You’ve heard the shocking statistics: From April through September of 2021, a record 24 million Americans
This tidal wave of resignations and a tight labor market have forced many employers to throw money at the problem to boost retention and strengthen recruiting. From Target and Walmart to JPMorgan and Goldman Sachs, companies are raising wages, while others, including Amazon, Kohl’s and McDonald’s are offering signing bonuses. Campbell’s, Microsoft and Starbucks are rolling out generous new benefits and perks that include pet insurance, paid parental leave, free childcare, student loan repayment and free college.
Read more:
Notice, though, that all these examples are large companies that have the financial resources to fund these expensive strategies. For many smaller businesses, the math doesn’t work. Too often, small and midsize employers simply can’t afford to invest in retention and recruiting.
Many employers, however, are discovering that they can redesign their healthcare plan not only to become a powerful retention and recruiting tool in itself, but also to fund other initiatives to keep and attract top talent.
Far too many companies today are grossly overspending on their healthcare, paying the insurance company far more in premiums than their employees spend on medical care. For example, a company paying $1 million in annual premiums, after deducting 20% for fixed administrative costs, has an $800,000 claims fund to pay employees’ medical and pharmacy expenses.
Read more:
With a relatively healthy workforce that spends only $600,000 on healthcare, this company’s plan would have a $200,000 surplus in unspent claims funds. In a fully insured plan, however, the insurance company, not the employer, keeps the surplus. This $200,000 profit for the insurance company is a $200,000 overspend for the employer.
Adding insult to injury, the insurance company then imposes an average 8-12% renewal increase, despite the employer overspending by 20% the previous year. How does this make sense?
Recognizing the absurdity of this arrangement, employers increasingly are turning to innovative benefits advisers who use next-generation benefits — an innovative new model for employee health plans — to keep their unspent claims fund dollars and also improve the quality of care while lowering costs.
More to the point, these benefits solves companies’ recruiting and retention problems by producing three remarkable results that work together to create an integrated retention and recruitment program.
Read more:
First, they simply improve the quality of care. Although insurance companies have reliable quality data on providers, their own network contracts prohibit them from guiding members away from bad doctors and dangerous hospitals to great doctors and safe hospitals. Next-generation-style health plans, however, use the same quality data to guide patients to high-quality providers, ensuring better medical outcomes.
Second, these plan designs, in most cases, totally eliminate employee out-of-pocket costs. Employees pay their monthly premiums and, when they need health care, it’s free. No deductibles, copayments or coinsurance.
High-quality providers dramatically reduce unnecessary and costly treatments and procedures, complications and hospital readmissions. When a next-generation health plan guides employees to quality providers, the plan achieves remarkable savings, making it possible to waive the employee’s out-of-pocket expenses without driving up plan costs.
Read more:
And finally, because employees in a next-generation health plan get high-quality care that produces better medical outcomes at a lower cost, the employer pays substantially less for health care, realizing year-over-year savings of $2,000 or more per employee.
Funded by these savings, an integrated retention and recruitment program allows employers to improve their pay and benefits package without having to spend any new dollars.
Would higher wages, sign-on bonuses, a premium holiday, benefits shopping spree, and other valuable benefits and perks — all funded out of savings from a smarter, better health plan — help a small or midsize employer retain and recruit great employees?
Now, any size employer can fund a retention and recruitment program; there’s money in the health plan.
