Why does it seem so hard to measure return on investment (ROI) for wellness or benefits initiatives? It isn't as if we are trying to monitor images of the radioactivity used in microwaves.
We track our weight, count calories, and scores for Fantasy Football, but why does it remain such a challenge to demonstrate positive ROI for employee benefits programs?
In the study, Making the Business Case for Investments in Workplace Health and Wellness, less than 1 percent of employers measure ROI consistently. The concept of analyzing return on investment can be broken down as measuring savings less expenses in order to determine if positive financial results have been gained.
In a recent report published by The International Foundation of Employee Benefit Plans titled A Closer Look: Wellness ROI, organizations that analyzed ROI of their wellness programs saved $1 to $3 for every dollar spent. Only 19 percent of the plan sponsors measured the data, but the results provided important insights that should motivate other employers to follow suit.
It appears obvious and intuitive that employee benefits and integrated wellness programs should garner positive results not only in ROI, but employee engagement, productivity and talent retention. Yet, there are many reasons why it seems hard to track ROI. Predominant reasons for the absence of ROI analysis include: lack of resources, more urgent priorities and existing programs that don't start with a baseline to monitor performance outcomes and success measures.
By planning ahead and finding ways to aggregate data from different sources, plan sponsors can find ways to more rigorously measure more than the intrinsic value a benefits plan. Calculating the cost of benefits has become more quantifiable through the advanced development of technology and web-based resources. Increasingly, it is easier to track and analyze non-traditional benefits including flexible work arrangements.
A valued benefits plan is also one that provides an important form of compensation without incurring additional payroll taxes. Understanding how to maximize tax effectiveness as part of the benefits plan design is key. Designing plans that factor in the multigenerational element is another. Understanding that a one-size-fits-all benefits plan may no longer meet the needs of a diverse employee group has been a challenging variable for many employers.
These days, demonstrating the tangible value of dollars saved due to increased productivity, reduced turnover and lower absence rates is critical. Increasingly, belt-tightening measures are sought-after and human resource practitioners search to find ways to show that benefits are more than just 'nice to have' employee perks. For help in optimizing the value delivered through your benefits plan, please contact us. We're here to help so that you can focus on what you do best.
It isn't easy to please all employees with one benefits plan. Plan members are at various stages in their life and career. Some see great value in orthodontic coverage while others want more coverage for vision care.
With four generations in the workforce, an influx of costly biologic drugs and increasing economic pressures, plan sponsors don't have it easy. How could there be one plan design that fits all? There isn't a silver bullet to offer a quick solution, but there are options available with the introduction of a Health Care Spending Account (HCSA).
Basically a HCSA offers plan sponsors the ability to allocate a budgeted amount to each plan member. Plan sponsors know the allocation is limited and that it won't be exceed. For example, each plan member could be allocated $300.00 toward his or her HCSA. It is tax deductible and cost-effective. Employees can spend their allotted HCSA using pre-federal tax dollars on health-related products and services that are eligible to be claimed as per the Medical Expense Tax Credit (METC) under the Canadian Income Tax Act.
Once a plan sponsor selects a balance carry-forward or no-carry forward option, the next steps involve communicating how employees can use their HCSA. Introducing a HCSA as part of a traditional benefits plan is a helpful way to add flexibility to the changing needs of a diverse employee base. Plan sponsors have more control over their costs with the knowledge that claims experience doesn't impact the budget assigned to a plan member's HCSA amount.
These days it is increasingly more challenging to attract top talent. An HCSA brings flexibility and choice to employees. It helps a traditional plan become more attractive. For plan sponsors, it offers predictability and stability. If well communicated, HCSAs are simple to understand and use. They work like a bank account and plan members can use their HCSA to pay for health-related services and products that might not be covered in a traditional plan such as dental braces or prescription glasses. An HCSA can be used to pay for deductibles and benefit top ups.
For questions about ways to maximize the effectiveness of a benefits plan design, please contact us. We're here to help so you can focus on doing what you do best.
Dave Dickinson, B.Comm, CFP, CLU, CHFC
Experienced Benefits Specialist ready to optimize your group benefits and pension plans.