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With 3.6% unemployment, the lowest rate in more than four decades, employers face increasing competition in recruiting and retaining top employees. While many businesses are responding by increasing wages, others are also making changes to their employee benefits programs to address changing demographics and health care needs.

As evidenced by the Society for Human Resource Management (SHRM) 2019 Employee Benefits Survey, offerings that were not a part of the typical benefits package a few years back are increasing in popularity.

Health Care & Wellness

Employers continue to emphasize health care and retirement benefits. In the latest SHRM survey, health-related benefits were increased by 20% of employers since 2018, regardless of size. Wellness benefits were more likely to be broadened by larger employers (those with 500+ employees), as compared to small businesses (1-99 employees).

Eighty-five percent of employers offer a Preferred Provider Organization (PPO) insurance plan. High Deductible Health Plans (HDHPs) linked to a Health Savings Account (HSA) or Health Reimbursement Account (HRA) continue to grow, with more than half (59%) of employers offering at least one HDHP offering. That could decline in next year’s SHRM survey, as the Kaiser Family Foundation reported in October 2019 that employers are scaling back on HDHPs, finding instead that a more generous plan with a lower deductible is an attractive recruitment tool.

Leave and Flexible Working Benefits

There is a growing demand for flexible work hours and the ability to work remotely. Employers have responded by increasing the availability of telecommuting and flextime. According to the SHRM 2019 survey, 69% of employers allow telecommuting on an ad-hoc basis (up from 56% in 2015). Forty-two percent allow telecommuting on a part-time basis (up from 36% in 2015). More than one-fourth (27%) of SHRM respondents said they allow full-time telecommuting (up from 22% in 2015).

While just 15% of SHRM survey respondents offer a four-day workweek, there is growing interest in the idea among employees. As reported in Q1 2019 by CNBC, approximately two-thirds of workers want to work less than five days a week, but just 17% have that option. The idea recently generated buzz because of a 2019 experiment by Microsoft for its workers in Japan. Productivity jumped by 40% when electronics store employees switched to a four-day workweek. The company also said it lowered its electric costs (by 23%) and reduced printed pages (by nearly 60%). Similarly, a New Zealand firm found its move to a four-day week boosted productivity and reduced electric costs.

While a four-day workweek is likely not an option for all firms, it could be worth considering depending on the needs and expectations of your customers as well as your flexibility in responding to employees’ interest in a compressed work schedule.

Personal Growth/Career Advancement

Educational assistance, tuition reimbursement, and management training can help you recruit and retain cream-of-the crop talent. A new education-related benefit is also growing rapidly: student loan repayment assistance. Forbes called it the hottest employee benefit of 2018 and Employee Benefit News advocated for the addition of student loan repayment benefits in 2019.

SHRM found eight percent of employers offered such a program in 2019, doubling the number from the three prior years. That compares to 56% of employers that offer undergraduate or graduate tuition assistance (the same percentage as in 2015) and 83% that offer professional development, including both offsite and onsite opportunities.

The employer cost need not be significant. As noted in a post by Gusto, even an extra $100 per month would help the average recent college graduate pay off his or her student loans nearly three years early.

Pet-Friendly Workplaces

As Employee Benefit Adviser said in an online article in November 2019, the modern workplace is going to the dogs. In response to millennial workers’ growing affection for pets, more employees are looking to their employers to offer them access to pet insurance and on-site or nearby pet care. SHRM says about 15% of U.S. employers offered a pet insurance benefit in 2019, up from nine percent in 2015.

Eighty-seven percent of polled employers say being dog-friendly helps them attract and retain employees, according to the Mars Petcare 2019 report, Better Cities for Pets. It cites several benefits of a pet-friendly workplace:

• Bringing pets to work means companionship, a social icebreaker, and less worry for workers about their pets.
• Pets boost morale, build a sense of community, and get people out for regular walking breaks – all things that are good for health and collaboration.
• When people bring pets to work, they don’t have to worry about them being alone at home. That means less anxiety during the workday and the commute home.
• Many people say they would be more likely to join or stay at a company that allows pets. (The Mars Petcare survey found 59% of respondents would choose to work for a dog-friendly employer over one that is not.)

SHRM’s 2019 survey found 11% of employers allow pets at work – up from 8% in 2015. “Take Your Dog to Work Day,” held annually in June, is a good way to test out the idea of pets in the workplace. Just be sure to check with your office property owner and develop some rules about who is eligible to take part (e.g., socialized dogs up-to-date on vaccinations). Also, be sure you have supplies on hand to help employees with the necessary clean-up tools, which are sure to be needed.

Purina offers additional suggestions in its article, 5 Steps to a Pet-Friendly Workplace.

