So you’re a small business that has implemented a benefits package for your employees. Congratulations, that’s a big step – one that sets you up for competitive growth and attracting top talent! More than likely, your open enrollment period is coming up shortly. Or perhaps you’re not currently offering employer-sponsored benefits to your employees but want to ensure they are taking proper steps to protect themselves and their families.
That’s all there is to it, right? Not so fast. Even with a suitable employee benefit package on offer, the likelihood that there are significant unmet needs and risks for your employees is high. What does that mean? There are many risks your employees (and most adults) face that benefits often do not or cannot fully cover on their own.
- Risk of Healthcare Expenses: Medical Insurance can cover the vast majority of out-of-pocket expenses for medical bills and prescriptions, but increasingly the benefits offerings from employers are building in higher deductibles and copays to mitigate the ever-increasing premiums. Can employees handle the higher out-of-pocket expenses (often upwards of $4-6,000/yr per family member) if they have unexpected needs? Often the answer is “not without struggle.” However, there are voluntary products available to employees that can help to address these unintended expenses without breaking the bank.
- Risk of lost income from missing work due to disability: Many employee benefits plans include medical insurance, often dental and vision care, but do not provide for the risk of lost income and the impact of a lengthy disability. Many benefits plans do provide this valuable benefit, but often with limits that cap their benefits well below their actual earnings, do not provide protection to replace important bonus/commission income, have very stringent and “hard-to-satisfy” definitions for when you’re considered eligible for benefits, and do not go with them if they move on to another employer. If you’re not a high-income earner, and you become totally and completely disabled/bedridden, then you’re probably okay but what if your income is higher and/or your disability isn’t total? According to the US Social Security Administration, there’s over a 25% chance that a 20 year old will become disabled at some point during their working career. It’s vital for employees to have personal protection against this risk, and easy for employees to consider supplemental disability coverage if they are already covered.
- Risk of lost income to the family due to death: Everyone is familiar with what kind of financial impact a death can have on a family, especially to a primary breadwinner or full-time parent of a dependent child. Most employee benefits programs include a very token amount of “free” life insurance ($50-100,000), if anything at all. This is barely enough to pay for final expenses in most cases. Other benefits plans offer the ability for employees to purchase additional life insurance (in multiples of their income) at prices that are adjusted annually and increase sharply as you get older to the point where they become unaffordable right when you need it the most. In virtually all cases the life insurance disappears completely if they leave the employer. It is recommended for most breadwinners to have anywhere from 8-12 times your annual after-tax income in life insurance, though that number can certainly be lower or higher depending on your circumstances (# and age of children, outstanding debt, other assets, etc), and to have a plan that covers them, not “them only so long as they’re employed with the same company”.
There are other areas (such as long-term-care, dependent benefits, etc) that are also often not addressed by employer group benefits. So… while you’ve given your employees a great start and a foundation to begin to protect themselves and their families, there’s one more very important benefit that you can provide to them – and the great news is that it’s 100% free to you and will make you look good.
Gather your employees together for a lunch, sponsored by an insurance representative (which can be your existing benefits advisor or another representative specializing in working with employers and their employee’s individual needs), which is purely informational and highlights the specific areas in which their benefits program covers them full, and the areas in which it falls upon them to make sure they and their families are secure if the unexpected happens. Your employees will appreciate it, their families will appreciate it, and you’ll be providing them the most important benefit of all – a trusted advisor that help them to gain the ultimate peace of mind. And there’s no better time to do it than in the context of their annual benefits elections most often occurring in the fall.
Michael S. Feinberg, ChFC is an experienced, hardworking, and trustworthy advisor to small businesses and their ownership. Michael’s experience and thorough process provides significant value to his clients while ensuring the long-term success and survival of his clients’ businesses. Please call me at 703-637-4339 or connect by email at [email protected] with any questions or to schedule a consultation or employee meeting. I look forward to hearing from you.