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It’s Time to Disrupt Employer Benefits Packages

Posted on in Retention Strategy

Technology has enabled the creation of products and services that are highly personalized. As a result, expectations are now set that everything can and should be customized. And I mean everything. Loyal readers know this theme is woven throughout the programs and processes that enable the talent continuum. In fact, we’ve talked about targeted marketing based on your ideal candidate and a hyper focus on development specific to the wants, needs, and desires of the individual employee as examples. But it doesn’t end here.

I recently came across this article and shared it on the Talent Point Consulting LinkedIn, Twitter, and Facebook pages (shameless plug, follow us here for daily insights, articles, and ideas!). The article suggests that in the future (maybe even now) companies should leverage personas as they build compensation plans. Admittedly, I had never considered this, but it makes sense.

With five generations in the workforce right now, it’s important that we are aware of what perks and benefits different people deem essential in building their career. Now before we get crazy, I am a firm believer that we all have way more in common than many want you to believe. However, as the workforce continues to evolve and is influenced by different working relationships (hello gig and shared economy), it does require that we begin thinking differently about our rewards systems. After considering this, I realized the notion of customizing compensation also supports an idea I’ve been kicking around for the last two years.

I’m going out on a limb a little bit here and am openly acknowledging that this idea is half baked (okay, maybe three-quarters baked). I also acknowledge that there are a lot of regulatory and tax code changes that would need to take place to make this idea possible, but that shouldn’t prohibit exploration of new thinking around how companies provide, and employees receive, standard benefits. In fact, I’m going to suggest that we remove this from the employers’ obligation all together. What?! Let me explain.

I don’t think the average employee understands the true costs associated with the array of benefits their employer provides. And because of this, I believe that most people undervalue their total benefits package when the look at it holistically. Even when you provide an annual summary that shows the value of their salary along with the cost of health care, retirements plans, supplemental insurance, and sick/vacation time absorbed by the employer, most people still don’t fully appreciate it.

So let’s take it away.

By doing so, you give the individual the power to choose what best suits their needs, remove a significant administrative burden on employers, and force individuals to be educated consumers.

Sounds like a win to me.

Before you start freaking out that this is some sneaky ploy to water down what employees have access to, that’s not the intent. Here’s how this might work practically.

Let’s say the value of your current benefits package is $25,000. And let’s say that this gives you access to an average HMO plan, three weeks of PTO, a 3% 401k match, and life and disability insurance. Pretty standard. But, what if you need or prefer a health plan with greater open access or maybe you’re on your spouse’s plan. Maybe you don’t need 3 weeks of PTO, or maybe you would prefer 5. Perhaps you’ve purchased your own supplemental insurance and don’t need what is being provided. Maybe it’s something completely different.

Unfortunately, with today’s standards none of that matters. The benefits package offered is what it is. You win in some scenarios and not in others.

But, what if that $25,000 was put into an account (pretax, please and thank you) for you to use on the open market and purchase what you want and need.

Comfortable with a high deductible health plan? Great. Purchase that and apply the remaining funds to the extra 2 weeks of vacation you want.

Want to put a little bit more away for retirement? That works. You might then choose to make different decisions around your health plan needs.

Don’t use the entire $25,000?  No worries.  The funds could remain in your account to defray out of pocket medical costs like today’s HSA accounts, paid out to you at the end of the year like a bonus, or be invested for disbursement at a later date.

Honestly, the configurations could be endless and just thinking about this gets my blood pumping (#nerdalert).

Before you write this off as something that will never work, it certainly couldn’t be a reality under current conditions. Deregulation would need to occur, tax codes altered, and other factors I can’t even think about. But, I see so many upsides to this. Might this approach bring coverage costs down due to increased competition? Could it force people to really understand how the healthcare system works? Would it reduce the cost burden of benefits administration on the employer and give people greater power to choose? I think so.

The old way of administering benefits to employees is ripe for some disruption at this point. No one is discussing it and it’s time. Who’s with me?

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