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Don’t Forget Your Small-Business Clients

They need your help to understand and take full advantage of voluntary benefits.

By Preeti Vasishtha

As health-care costs continue to rise, many small businesses are caught between a rock and a hard place. They have to make a choice between offering an attractive, robust benefits package (which digs into profits) to employees and cutting back on offerings (and risk losing employees to the competition).

Most small-business employers also don’t have the time or expertise to continually shop around for a benefits package that best suits their needs. In fact, many of them have misconceptions about voluntary benefits. And that’s why small-business owners need knowledgeable advisors to dispel those myths and help them deploy and administer a benefits program so that they can focus on driving revenue and increasing profits.

A new white paper, Small Business: Big Benefits, How Smaller Employers Can Use Voluntary Benefits to Create a Competitive Advantage, from Colonial Life & Accident Insurance Company explores common misconceptions that many small-business owners have.

These include:

  • Concern over HR administration burden. Small-business employers think that adding more benefits is too complex and will add to their human resource department’s administration burden. But according to the International Foundation of Employee Benefit Plans, although employers do incur some administrative costs relating to implementing and maintaining voluntary benefit product offerings, a large majority (78.3 percent) finds that offering voluntary benefits results in only slight or moderate increases in administrative costs. In fact, administration can be handled seamlessly and effortlessly with a good voluntary benefits partner.

  • Fear of low employee participation. Smaller firms don’t want to expend the effort to implement new programs if employees aren’t going to be interested enough to participate. Contrary to this belief, employers usually add voluntary benefits because employees ask for them, and employee enthusiasm for voluntary products is on the rise. According to a 2010 survey by Eastbridge Consulting, 71 percent of employers expect workers to be more enthusiastic about voluntary benefits over the next 12 months. And that enthusiasm translates into employees’ willingness to pay for more choices in their benefits plans. Forty-seven percent are willing to pay between $25 and $49 more per month; while 25 percent are willing to pay $50 more per month.

  • Worry that enrollment monopolizes employees’ time. Small companies wonder when employees will work if you combine the education and enrollment of employees in a new voluntary benefits plan with the traditional enrollment process for core benefits. But a well-designed plan that’s simple to understand and use, along with a provider who can enroll all employees, including other core benefits, reduces the amount of employees’ required time.

  • Belief that voluntary benefits are designed for large corporations. Small companies believe that plans offer a one-size-fits-all benefits approach, which doesn’t address their unique HR needs and challenges. Although many plans require 50 or more employees, some cover groups as small as three. An insurance partner well-versed in the needs of a small business can demonstrate how voluntary benefits offer the flexibility to address the changes in employee numbers.

“Smaller employers have much to gain by adding voluntary benefits to their core benefits programs, but many of them don’t fully understand how these benefits work yet,” says Randy Horn, president and CEO of Colonial Life. “Voluntary benefits are highly desired by employees. They use them to fill gaps in coverage and eliminate some of the financial risk they face because of cuts in their benefits packages.”

Voluntary coverage that’s offered most frequently to small businesses includes short-term disability, long-term disability and supplemental life, according to research from Colonial Life. Cancer and accident insurance are gaining traction. In addition, long-term-care insurance is considered to be one of the fastest-growing voluntary products, fueled by Baby Boomers who need coverage for their aging parents. For more information, visit www.ColonialLife.com.


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