How We Saved 30% on Our Benefits Plan
As a rapidly growing business, one of the last things we were focused on was our employee benefits plan. Not a great approach, since providing a world-class benefits package can be a relatively inexpensive way to reward and retain key people.
We recently revamped our health and benefits plan to more accurately reflect our growth and our commitment to our employees. We’re a small, growing professional services firm, which means our biggest asset–in fact our only asset–is our team. Relative to other small businesses, this team is highly educated, with impressive experience with larger consulting and financial companies. They are accustomed to the compensation and benefits packages of large, established companies, yet they have chosen to join a small, growing business.
When we first chose a benefits plan three years ago, we only had five employees. Anticipating growth, we knew we needed a strong benefits plan, but our size at the time restricted us to what amounted to glorified individual policies for small businesses. We worked with an extremely competent benefits advisor and got the best plan we could for our five employees.
Three years later, we have 22 employees and are hiring aggressively; in this context, our benefits package was looking fairly weak.
We chose to shop our policies around and worked with a few new advisors. Much to our surprise, our 22 employees made us fairly attractive to all of the providers. We were offered traditional health plans, as well as high-deductable plans with a health savings account (HSA), which allowed our highly compensated employees to access a tax-advantaged health benefit.
The biggest benefit: no matter what plan or provider we chose, we would see a 25 percent to 30 percent savings over our existing plan. The impact of moving from a five-person shop to a 22-person business made all the difference. In addition, the benefits of these plans, such as lower co-pays, drug benefits, and higher life insurance maximums, were vastly superior to our current plan–we truly were getting more for less.
Attracting and retaining the best people is absolutely critical to the success of our business. We have a young, healthy team, and we realized that providing a world-class benefits package would help us reward and retain our key people.
We wanted to provide a clearly superior plan without increasing premiums for our employees; the last thing we wanted was to take a 25 percent to 30 percent savings while asking employees have to pay more for their healthcare.
The key to us were the benefits provided by an HSA. Given the attractiveness of this option, we were able to reinvest the savings we received in switching employee benefit plans into employees’ new HSA accounts. This would cover the full amount of their deductible while giving them a way to save money for a future health event.
The result was a clear win-win–we provided better benefits to employees at no additional cost to the business. This will help us continue to attract and retain quality talent. Plus, we found a great benefits advisor that we will undoubtedly use in the future (thanks Robin!).
Please share your experiences on the growing pains of building a successful business with us at firstname.lastname@example.org.
KARL STARK AND BILL STEWART | Columnist | Co-founders, Avondale
Karl Stark and Bill Stewart are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree.