5 Ways to Reduce Employee Benefits Costs

Updated: June 10, 2009

1. Consider Outsourcing HR to a PEO

Outside of providing experienced professional HR support, outsourcing HR to a PEO can substantially reduce the cost of the employee benefits program. A PEO provide groups all of their clients into a "buying pool" when negotiating rates with insurance providers. SMBs can therefore take advantage of negotiated large company rates despite their smaller size. This is especially advantageous as some insurance providers often utilize "age bands" when pricing out a benefits plan for an SMB. Plan costs per employee are determined by what "age band" an employee falls into. The older the employee, the higher the individual plan cost. SMBs with an older employee mix may therefore face higher costs with these providers. Utilizing a third party HR provider for benefits administration eliminates the use of "age bands." Furthermore, third party HR service providers possess some negotiating leverage with insurance providers due to the number of people they bring to the provider's network. SMBs do not have this leverage. They must either sign on based on the quote or find another provider.

2. Choose higher deductible plans

Choosing higher deductible plans reduces the overall cost of the benefits plan. An employer may also find it possible to reimburse employees for all or part of their deductible and still save money as compared to providing a lower deductible plan

3. Offer a more robust benefits package but make employees contribute.

It is not uncommon for employees to pay 10-20% of the cost of their benefits package.

4. Educate your employees

There is a difference between the costs of HMO and PPO plans. Educating your employees on the costs and features of each as well as helping them choose the right plan can significantly impact overall benefits costs. This is especially true for SMBs with a younger age demographic.

5. Check the market

Although switching providers is a time intensive process, it always a good year to check rates of various provides every year. Annual rate increases are not universal across all providers.

Featured Research
  • Executive Brief: Mitigate Avaya risk and future-proof your customer experience

    When Avaya filed for bankruptcy, it ended months of speculation. However, the company’s ongoing financial instability has left many businesses in a precarious position. If you’re concerned about your future with Avaya, don’t wait around to see what long-term options are available to modernize your customer engagement center. more

  • Harnessing the Power of Speech Analytics

    The conversations between your customers and agents contain invaluable insights—if you have the right tools to easily interpret and act on this dialogue. Unfortunately, most organizations waste time manually mining only a subset of customer interaction data, or worse yet, do nothing with it at all. Speech analytics is an incredibly powerful tool for contact center leaders. It easily delivers real-time visibility into the full customer journey and agent responses, which are essential for driving higher customer satisfaction and business success. more

  • Budgeting for BI in 2018

    Is your business ready for Business Intelligence (BI) software? As BI software continues to improve, more businesses are moving to adopt BI sooner rather than later. Before you make that commitment though, it pays to figure out exactly how much money it will cost you to implement. more

  • Gartner Report: Gartner Magic Quadrant for Contact Center Infrastructure, Worldw...

    The 2017 Magic Quadrant provides Gartner’s annual analysis of the contact center infrastructure vendors. The report examines the innovations driving the market and compares vendors based on completeness of vision and ability to execute. more

  • Forrester Report: Artificial Intelligence with the Human Touch

    Artificial intelligence (AI) can’t replicate the human touch, but it can ease your agents’ burden by handling many simple, repetitive requests. A new Forrester Consulting paper offers a look at the strengths and weaknesses of both AI and humans independently, yet how blending them together can give your customers the seamless end-to-end experience they expect. more