4 Steps to Develop Competitive, Cost-effective Employee Benefits

Step 1: Do more (for less) with ancillary benefits

During times of economic uncertainty, employers may be tempted to scale back employee benefits, but many are taking a different approach. Instead of reducing offerings, employers can turn to ancillary benefits as a cost-effective way to add value and support their workforce.

Today’s workforce is multigenerational and increasingly diverse. The key is offering choice. Ancillary benefits – including dental, vision, life, disability, supplemental health and accident insurance – can provide employees with crucial layers of financial and well-being support without driving up employer costs. These benefits offer flexibility and choice, and help cover out-of-pocket expenses that core health plans may not address.

Ancillary benefits may also come with financial advantages. Many can be offered on a voluntary, employee-paid basis and deducted pre-tax, lowering both the employee’s taxable income and the employer’s payroll taxes. Employers may also be eligible for tax deductions related to benefit contributions, which can make this a smart financial move all around.

For small businesses, ancillary benefits can be especially valuable, allowing them to offer more attractive benefits packages and compete with larger organizations that have bigger budgets for salaries.

Step 2: Help keep healthcare costs more manageable for everyone

Financial stress is top of mind for employees. With inflation and the rising cost of living straining household budgets, many workers are struggling to afford basic care, let alone manage unexpected medical events. And it’s taking a toll at work.

Employers can make a meaningful difference by offering benefits that help strengthen financial security and provide peace of mind. Options like disability, life and supplemental health insurance help protect employee income when the unexpected happens.

These benefits can be even more valuable when enhanced with optional add-ons.  Long-term disability options like student loan repayment benefits and activities of daily living (ADL), for example, provide an additional layer of financial security in the event of a disability. Employers should also look for value-added benefits included in some life and/or disability programs, such as travel assistance, beneficiary companion assistance and identity theft resolution. These important benefits can help add to the financial well-being of employees and their families during challenging times.

Step 3: Manage long-term health risks

Employers may be able to decrease future health care costs by offering benefits that support a healthy workforce.

Preventive eye and dental exams, for example, can help detect early signs of certain chronic conditions like heart disease and diabetes, which can drive high-cost medical claims. By providing access to preventive care, dental and vision benefits can help catch potential health problems early — before they become more painful and costly.

Mental health is another growing concern, and employees are increasingly turning to their employers for support. In fact, nearly 1 in 5 employees report a decline in their mental health, with those in healthcare, retail, and higher education citing the lowest self-ratings.

In response, many employers are expanding mental health support for their employees through benefit offerings and other policies that prioritize employee wellness. One example of this is an Employee Assistance Program (EAP), which offers behavioral health support for employees struggling with a variety of work and life concerns, including mental health, financial and career issues.

Step 4: Prioritize communication

Getting the most value out of an employee benefits program is contingent upon employees’ understanding and full appreciation of what is available to them. Employers should implement an ongoing, multichannel communication strategy that explains how voluntary benefits can meet employees’ needs during every life stage.