Incorporating the ACA: Boost Your Benefits Package

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When it comes to attracting and retaining top talent, one of the best cards an employer has to play is still a solid benefits package. In fact, the recent MetLife 10th Annual Study of Employee Benefits Trends shows that the most significant factor for talent retention is the "strong relationship between satisfaction with benefits and job satisfaction." The report also stressed that "this correlation creates compelling evidence for the power of benefits to drive a universal set of business objectives — employee attraction, retention and productivity ... [and] justifies benefits investment to senior management."

What Does an Effective Package Look Like?

According to the MetLife study an effective package can vary, but is going to be one that employees deem attractive to them. This can include health benefits, holiday pay, vacation and sick time, and sometimes a 401(k), SEP or SIMPLE plan. To make benefits packages more attractive, the study suggested offering non-medical benefits; dental, vision, disability and life insurances were specifically named.

The employees who were surveyed noted that, even if they have to pay more of the costs themselves, they would "more fully appreciate the coverages." Seventy percent of the employers surveyed, though, tend to be "out of step when it comes to recognizing which benefits engender feelings of loyalty in their employees." This leaves a big opening for organizations who want to step up and steal talent.

How Does the ACA Figure In?

With the adoption of the Affordable Care Act (ACA), the health insurance portion of a benefits package changed. For some employers that could not afford, or were being priced out of, the health insurance portion of the package, the ACA provided new options. By not offering health insurance, employers could take all, or a portion, of the money they would have spent on health insurance and divert it to other benefits, like education reimbursement, bonuses or increased pay.

By sending employees who would otherwise not have health insurance to the Exchanges (sometimes called Marketplaces), employers give their employees the ability to purchase health care coverage that fits their needs and budgets, often at a lower cost than what they would pay for with employer-sponsored packages. Private Exchanges help companies offer a variety of benefits options, including major medical and voluntary products.

Is ACA a Better Option?

"Generally, an employer's benefits package will be better for an individual than going to the Marketplace," says Society for Human Resource Management HR Knowledge Advisor, Pattie Graves, SHRM-SCP. This is especially true for high-income employees who expect a robust employer health benefits package. "Additionally," Graves says, "an employer will normally pay some portion of the premium, which would benefit the employee financially." She goes on to say that if an employer offers benefits that meet affordable coverage and minimum value, and the employee elects to opt out, the employee would not be eligible for a Marketplace tax credit. Basically, the employee would pay the full premium, which may not be cheaper than employer coverage.

The Choice Is Ultimately Yours

In the end, the best option is the one that best fits your population, demographic, industry and needs. It's still important to regularly poll your employees to learn what benefits are important, what attracted people to you, what keeps them on board and what could potentially drive them to leave. As your demographics change, so might your benefits package. It's still crucial to research your competition to learn what they're offering their people. Where are your highly compensated people going? Where are other people in high turnover positions going? Be aware of your talent needs and what people who populate those positions deem valuable as benefits.

Whatever your benefits package design, it's critical to ensure that you meet the non-discrimination requirements, so neither you nor your employees wind up paying more than necessary for their benefits or at tax time.