09/ 23/ 2005
by Steve Strauss
Q: What are my obligations as far as employee benefits go?
A: Previously, I discussed the legalities surrounding employee benefits, bonuses, employee ownership plans and other sorts of benefit options. In this installment, I will discuss health insurance and time away from the office.
Health insurance
Employees consistently rank health insurance as the most important benefit supplied by an employer. (though you are not legally required to provide it.) The problem for the small businessperson is that the cost of insuring employees continues to rise at frightening rates.
So what do you do? The first and easiest thing is to shop around. Online, ehealthinsurance.com is a good site for comparing health plans. You should also speak with your insurance agent or broker. The plan you bought a few years ago may have cheaper alternatives today. By shopping, you can compare quotes for scores of different plans.
Your basic options are:
Traditional health insurance: This type of insurance allows employees to pick any doctor or specialist they want. They need to first meet the deductible, and there is usually a cap on out-of-pocket expenses. This is the most flexible, and most expensive, sort of plan.
Health maintenance organizations: HMOs direct employees to providers within the system. Their primary care physician is the gateway to all other medical care. Co-pays are small, and meeting deductibles is usually not a requirement.
Preferred provider organization: A PPO allows employees to see any health provider they want, but if they choose a doctor outside the system, their co-pays are higher.
Point of service: With a POS plan, as with an HMO, your staff has small co-pay and are encouraged to see doctors in the network. If they go outside the network, they must meet a deductible and also pay a percentage of the fee.
Health savings accounts: HSAs are sort of like IRAs for medical care with two parts. The first is a health insurance policy that covers expensive hospital bills. The second is that employees can contribute money tax-free into an interest bearing investment account in which the money deposited can be withdrawn tax-free for medical care.
Health purchasing alliance: Here, instead of joining one health plan, you join an alliance of many health plans all of which are being jointly administered.
Finally, you should find out whether your business may be eligible for discounted health-care plans from an association. Chambers of commerce often offer this, as do trade associations.
Holidays, sick leave and vacation
Time off work for holidays, sick leave and vacation days are not rights that employees have, but benefits you offer. As indicated legally in the Fair Labor Standards Act, you are not required to give paid time off for holidays, sick days or vacation days. But just because you don’t have to be a good employer, it doesn’t mean that you shouldn’t. If you want to recruit great people, you have to create a great place to work, and this is one place to start.
Traditionally, small business usually set up a leave policy whereby employees get x number of days for sick days, y number of days for holidays and so forth. Typically, employees usually get about 16 days off per year, allocated evenly between vacation days and sick days. Most employees expect a paid week or two off per year.
But consider this idea: Pool these various types of days off into a “bank” of hours that employees can use as they see fit. For example, instead of giving employees 11 holidays and five vacation days a year, you might decide instead to give everyone 100 hours a year off to use how and when they want.
This sort of plan has many benefits. First, it promotes honesty. Employees could schedule days off without having to “call in sick.” Also, it respects employees as adults, in effect telling them that you trust them, and that you assume they know best how to balance their lives and work. Employees are responsible for their choices for using their time off. They may use a half day here, a full day there, a week for vacation, save their allotment for sick days or just save it to be used later.
The important thing to understand about benefits is that they don’t need to cost a fortune. Innovative ideas can be inexpensive and are usually welcome.
