging key talent. However, if employees do not understand their employee benefits plan, they likely will not appreciate the plan’s value as much as they should, and therefore these plans will not play that key role in supporting an organization’s people strategy and ultimately its broader business strategy.
A communications strategy can play a key role in helping employees better understand their benefits plan and therefore increase the value of the plan in their eyes. There are many ways to communicate and engage with employees, and facilitating employee education sessions (in person or virtual) is one of the easiest and most impactful ways of doing so. These sessions can provide a number of benefits including reinforcing employees’ understanding of the depth and breadth of the benefits plan. In addition, employees’ questions can be answered immediately and organizations can receive important feedback to help them in developing short and long-term benefits plan strategies. Alternatively, plan sponsors could put together a regular stream of employee education updates to reinforce key elements in their benefits plan.
Education sessions can also help employees better understand the cost of their employee benefits plans, and provide them suggestions to help ensure the sustainability of those plans. As noted previously, at ZLC Financial we expect inflation for employee benefits plans to run around 6% to 8% in the long term. By helping employees better understand the financial risks that employee benefits plans put on the business, these sessions can often help them become better and more knowledgeable “consumers” of those plans. Employees are at the front lines of many of the buying decisions related to the benefits that they use and can therefore play a key role in being more cost-effective “consumers”.
For example, employees can be educated about the varying costs related to paramedical practitioners (e.g., physiotherapy, massage therapy, chiropractors, etc.), how those practitioners’ fees are set by the practitioners, and options or alternatives that might be available to secure the same services at lower costs. Likewise, if employees better understand how dental services are priced, they can be better prepared to engage their dentists in discussions around options available to them for the most effective dental care. Depending on the plan design, these types of decisions by employees could save the employees money (by way of coinsurance and avoiding excess charges) in addition to reducing costs to the business (by way of lower claims and therefore lower premiums).
However, before embarking on any employee communications strategy, plan sponsors should be aware that they could see an increase in employee benefits plan costs in the short term, driven by the resulting heightened level of employee awareness. Once employees learn more about their plans, they are more likely to use them, and use them more effectively. These increases in plan costs can often come as a surprise to plan sponsors at the next renewal in terms of higher premiums if those increases are not anticipated beforehand. However, the potential of increased costs in the short term needs to be weighed against the benefits of higher employee satisfaction and engagement. If employees truly understand their benefits plan, they are more likely to value them and appreciate the broader total rewards offering provided to them, and they could be less tempted to look at job offers from competitors. This should ultimately result in improved employee engagement and therefore retention.
We would be pleased to discuss your specific situation with you to identify the best strategy with respect to your employee benefits and retirement programs. Should you have any questions on the above, please don’t hesitate to contact any member of our team.
ZLC Financial is one of the fastest growing advisor firms for employee benefits programs in Vancouver and we are fortunate to have the best people and resources to best serve our clients. We provide value to you by leveraging one of the most skilled benefits teams – over 350 years of experience within our team of 18 employee benefits and Group Retirement specialists. We have been working with businesses ranging from as few as 3 to as many as 75,000 plan members for the past 35 years.
Disclaimer: This information is designed to educate and inform you of strategies and products currently available. The views (including any recommendations) expressed in this commentary are those of the author alone and are not necessarily those of ZLC Financial. This information is not to be construed as investment advice. It is for educational or information purposes only. It is not intended to provide legal, taxation or account advice; as each situation is different, please seek advice based on your specific circumstance. This commentary is not in any respect to be construed as an offer to sell or the solicitation of an offer to buy any securities.