Employee benefits are an important part of the HR function and the employee-employer relationship in any organization operating within the United States. Candidates and employees often place significant value on benefit offerings in addition to salary when considering how a job will contribute to their overall quality of life. Certain benefits, such as fitness memberships, enhance an employee’s physical and mental well-being; happy, healthy staff tend to be more engaged and productive.
But not all employee benefits are just “nice-to-have” perks employers use to sweeten a job offer. Many benefits are legally required, and those requirements often vary by state. In addition, even when benefits are optional, employers could potentially invite claims of discrimination if they selectively offer benefits to some employees and not others.
This article, while not legal advice, will discuss some basic best practices in managing a benefits program in the United States, as well as how to communicate with employees and candidates about the benefits you offer.
Become Familiar with the Legal Landscape
While not a substitute for expert guidance (see below), having key internal stakeholders develop a basic understanding of key benefits laws is a great strategy for helping to manage compliance and even for building out an internal benefits compliance framework.
“You’ve got to get your head around the fundamental laws,” Kraig Kleeman, CEO and founder of The New Workforce, told Accurate. “The ACA, Patient Protection Act, and ERISA aren’t just fancy acronyms; they’re the rulebook for managing health insurance and retirement plans. Understanding these laws is like having a roadmap for compliance,” he added.
Don’t Hesitate to Seek Out Expert Help and Guidance
Third-party help can be expensive. But, so can failing to meet legal and regulatory requirements and associated fines and even lawsuits for non-compliance — not to mention reputational harm.
“It’s wise to chat with legal experts who know their way around employment law,” said Kleeman. “They can break down the nitty-gritty of laws like the Affordable Care Act and the Employee Retirement Income Security Act. And if things get too tricky, consider bringing in a benefits consultant or a third-party admin to handle the heavy lifting.”
Continually Assess Benefit Offerings and Requirements
The employee benefits landscape constantly evolves, with multiple dynamic elements to keep track of. The availability and cost of benefits often change with demographics and market conditions, as do employee demands for certain benefits. Most importantly, laws and regulations around benefit compliance also change and vary from state to state. Managing a benefits program is an ongoing process that needs continuous attention.
“As both the market and healthcare needs are ever-changing, it is necessary to reevaluate benefits and how they are serving employees,” Carmen Schram (SHRM-CP), Senior Talent Acquisition Specialist for Human Resources at Info-Tech Research Group, told Accurate. “This can be done via employee surveys, feedback sessions, and through evaluating trends in employee benefits.” For instance, she notes that Employee Assistance Programs (EAP) “needs have drastically increased and have therefore become an important part of benefits after COVID.”
“Constantly checking up on how you’re doing with compliance is super important,” added Kleeman. “Regularly reviewing your retirement plan documents and making sure everything’s up to snuff with ACA standards will help keep you in the clear. And remember, keeping up with the paperwork and reports is part of this routine.”
An Iterative Process
Because benefit programs are so complex, it’s essential to continually monitor and update them, considering changes in the regulatory landscape. It’s natural not to get a benefits program perfect on the first try, and even the lucky few who do achieve this need to update their plans routinely to account for the fluid nature of the employee benefits landscape.
Even when there aren’t new developments to account for, it’s important to periodically review existing policies and practices to ensure compliance as well as the effectiveness and efficiency of the benefits program.
“Rolling up your sleeves and deep diving into your current practices with a compliance audit is vital,” said Kleeman. “This means ensuring your health plans are on point with ACA rules and that your retirement plans are playing by ERISA’s rules.”
The Importance of Effective Communication
It’s hard to overstate the importance of communication when it comes to employee benefits. With frequent changes to rules and employer offerings, communicating early and often is essential to keep employees in the loop.
“When you make changes, please don’t keep it a secret,” said Kleeman. “Let your employees know what’s up with their benefits or retirement plans. Opening doors—or emails—for them to ask questions and share concerns can help everyone feel more at ease.”
Often, employees fail to take advantage of attractive benefits simply because they aren’t aware of them.
“To promote overall employee wellbeing, including both physical and mental health, employees should take advantage of their benefits and actually use them,” said Schram. “For example, only a very small number of employees use their EAP, with one study stating that only 5.5% of employees use EAP services.”
Consequently, Schram offers a few considerations to keep in mind when communicating with employees about the benefits available to them:
- HR needs to continually educate employees on the benefits to which they’re entitled via email, intranet, 1-1 sessions, etc.
- Information needs to be easy to understand as reading and understanding benefits can be confusing, and people are often afraid to ask for clarity.
- As such, it is important that companies have a culture of openness and transparency that allows employees to ask questions and seek clarification without judgment.
Along with salary, employee benefits are a key consideration for candidates when deciding where to work. But, as we’ve seen, benefits come with a variety of legal and regulatory requirements that employers must comply with.
Are you enjoying this content? Learn more about how employee benefits play into your overall candidate experience and help you retain top talent.
The foregoing commentary is not offered as legal advice but is instead offered for informational or educational purposes only. Accurate Background is not a law firm and does not offer legal advice. The foregoing commentary is, therefore, not intended as a substitute for the legal advice of an attorney knowledgeable of the user’s individual circumstances or to provide legal advice. Accurate Background makes no assurances regarding the accuracy, completeness, currency, or utility of the foregoing information and we are under no duty to update the information provided. Regulatory developments and the impacts of the changes are continuing to evolve in this area and should be carefully monitored and considered.