Better Benefits, Happier Employees

A Strong Benefits Plan Can Deliver Better ROI Than You Think

July 26, 2021

Do employees care about benefits?
Construction is no different than most industries these days. There’s so much work to get done, there seems to never be enough time to talk benefits. No time to sit the team down and explain why your company’s benefits make such an immense difference people’s lives. But because we know they do it’s a bit of a conundrum. In the competitive construction industry – one that is competing for top talent, we need to be talking about all of the compelling aspects of what we have to offer candidates to recruit them, or to employees to retain them, and yet most of us don’t.

The employee benefits challenge while often introduced by business leaders, with a tone of frustration seems initally like an easy enough problem to for us to help solve – “tell your employees that they should view benefits differently.”

If only it were that easy. The reality is that leaders have already had many conversations with their people, in an effort to retain or attract staff who end up leaving to join a competitor for compensation increases of a dollar or two per hour.  This is further complicated if your workforce is between 18 to 26, since under the Affordable Care Act , this age group can stay on their parent’s insurance plan. The construction industry’s seasonal layoffs further complicate the situation as COBRA expenses pile up during the idle winter months. As construction leaders start to calculate ROI, this can be a tough hill to climb. Employee benefit discussions  can make all the difference between the talent you keep and the talent you lose.

Competing on Benefits
The solution is not an easy fix but rather a long-term strategy built on using several best practices. As a Construction business owner or leader, ask yourself this question, “Do we want to compete on benefits, perks, or wages?” Very rarely can an employer successfully compete on all three.  If you come to the conclusion that you want to compete on your benefits program, then here are some best practices to follow:

  • An employer should set the employee contributions as high as you can, ideally at 100%. This will ensure that most of your employees will chose to be covered by the plan. The goal would be to have at least 80% of the employees on the plan especially in the 18-26 age group. Our experience has shown us that by achieving this, the loss ratio or claims experience will likely trend down creating a better pool of risk. In addition, the dependent strategy can impact this as well.

    If the employer decides to contribute toward the dependent premiums then it is essential to contribute at a high enough percentage as to attract most of the eligible dependents. When an employer contributes less than 50% of the dependents premiums, the plan can become exposed to possible anti-selection. Meaning, only those dependents who either need the insurance because of ongoing conditions and/or cannot purchase coverage outside of the employer plan because the cost to do so is too high, will elect to take the coverage. Many times in this scenario, we see a large percentage of the high dollar claims coming from the dependents causing the loss ratio to increase. We have seen great results when the contribution strategy is 80% or higher for the employees and 60% or higher for the dependents. When it isn’t possible for an organization to do so, then I would recommend an 80% - 100% employee contribution and 0% for dependents.

  • Employee communication of the benefits plan is a must! The most effective and successful ways to communicate benefits to the employees is by incorporating the discussion into your safety meetings. Most, if not all construction employers will hold these on a quarterly, semi-annual or annual basis. And attendance is mandatory.

  • If you have seasonal layoffs, consider setting the employee portion of the premiums a little higher during the months while working to fund their COBRA premiums while on layoff. This may increase the % of employees who will return to work in the spring. Be careful to look at the life and LTD actively at work statements as most insurance companies will deny the claim if an employee is not actively at work. However, there can be exceptions to this as some companies will re-write their policies to waive this, but only if the employer is paying the premiums for all employees.

  • Benchmark your plan often. We have seen that the benefit plan designs can change from year to year. Know what the market is offering, and adjust accordingly.

  • If you have a High Deductible Health Plan (HDHP) consider making a contribution to employees’ Health Spending Accounts (HSA). Often times an employee does not participate in an HSA because they haven’t opened one or doesn’t know how it works. The education of the moving parts during the Open Enrollment communication is critical.

  • Lastly, a great tool to help communicate to employees the value of their benefit plan is a Total Worker Compensation Statement. Adding in all the things that an employer provides to the employees including the many “perks” as well. A sample is below.

By thinking about all of these benefits best practices, your team can improve your position against competition and bring real value to your plan. We know that this is just part of why someone would choose you as their Construction employer versus another firm, but when you take the steps to show them what you have to offer, you will see the ROI of benefits in attracting and keeping talent. If you would like to walk through what this means for your firm, reach out to your MMA Construction team and let’s build best practices together!