Rise of Alternative Benefits Options

How the employee benefits industry is changing in front of our eyes

* By Kyle Kelly

Many times, when people hear the term “employee benefits,” they think of the basic health and dental care packages offered by their employer. In recent years, however, the alternative benefits trend has been gaining popularity in workplaces across the country — these are options offered to employees outside the scope of traditional benefits, and can include anything from vacation savings programs and pet insurance to nap time built into the workday.

With the rising cost of health insurance and other benefits and the fact that many companies must pass some of those costs on to their employees, many organizations are looking for ways to offer alternative benefits. For employees, these can result in healthier lifestyle choices, better work/life balance, and increased morale — which can reduce health care claims and increase cost savings for the employer. Alternative benefits can also reduce costs associated with absenteeism, sick time, and premature turnover, all of which mean crucial savings in a still-uncertain economy.

So what are some of the hottest trends today in the alternative benefits arena?

1. Cafeteria plans. In order to give employees choices about their benefits programs, many companies are turning to cafeteria plans rather than traditional benefits programs. In these types of plans, employees typically receive a certain dollar amount from the company for benefits each year; the employee then has the choice of the benefits and program levels in which they wish to participate. Some companies even offer money or additional benefits if an employee does not sign up for a particular benefit. For example, a company may allocate $150 per month for health insurance, but if the employee does not sign up for insurance, they can convert that amount into extra paid time off or apply it to another benefit
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2. Prepaid legal services. More and more, people find themselves in need of legal representation for a variety of issues, yet lack the funds to pay for it. Prepaid legal services allow employees to set aside funding for such occasions, including motor vehicle legal services, trial defense services, and the increasingly in-demand identity theft services.

3. Supplemental insurance. Everyone has different insurance needs, and supplemental insurance, beyond basic health insurance, allows employees to group this with their other benefits through the employer. Supplemental insurance is available for a range of coverage types, including disability, hospital indemnity, accident, and cancer.

4. Pet insurance. Pet owners don’t want finances to get in the way of providing their furry (or scaly) loved ones with the best care possible. Pet care insurance policies cover a multitude of medical problems and conditions related to accidents or illnesses — even cancer — for dogs, cats, birds, and other exotic pets.

5. Vacation savings programs. No one wants to accrue enough time for a dream vacation and then not have the money set aside to make the trip. Vacation savings programs allow employees to save up for their vacations through minimal payroll deductions, as well as to enjoy vacation planning services.

6. Health savings accounts. Health savings accounts pay for any medical expenses not covered by regular health insurance. This is a great “rainy day” option, and if the client is lucky and doesn’t have to dip into this fund often, it can be used to supplement their retirement fund when the time comes.

7. Wellness programs. More and more companies are offering programs designed to relieve their employees’ stress. These can include on-site gym memberships, massages, stress relief products such as stress balls, and educational programming designed to help employees make healthy choices in their lives. Many times, employees can use resources available to them through their medical insurance provider at low or no cost. This again can reinforce the idea that companies care about their employees, both on and off the job, and want their lives to be as stress-free and productive as possible.

In an economic climate where employees are not necessarily receiving the raises or bonuses to which they are accustomed, offering a comprehensive, creative benefits package can go a long way toward keeping morale high and making staff feel they are valued. Know what’s available, know what’s popular — and know what may best help your clients and their employees.

Kyle Kelly is president of AlphaStaff MGA, the brokerage division of AlphaStaff Group Inc., a human resource outsourcing company. He can be reached at 954-938-1316 or kkelly@alphastaff.com.