Interestingly, the first question employers ask tends to be the least relevant. How much does it cost? Well, that depends on what you're looking to get and what kind of group your company is. Much like buying auto insurance, which is determined based on the type of vehicle, driver risk and policy provisions (deductibles, maximums, etc.), the cost of benefits are going to depend on multiple factors. Ultimately, there's no such thing as employee benefits that are "on sale" or discounted to create more value. Because the premise of insurance is the protection against risk, the results for premiums are very tightly controlled according to well defined mathematical formulas. As a result, you'll pretty much get what you pay for, so it's better to ask a different question and decide whether its in your budget.
The question everyone should actually start with is, "What kind of employee benefit platform is right for me?" This focuses the conversation on the needs of your business and employees rather than just cost. The answer will depend on a variety of factors:
- Group Size - There are essentially two markets, small group (2-50 employees) and large group (50+ employees). Small group policies have age banded rates, so the premiums will not only vary based on the plan features, but also the age and location of each employee. This makes it more difficult to budget for growth in your company since your costs can't be scaled predictably. Large group policies have composite rates that don't change based on the demographics of the employee. If you're currently under 50 employees, but would like to have access to the large group rate structure, consider joining a multiple employer plan through a PEO or fix your contributions to a specific dollar amount and leave it to the employee to absorb the variance due to their demographics.
- Industry Standard - A well trained HR professional should evaluate how common health insurance benefits are for each position in your company based on a compensation analysis using data from similar companies. You may not be able to avoid paying for health insurance if the new Systems Engineer you're looking to hire is offered these benefits everywhere else. This ought to be considered part of the overall compensation and budgeted for accordingly. Remember that benefits are a way to make your offers more competitive and attractive to potential candidates!
- Employee Demographics - As insurance companies have developed more focused programs, like HealthNet's Salud, it's becoming increasingly more relevant to make sure that the plan you're considering and it's network is appropriate for your employees. After all, it does you no good to offer a plan that doesn't have any coverage in the region your employees reside, even though it might be inexpensive.
In the end, your consultant should prepare a short list of options, focusing on high fit solutions and discuss a multi-year program of development for your benefits platform. Only then can you make an informed decision about whether your organization is ready to make the commitment to providing benefits!