- Employee Benefits
How Does Your Employee Benefits Program Measure Up?
August 30, 2021
Employee retention and turnover continues to be an ongoing issue for Canadian businesses. Globoforce reports that this was the leading workforce management challenge facing employers in 2017 with 47% of survey respondents pointing to retention and turnover as their number one problem. Compare this against 2012, where only 25% of employers reported the same. This, coupled with recent reports of the ‘Great Resignation’, the mass wave of employees who are projected to quit their jobs post-COVID, and all signs point to a workforce that is undergoing some significant changes, and one where organizations need the best possible tools to entice (and keep) top performers. Group benefits are one of those tools.
Group Benefits Give Organizations a Competitive Advantage
“Group benefits rose to prominence in the 1940’s because of the shortage of skilled labour caused by the second world war,” Barry Hutchins, Senior Consultant, Employee Benefits with WealthCo explains. “More and more employers began offering group benefits as a way to compete for and attract top talent. And it continued to grow from there. Today’s employees have come to expect a comprehensive package of benefits from their employers. Companies with good benefits plans tend to have lower employee turnover and higher employee morale.”
Rather than being viewed as simply another operating expense, organizations should see group benefits for what they truly are: an investment in their business and their people.
“Group benefits are a very tax-effective form of employee remuneration,” Hutchins describes. “Premiums paid by the employer are income tax-deductible as a business expense and benefits received by employees in the form of claims reimbursement are generally tax-free.”
Benefits Canada reports that almost 60% of employees would choose a benefits plan over an extra $10,000 in cash, a statistic that doesn’t surprise Hutchins.
“That makes sense,” Hutchins observes. “A salary increase will attract not only employee-paid income taxes but also employer-paid payroll taxes such as CPP, EI, and WCB, whereas benefits attract no tax.”
Group Benefits are Critical in a Health-Minded Society
COVID-19 has demonstrated just how disruptive and devastating a global pandemic can be. It put the importance of healthcare front and centre in a way that the world hadn’t experienced in a century. Needless to say, good health is top of mind for the broader population in a way it hasn’t been before.
“The pandemic has really changed the way in which we perceive everything,” Hutchins points out. “And employee benefits are certainly included in that - especially when it comes to the delivery of benefits. Virtual healthcare has very much come to the forefront in the benefits world, as a result of the pandemic, and it will surely continue to grow in popularity.”
The pandemic also introduced a heightened sense of employment vulnerability and forced a number of people to consider the impacts of living without employee benefits.
“The pandemic led employees to realize how fragile their employment really can be, and the group benefits that go along with it,” Hutchins states. “Many families across Canada have seen one or more of their family members lose their job during the pandemic and also, unfortunately, lose their health and dental benefits as well. Being without group benefits while unemployed can certainly increase the perceived value of benefits when looking to re-enter the workforce and employers with a comprehensive package of benefits will definitely have the advantage.”
In particular with older employees and those with families, group benefits are a critical recruitment and retention tool.
“As we get older, we tend to have more chronic health conditions such as hypertension, cholesterol, and diabetes, and more financial obligations such as mortgage payments and children,” Hutchins shares. “The financial security that a comprehensive benefits plan brings is more important to those who have a real or perceived need.”
Your Benefits Plan Should be Reviewed on an Annual Basis
“Your group benefits plan needs to be regularly monitored and modified when necessary to ensure that it remains relevant and valued by employees,” Hutchins warns. “This is especially true if employees are contributing to the cost of the plan with after-tax dollars.”
Take your employee feedback to heart regarding group benefits. Employees don’t tend to be shy about voicing their opinions; if they are complaining about the plan it is likely because they have valid concerns.
Hutchins shares some clear signs that your benefits plan may be in need of a review.
“Have you taken your plan to market for competitive proposals from other carriers in the past three to five years? Are your employees voicing concerns about rising out-of-pocket costs, concerns about coverage restrictions, or concerns about service levels from your current provider? Are you concerned about rising costs and the lack of proactive action from your current provider? These are all signs that your plan needs a review.”
Scheduling a benefits audit can pay off in spades. Hutchins recalls a recent audit he undertook for a client.
“During a recent audit I discovered that several employees were capped at the non-medical limit for long term disability benefits when they were in fact eligible for much higher amounts of coverage. In the event of a claim, they would be considerably under-insured. These employees each had their benefit amount capped at $4,300 per month. Some were actually eligible for coverage of $6,000 per month based on their income. In this scenario, instead of replacing 67% of pre-disability gross income, these employees would only receive 48% of income. Not only is this a disadvantage to the employees but also a very serious liability risk to the employer in the event of legal action taken by the employee.”
The workplace has changed. It’s time your employee benefits did too. Schedule your benefits audit today and see how WealthCo can help you create a better benefits strategy for your employees.