January 14, 2014

So, You Think Giving Your Employees Decent Health Insurance Is Too Expensive?

By Paul Bieber

Yup, it is expensive, confusing at best and your employees will gripe about it, so why should you bother?  Let’s say you have ten employees; you could probably buy a new truck for the cost of giving the insurance for one year.  One of your current trucks is three years old and is definitely beat up; so there is your decision…buy the truck and let the insurance thing sit for another year.

A buzzer sounds.  You have successfully come up with the WRONG answer!

In many conversations on insurance with glass company owners, the ones that don’t give insurance have told me these reasons why they don’t:

  • It is too expensive;
  • My employees are all young and healthy and really won’t use the insurance;
  • I don’t have the time to figure it all out;
  • Why give insurance and start all the paperwork as most of my folks leave after a couple of years?; and
  • When employees leave, I still have to pay for their insurance for 18 months.

And, after a half-hour conversation, almost all of my consulting clients have changed their minds and started basic health insurance programs!  In follow-ups I have done with them, eight out of nine were happy with their programs, and one dropped it after one year.

So here is a very condensed version of the half-hour discussion on why a glass company should give employees a basic medical insurance program.  The single most important asset of any company is its employees.  We sell service.  We install on time, correctly and with no problems for our building and homeowners.  It is our employees who do these installs, take the phone calls and do the clean up at the job sites. 

But, the owners all tell me, even in these times of high unemployment, it is hard to hire good people.  All they get are young folks who don’t really know what they want to do with the rest of their lives.  And these owners don’t see a change coming in this cycle.

Health insurance will change this so that you hire better employees who want a career with you.  A young person who realizes that health insurance is important has his or her head screwed on correctly.  The family-oriented applicants will not even come down to talk with you when they hear you don’t offer health insurance.  And these are the people who will work their tails off because they appreciate having a job with insurance. 

I absolutely guarantee you will hire better employees if your company offers a good benefits package which includes basic health insurance.  You don’t have to give a very rich plan.  It can have a deductible, and you can ask employees to pay 20 or 30 percent of the cost.  And you will hire better employees.  And maybe your three-year-old truck will not be so beaten up that you have to buy a new one. 

Let your insurance broker handle the paperwork, especially for the times that an employee does leave you.  A good broker will do this for a small fee.  You don’t pay a former employee’s medical costs for 18 months.  The employee does by paying you and you pay the insurance company.  And yes, your broker can handle this as well.

And as far as employee turnover goes, many business articles cite that changing an employee costs somewhere between one-third and two-thirds of his annual salary.  These costs come in training time required, allowing for rookie mistakes, usually hiring two or three people for one position until you find the one that works, the increased unemployment insurance costs and the stress within your company as you work to fill the open position.

Next week I’ll go over some ideas on how to keep your costs low on the insurance program you will now give your employees, or on your current program!