More Changes Likely

There is no doubt employee preferences are driving benefit changes in the workplace. That is sure to continue, as long as the economy continues to thrive and unemployment remains low. For more information about how employers are responding and what are the most common employee benefits, read our blog post, The Most Common Employee Benefits.

To get help on developing a winning employee benefits package for your business, talk with your insurance and benefits agent. If you do not have one, you can search for one here.

Today’s workplace is evolving quickly as are employee salary and benefit expectations. Employers should take note and consider what these changes mean in practice, today and for the coming year. We’re looking ahead to 2020 and making five predictions for small business employee health insurance that could impact employers in a big way.

Increased Demand for More Options

Changing demographics make it more challenging for employers to find a single health plan that’s right for all employees. The workforce is more generationally diverse than ever before. It’s not uncommon to find four generations working side by side: Baby Boomers, Generation X, Millennials, and Generation Z. 

With greater diversity comes a variety of health care needs. Your young, unmarried employees starting their professional careers are likely to want something different than their older co-workers who may be married, parents, or even empty nesters.

As an employer, offering options can help you attract and retain employees in an increasingly competitive environment. More and more, employees expect to have a greater say in their health care and other benefits. With a multi-carrier health care exchange, you can easily address diverse employee needs. That’s because an exchange delivers access to multiple health plans – and plan designs – giving your employees the freedom to choose what’s right for them.

Increased EPO Membership

Among the many options available through a private exchange is an Exclusive Provider Organization (EPO), which combines some of the benefits of a Health Maintenance Organization (HMO) with other benefits of a Preferred Provider Organization (PPO).

An EPO gives your employees access to a select network of doctors, hospitals, and other health care providers like an HMO. If employees stay in-network, they typically have lower or no out-of-pocket costs; however, if they go out of network, the EPO offers limited benefits and employees pay higher out-of-pocket costs.

A big advantage for EPOs is that, as with a PPO, members don’t need a referral from a Primary Care Physician to visit a specialist, as long as the specialist is part of the EPO network.

Where five years ago, only seven percent of employers offered an EPO, today nearly twice as many (13%) offer EPO coverage, according to the 2019 Employer Benefits Survey by the Kaiser Family Foundation. Expect that number to keep climbing in 2020.

More Value-Added Benefits Offerings

More is the theme of 2020. We predict employees will expect access to more wellness products and services like gym memberships. We’re already seeing the effects of employee expectations in this area. The state’s private exchange and many health insurers offer value-added benefits like fitness discounts. Health Net, Western Health Advantage, and CaliforniaChoice all have affiliations with the Active&Fit Direct program that includes membership discounts at more than 10,000 fitness centers nationwide.

CaliforniaChoice anticipated the increased demand for additional benefits by launching its Member Value Suite for its members. In addition to Active&Fit Direct, the Member Value Suite offers entertainment discounts through the Cal Perks® program, reduced fees on dental services at participating Dentegra® dentists, discounts on vision exams, frames, and lenses through the EyeMed® Vision One Eyecare program, discounted hearing services, and more.

When you’re considering a benefits program, be sure you look at the big picture and compare any added benefits that carriers and exchanges provide.

Modernization of Health Insurance Technology

Most health plans offer provider network search tools on their websites to simplify the search for in-network doctors, specialists, and hospitals. Some plans and administrators will take it a step further in 2020. For example, in addition to offering online provider searches and prescription drug searches, CaliforniaChoice’s Automated Choice Profiler allows prospective and current members to search for coverage that best matches their specific health care needs — or projected needs — from the dozens of plan options available through the private exchange.

We’re also projecting a push for greater cybersecurity. With data breaches and system hacks dominating the headlines, you can expect insurance and related companies to invest heavily in protecting member information. Make sure your health insurance provider is cybersecurity certificated through a reputable organization like HITRUST.

Greater Employer Cost Control

Fortunately, double-digit annual premium increases on group health coverage are no longer the trend in California. However, controlling health care costs remains a focus, particularly for small businesses. Defined Contribution is one solution. Defined Contribution allows you to set the amount you want to contribute toward the premium for your employees’ health benefits. It gives you more flexibility than what you may find with a carrier-direct program.

There could also be an increased focus on Section 125 Premium Only Plans (POP) as an additional cost-saving measure. A POP plan allows employees to pay for their premiums with pre-tax income. The benefit of a POP is two-fold. First, it results in a lower tax bill on employees by reducing their taxable income. For employers, it lowers the cost of payroll taxes and Workers’ Compensation.

Plan Now for 2020

An employee benefits agent can help you prepare for the changes coming in 2020 – and share other predictions and updates on trends affecting employee benefits. If you do not already have an agent, it’s easy to search for one here.

At CaliforniaChoice, we offer the most comprehensive array of health plan options in the state. But, we’re not stopping there. The CaliforniaChoice Member Value Suite offers outstanding savings to you and your employees on a range of products, services, and activities. Best of all, it’s available at no added cost to your business.

