The Benefit Stepping Stones Program™

High Benefit Cost vs. Affordable Employee Benefits

The second danger that small business owners face is designing an expensive benefit plan that achieves results at a higher cost than other available methods.

Benefits can be thought of as indemnity contracts in which the employer agrees to pay the employee certain amounts in certain circumstances. For example, you might provide drug coverage and reimburse employees for the cost of prescription drugs. In order to ensure confidentiality of private health information the adjudication and payment of benefit claims would be outsourced to a benefit administrator.

The three factors that influence the cost of health benefits are: claim payments, markup for administration and benefit funding method. The way you manage each of these components will impact the cost of your benefit program both now and into the future.

To ensure your benefit plan is affordable you need to manage the: claims, markup and funding method.

The decisions you make while designing your plan, choosing an administrator and selecting a funding method will influence the cost of your benefit plan for years to come.