Question

In a MS Word document, answer the following questions in 200 words or less:

Benefits account for a significant percentage of payroll costs for organizations. Name three ways in which you, as an employer, would try to reduce the costs of benefits.

Answer 1

Some of the ways in which organizations can control and reduce their employee benefits cost are:

(i) Consider Outsourcing HR to a Professional Employer Organization

Besides providing professional and experienced Human Resource support, outsourcing HR to a Professional Employer Organization(PEO) can reduce your cost of the employee benefits considerably.

The PEO groups all clients into a single “buying pool” when trying to negotiating rates with insurance providers. That means that organizations can take advantage of negotiating large company rates irrespective of their size. That can be especially beneficial as organizations can find some insurance providers that often apply “age bands” when pricing out a organization's benefits plan.So, the older an employee is, the higher the individual plan will cost. Using services of a third party HR provider can reduce or eliminate the utilization of "age bands".

(ii) Offering a more booming benefits package but making sure that employees contribute

If organizations wants to compete effectively and attract talent, employers must offer health insurance, life and disability insurance and also, a retirement savings plan. For specialty benefits such as dental and vision coverage, employers must investigate what the current employees need and whether they’ll be willing to contribute. It is a common practice that employees or workers pay 10-20% of the cost of their benefits package.

(iii) Offer employee discounts on Wellness Program

Organizations can save money in the long term by adding “wellness component”- nutrition counselling, fitness programs, and various other health plans. There are insurance plans that include a wellness program at a minimal annual cost of $150 to $200 per employee. The government weighs tax incentives for organization wellness programs as well. This way of thinking can be very beneficial for employees and the organization as it can help with improving productivity and reducing absenteeism.