Employee Benefits Strategies

BENEFIT PLAN MANAGEMENT

Now that we've looked at benefit costs and options, let's talk about the ongoing management of your organization's benefit plans. Most organizations use the services of an outside expert to help them manage their benefit plans. Benefit plan management generally falls into three categories.

Benefits Administration

After plans are implemented, they must be administered properly. This administrative task consists of:

• conducting the enrollment and annual re-enrollment process
• reporting eligibility to insurers and other vendors
• paying premiums and withholding employee contributions
• answering questions and resolving employee issues

Counseling employees who have been turned down for a claim and showing them why they didn't qualify requires good interpersonal skills.

Benefits Communication

To be considered rewards, benefits must be recognized and perceived as relevant by employees.

However:

• many employees are unaware of what benefits they receive
• many employers don't communicate to employees the cost of benefits to the organization

Unlike the paycheck, the value of benefits is hidden from employees - especially if they're deferred for long periods of time. Communication must be a big part of the benefit administrator's job. Otherwise, the organization may lose any advantage of providing these high-cost items. Employees won't know about them and won't appreciate them.

Even worse, employees often view the benefits they do receive as a right, not a reward. This can defeat the original purpose of offering the benefit. But it's a natural result of the fact that some benefits are required by law.

Communicating benefits is harder than communicating salary information. The employee receives feedback regarding salary each payday. But benefits may or may not be visible to the employee over a long period of time.

Retirement plans are good examples. There's little perceived relevance of retirement plans to young people; retirement is the least of their concerns. So, chances are slight that younger employees are aware of their organizations' retirement plan programs.

To complicate matters, many benefits are difficult to explain, and retirement plans are among the worst. The technical language of insurance and retirement plans makes it difficult for employees to understand what they are entitled to, even if they show an interest.

Communicating benefits information takes a carefully planned and continuous approach if employees are to know and understand their benefits package.

Here are some of the communication vehicles that organizations use:

1. Websites can provide employees with access to benefits information 24 hours a day. Employees can access their benefit plans, view plan documents, such as Summary Plan Descriptions, and link to carrier websites.
2. Your HR staff can conduct group meetings to educate employees on their benefits plans and options. An outside benefits expert, consultant or broker, could be brought in to facilitate the talk.
3. Newsletters can be used to update employees on their benefits as well as provide helpful information on healthy lifestyles and retirement planning tips. Email campaigns can promote awareness of benefits plans.
4. Provide your employees with a hotline, a toll-free number they can call to have general questions answered by an experienced staff member.

Monitoring Benefits

The field of benefits is changing rapidly. The needs and preferences of employees are likely to change because the organization's workforce is constantly changing.

Surveying employee needs and preferences should be a continuing exercise and not a one-time project.

It's necessary for the organization to keep careful track of what is happening externally and internally.

Competitive practices in the labor market should be monitored continually. Also, costs should be closely tracked so that organizations can develop alternative ways of providing these benefits to employees at a lower or stable cost.

Finally, benefits legislation is constantly changing. Administrators need to examine state and federal regulations to see if the organization is meeting legal requirements and adhering to changes in the law. We recommend you visit your state's Department of Labor website each month to stay abreast of changes.