Here’s a look at what’s available through the Member Value Suite:

Entertainment

The no-cost Cal Perks^® program offers big savings on movies, theme parks, water parks, sporting events, travel, tax prep, retailers, and more.

Health Products

The ChooseHealthy^TM program delivers discounts of up to 57% on Garmin^®, Vitamix^®, and Fitbit^® products. It also offers fitness memberships for $25 per month, and 25% savings on specialty health care practitioners in acupuncture, chiropractic, and therapeutic massage.

Dental Care

CaliforniaChoice members enjoy reduced fees on hundreds of procedures at participating Dentegra® dentists throughout California and nationwide. Dentegra delivers instant savings without claim forms or waiting periods.

Vision Care

The EyeMed® Vision One Eyecare program offers discounts on exams, frames, and lenses at participating LensCrafters, Pearle Vision, Sears, and Target locations nationwide.

Hearing Services

Your employees can save up to 50% on brand-name hearing aids, and enjoy additional discounts on testing, batteries, and other devices through the EPIC^® Hearing Service Plan.

Prescription Drugs

The California Rx Card saves you and your employees up to 80% on brand name and generic prescription drugs. The card can often reduce your out-of-pocket cost to less than your Rx co-pay with insurance.

If you’re thinking about whether CaliforniaChoice is the right health care choice for your small business, be sure to consider the added benefits available to you and your employees through the Member Value Suite. They deliver valuable extras – and they’re free to you and your employees exclusively through the CaliforniaChoice program.

Talk with Your Agent to Learn More

If you are interested in getting a quote for CaliforniaChoice — and learning more about the no-cost Member Value Suite – talk with your employee benefits agent. If you do not already have an agent, we can help you find one.

Health care costs have been climbing for years and show no signs of slowing down. Increases to deductibles and copays have become the norm. For most small businesses, rising premiums are a frequent cause for concern. In the midst of rate increases, business owners want to know how much they should pay. It’s a simple question with a not-so-simple answer.

ALE Requirements

With all things health care, we must begin with the Affordable Care Act (ACA). The ACA defines an Applicable Large Employer (ALE) as an organization with 50 or more full-time and full-time equivalent (FTE) employees, on average, during the prior year. If you are an ALE, your organization is subject to the ACA employer shared responsibility provision and employer reporting requirements. For more information, visit the IRS website page on ALEs.

Under the shared responsibility provision, the health insurance coverage offered to employees must be “affordable” and must provide “minimum value” to your full-time employees and their dependents. If coverage is not affordable or does not offer minimum value, a business could be subject to a penalty if at least one full-time employee receives a premium tax credit for individual coverage purchased through Covered California, the state public exchange set up in connection with the ACA.

The ACA affordability threshold changes annually. In 2019, coverage was considered affordable if the lowest-cost, self-only coverage option available to employees did not exceed 9.86 percent of an employee’s household income (up from 9.56 in 2018). In 2020, the threshold has been reduced to 9.78 percent.

Average Costs for Employers

The 2019 Kaiser Family Foundation (KFF) Employer Health Benefits Survey found that employers were contributing an average of 77% of a plan’s cost. However, that 77% is not uniform across the board. Upon closer inspection, the average was found to fluctuate based on coverage. For example, employers were found to contribute 82% for single coverage, while contributing just under 71% for family coverage. That translates into an average contribution cost of $5,946 for single coverage and $14,561 for family coverage.

Your Contribution Options

Generally, for employer-sponsored health coverage, insurers require a contribution from the employer of at least 50%. In this scenario, the cost is contingent on several key factors such as carrier, plan type, provider network, and location. A viable alternative, like CaliforniaChoice’s Defined Contribution, lets you choose your premium contribution. You can select a Fixed Percentage of costs (from 50% to 100%) or a Fixed Dollar Amount for each employee.

How Much Should You Pay?

There is no blanket answer to this question. However, there are several good reasons most businesses pay 20 to 30 percent above the required minimum:

• Good health coverage helps in recruiting new employees. A survey by the Harvard Business Review found 88% of respondents would choose a job that offers a lower salary with better health, dental, and vision insurance over an opportunity with a higher salary but lesser benefits.
• A strong employee benefits plan affects employee retention. A 2018 survey by the Society for Human Resource Management (SHRM) found more than half (56%) of U.S. adults said whether or not they like their health coverage is a key consideration in their decision to stay on their current job. Forty-six percent said health insurance was either the deciding factor or a positive influence in choosing their job.
• Comprehensive coverage helps reduce stress in the workforce. The Annual U.S. Employee Benefit Trends Study by Metlife found that 74% of employees agree that having comprehensive health care services provides peace of mind for the unexpected. It is well-documented that happy employees are more productive and use less sick time.

