There are 134.56 million full-time employees in the United States. So, if you’re a business owner, replacing one of yours shouldn’t be hard if they leave for a different job.
Wrong. You might be able to find another employee, but it probably will not be quick and certainly will not be cheap. It’s taking companies 18 percent longer to fill roles than before the COVID-19 pandemic, and the cost of replacing an employee ranges from one-half to two times that individual’s annual salary.
Employee turnover isn’t only expensive, although it costs $160 billion annually. It also often results in lost productivity, employee burnout, low employee morale, lost expertise and training.
This is why employee retention should be a focus for businesses both small and large. There are various reasons employees leave jobs, from a lack of workplace flexibility and unrealistic employer expectations to an absence of professional development or career advancement opportunities. Probably the most common reason for employee turnover, though, is dissatisfaction with salary and benefits and a chance to get them with another company.
In this blog, we’ll explain why health insurance should be an essential component of the compensation package you offer your employees. We’ll also outline types of health benefits and the steps you should take to include them to improve employee retention at your business.
Why Health Benefits Matter
Health insurance is second only to wages as part of employee compensation. It ranks higher than paid vacation or sick leave, retirement savings plans and dental insurance.
According to a survey by the Society for Human Resource Management (SHRM), 90 percent of employers rank health as the benefit their workforce values the most. Forty-six percent of employees say health insurance was either the deciding factor or a positive influence in choosing their current job, and 56 percent of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job.
Types of Health Benefits
The single largest source of health benefits in the U.S. is employer-sponsored insurance (ESI), covering more than 70 percent of employees, 53 percent of children and 36 percent of nonworking adults. This type of insurance, of course, is offered to employees and their dependents (and in most cases, spouses) as a benefit of employment. Nearly half of the 475 companies on Inc.’s Best Workplaces list now offer entirely employer-paid health insurance.
A newer but popular form of health benefit offered to some employees is wellness and preventive health programs, which are designed to promote healthy living and prevent diseases before they occur, educate members and reduce healthcare costs. These programs typically require health screenings and risk assessments at the outset. They then provide participants with educational materials, exercise and nutrition plans, smoking cessation tools, stress reduction resources, mental health assistance and more.
Nearly 85 percent of large employers (200 or more workers) with health benefits offer a workplace wellness program, such as those to help people lose weight, stop smoking, or provide lifestyle and behavioral coaching. Approximately 40 percent of small firms and 55 percent of large firms provide workers the opportunity to complete a health risk assessment.
The Office of Disease Prevention and Health Promotion lists the following five reasons employee wellness is worth the investment:
- Healthy, active employees incur lower health costs.
- Employees who take advantage of wellness are more productive.
- Physically active employees are healthier.
- Wellness programs inspire important behavior changes.
- Small business owners may be able to take advantage of tax incentives for workplace wellness programs.
Mental Health Support
Just last year, roughly 50 percent of large employers saw an increase in the share of employees seeking mental health services, and 43 percent were at least somewhat concerned with the growth of substance use conditions among their employees. It’s been reported that 42 percent of employees with access to mental health benefits said they’re more likely to stay with their current employer than if they didn’t have those resources.
How Health Benefits Boost Employee Retention
Businesses that offer ESI remain more competitive with other businesses. They also increase the odds of retaining their workforce by the financial security and better work-life balance those health benefits provide.
Healthcare is already expensive in the U.S. An estimated 1 in 4 employees have major financial distress, which leads to roughly 30 million workers who are likely distracted at or absent from work. About 65 percent of Americans, though, believe that employer-sponsored insurance provides them with “financial peace of mind.”
An increasing number of businesses are offering financial wellness benefits, and about 85 percent of employers say they reduce employee attrition. The most common financial wellness benefits offered by employers are retirement savings plans and safety net insurance, such as life and disability insurance.
Maintaining a work-life balance is essential for employees’ mental well-being. When their employers give them the resources and support to balance their work and personal lives, they are less likely to look for new employment. Also, employees who can successfully separate their work and personal lives are less likely to experience anxiety, depression and other mental health issues that can impact their job performance and overall satisfaction.
A well-designed employee benefits package can not only improve productivity but also loyalty. That’s important to businesses striving to improve employee retention because fewer workers are feeling strong loyalty to their employer. Loyal employees are more engaged, productive and committed to achieving organizational goals.
Steps to Implementing Health Benefits for Employee Retention
Research has proven that employees prefer to work for a business that prioritizes health insurance. Doing your research on health insurance plans that best fit your employees’ needs but are affordable for your company is essential. Following are other recommendations for making ESI an important part of the benefits you offer to maintain a skilled workforce:
- Figure out what type of health insurance you want to offer your employees.
- Select a plan that offers a wide network of healthcare providers.
- Decide what employer/employee contribution ratio works best for you and your employees.
- Figure out the average out-of-pocket costs your employees would have.
- Research reimbursement levels for various procedures.
- Avoid plans with numerous restrictions.
- Decide if you want to include vision and dental insurance, a wellness program or mental health services as part of your employees’ health benefits.
- Identify any tax breaks you can get by providing your employees with health benefits.
Deciding on the best health insurance for your employees can be difficult. That’s why it’s helpful to enlist the expertise of professionals like those at StenTam 360. You’ll receive access to best-in-class, enterprise-level health insurance products, tips on tax incentives and programs to help you maximize your benefits and tools to help you combat rising health insurance costs. Get a quote now to see how affordable it is to get a comprehensive benefits strategy tailored to your business.