How would you like to give all of your employees and raise and actually spend less money doing it?  Hopefully all small business owners would jump at this opportunity and it is really easy.  Through better employee education, you can help them avoid the five most expensive benefits mistake, which will reduce their payroll deductions and other benefits related expenses, while saving the company some money at the same time.

First, help employees to choose the right healthcare plans.  On average employees waste $750 each year by selecting a plan that is the wrong fit for them.  For example:

• Pay more for a plan with low physician copays, when they are healthy and rarely go to a doctor so a higher copay or high deductible health plan would be less expensive
• Select plans that are more expensive because they include coverages that the participant will likely never use, such as orthodontia, in vitro, etc.

Not only do these mistakes cost the employees through higher payroll deductions, since the company contributes to the premium cost as well, between $500 and $2,000 of employer money is also being wasted.

Second, poor health care spending decisions.  High Deductible Health Plans (HDHP’s) were implemented in 2003 and by 2017 almost half of all employees were enrolled in one of these plans.  These plans have lower premiums, which both employees and employers like.  Additionally, they give participants more control over their health care spending to control their costs.  The problem is that most people do not know what to do with that control.  HDHP’s were created in an attempt to control the rising cost of healthcare by making people look for lower cost options for their health care services, such as generic and mail order prescriptions, using urgent care centers rather than the emergency room and new online services such as tele-medicine.  There are also an assortment of websites that employees can use, such as GoodRx that can help employees find the local pharmacy with the lowest price on their prescriptions that could potentially save them hundreds or thousands of dollars each year.

Number three is low utilization of Health Savings Accounts.  While almost half of all employees are in qualified HDHP’s, 40% of these employees never open a Health Savings Account (HSA).  HSA’s were created to incentivize employees into the HDHP’s as a way to control the rising cost of healthcare by making people look for lower cost options for their health care services, such as generic drugs, using urgent care centers rather than the emergency room and new online services such as tele-medicine.  HSA’s also provide triple tax advantages: pre-tax going in, tax deferred earnings and then tax free withdrawals for qualified healthcare expenditures.

The fourth mistake is low 401k contributions.  Unfortunately, too many employees are saving nothing for their retirement, even though their employers provide easy access to a 401k plan.  However, when the company provides a matching contribution these employees are missing out on free money.  Even when the employee contributes enough to earn the matching contribution, they could be saving too little to meet their long term retirement goals.

The solution to all of these mistakes is better employee education and communications.  This means not only at annual open enrollment meetings, but periodically during the year to reinforce the concepts at staff meeting, newsletters and other forms of communications.  It also helps to do this in creative an innovative ways that will get employees attention to focus on these issues.  However, that is not always easy for a small business owner who need to focus on managing and growing their company. 

That is where Total Team Solutions can help.  For more than 30 years we have been helping small businesses in New York and Connecticut manage their payroll, benefits and other employee matters in the most efficient manner to save our clients time and money.  To find out how we can help your small business, contact John Morlock at jmorlock@ttspro.com or call him at 800-836-9678, ext. 5.