Tax Benefits

It is important to note that offering health insurance benefits to your employees is, generally, 100% tax deductible as an ordinary business expenses on your state and federal income taxes. For an additional tax benefit, be sure to ask your employee benefits agent about a Premium Only Plan (POP), which gives your employees the ability to pay their share of premiums with pre-tax dollars – while also reducing your payroll taxes.

Average Costs

In summary, the average business is paying around 77% of a health plan’s cost, which amounts to $10,253.50 per year. While it is very likely your workforce will benefit greatly from a high employer contribution, there are cost-controlling options, like Defined Contribution, that let you take control of your health care costs. Of course, contribution requirements are wholly dependent on your business’ status as an ALE. If you are unsure if your organization is an ALE, you can use the calculator on the HealthCare.gov website or one on the CaliforniaChoice website.

Get a Custom Quote

To learn about the coverage and contribution options available to you and your business, talk with your health insurance agent. You can request a custom quote and discuss value-added benefits available to your group. If you do not already have an employee benefits agent, it’s easy to search for one here.

People are accustomed to making choices every day based on their personal preferences and individual tastes — from what they wear and drive to the restaurants they frequent. With the “individualization” of the market (think Amazon, Netflix, and DoorDash), more and more industries are serving up options to stay relevant in a world where choice isn’t just a nice to have, but the expectation.

It should come as no surprise that the health insurance industry is not immune to these expectations. In the past, employees were limited to a single health insurance option (selected by the employer) that did not necessarily address their individual needs. However, that model is quickly becoming a thing of the past and the private health exchange is leading the way.

What is a Private Health Exchange?

A private health insurance exchange gives employees access to multiple health plans through a single program. It enables you and your staff to individually shop, compare, and enroll in an array of coverage options and receive one bill for all of your employees’ insurance.

Many people became acquainted with insurance “exchanges” when the Affordable Care Act (ACA) was signed into law in 2010. The ACA created a national public health exchange and established the framework for states to take part or create their own state-run exchanges. California was among the first group of states with a state-run exchange.

However, California small businesses have been able to choose coverage through a private health exchange since 1996, when CaliforniaChoice opened its doors. The Word & Brown Companies’ co-founders John Word and Rusty Brown created the state’s first private health exchange and modeled it after large group and government employee insurance programs offering enrollees access to multiple health plans.

Choice Matters to Employees

Today’s workforce is dramatically different from the past. It’s fairly common to find a business with employees ranging in age from 20-somethings to baby boomers. Also, on the rise is workplace diversity of gender, religion, race, ethnicity, cultural background, sexual orientation, and language.

With so much to consider, it can be a challenge for employers to provide health insurance to an employee population with such variance. For example, the preferences and needs of an older, married employee are going to be vastly different than those of a younger, single person who is just starting out in the workforce.

An exchange program gives employees a way to find coverage that best fits their health care needs and budget. One employee might select a PPO because of a particular doctor or hospital in the PPO’s network. Another employee who rarely visits the doctor might choose a HMO. A third employee might select an EPO (Exclusive Provider Organization) plan because it has a slightly lower premium, but offers direct access to in-network specialists without a Primary Care Physician referral. A fourth employee might choose a Health Savings Account-compatible plan due to cost and tax considerations.

It is your employees’ choice when you offer them access to a private health exchange.

Cost Control for Your Business

In addition to offering you streamlined administration and one bill for all of your employees’ health coverage, a private exchange program also offers you the ability to control your employee benefits cost. The CaliforniaChoice exchange lets you set your own budget for benefits using Defined Contribution.

You decide what you want to contribute to your employees’ benefits. You can select between a Fixed Percentage (50% to 100%) of a specific plan and/or benefit, or a Fixed Dollar Amount for each employee. Employees then apply your contribution to whatever health plan and benefits they prefer. If employees selects a plan that costs more than your contribution, they simply pay the difference.

When you renew, you have the option to adjust your premium contribution – up or down – giving you complete control over your benefits cost for another 12 months.

Finding Coverage That’s Right for Everyone

Offering a greater level of choice to your employees — without increasing your cost as compared to a single health plan solution — sets a private health exchange apart from other health insurance options. It also gives your business a recruiting advantage and a powerful tool to retain your current employees.

If you have an employee benefits agent, ask about a private exchange quote for your business. If you’re not currently working with a benefits professional, go here to find a licensed expert in your area.

It’s no secret that Californians identify as being unique. From what we wear to what we drive, we take pride in standing out from the crowd. So, why should choosing health care be any different?

At CaliforniaChoice we celebrate your differences because we’re different, too. We believe there are five distinct advantages that make the CaliforniaChoice health insurance exchange unique among other companies in the market.

Greater employee choice