However, whether or not small businesses recognize these and other official declarations, there are two critical observations decision-makers need to make about their employees today, and consider year-round, because of their potential to directly impact business productivity and turnover costs.

First, U.S. workers are in denial about the likelihood of accidents and serious illnesses. In addition, they are not prepared to handle the financial consequences of unexpected health issues.

Workers’ Unrealistic Health Optimism

When it comes to anticipating a serious illness or accident, Americans may be overly optimistic. According to the American Cancer Society’s Cancer Facts & Figures 2012, one in three women and one in two men will be diagnosed with cancer at some point in their lives. The American Heart Association’s Heart Disease & Stroke Statistics 2012 shows that one in six U.S. deaths in 2008, was caused by coronary heart disease.

Despite these findings, the 2012 Aflac WorkForces Report revealed six out of 10 workers (62 percent) think it’s not very or not at all likely they or a family member will be diagnosed with a serious illness like cancer, and more than half (55 percent) said they were not very or not at all likely to be diagnosed with a chronic illness, such as heart disease or diabetes.

In addition, despite optimism about their physical health, the study reveals that American workers also are concerned about their financial health, and many admit they are unprepared to handle the financial consequences of a serious illness or accident in their family.

Financial Strain & Productivity Drain

Half of American workers (51 percent) are trying to reduce debt, according to the Aflac study, and nearly six in 10 (58 percent) don’t have a financial plan to handle the unexpected. In addition, only eight percent of U.S. workers strongly agree their family will be financially prepared in the event of an unexpected emergency, and 28 percent have less than $500 (51 percent have less than $1,000) in savings for emergency expenses.

These are among the personal challenges weighing on workers’ minds daily and impacting individual productivity through absenteeism and distracted work. Decision-makers are keenly aware. In fact, 63 percent of leaders at small businesses believe that productivity is lost because employees are concerned about personal issues, according to the study.

The fact that American workers aren’t aware of their medical risks and the potential financial impact of those risks is a very real concern that is only compounded when workers don’t take full advantage of available benefits options or adjust their savings strategies to be more prepared.

For example, when asked how they would pay for out-of-pocket expenses due to an unexpected illness, the study found that more than half (57 percent) of respondents said they would have to tap into savings, 30 percent would use a credit card and 19 percent—nearly one out of five people—would have to withdraw funds from their 401(k) plans to cover the costs.

Now, more than ever, American workers need to understand that well-being means more than just good health—it’s being prepared for the reality of whatever life may bring and taking the necessary measures to protect themselves and their families. A very real connection exists between health and finances—a worker’s financial stability and employment security can be threatened by an unexpected illness or accident, and conversely, the ability to obtain adequate medical care can be influenced by finances.

Many Benefits of Employer Action

Most individuals are looking to their employers to educate them about all available benefits options, not just traditional benefits changes or choices, to better understand how they can have a more secure safety net.

The Aflac study revealed that 58 percent of employees at small businesses would be likely to purchase voluntary health insurance plans if offered by their employer. Yet, small businesses are least likely to offer voluntary insurance policies (just 19 percent, compared to 41 percent of medium-sized and large companies) for various reasons, including the common misconception that these policies will increase their health care costs. Workers’ perceived lack of benefits understanding also is a limiting factor.

For example, only 19 percent of HR decision-makers at small businesses believe their employees are extremely/very knowledgeable about voluntary benefits.

However, despite these low figures, small businesses excel at putting employees’ benefits interests first. The study found that small businesses are more likely than medium-sized and large businesses to rank taking care of employees as their top objective, with 23 percent ranking it first. More small businesses are realizing that making group voluntary insurance policies available to employees has no direct cost and may reduce corporate taxes by cutting FICA tax contributions.

Additionally, savvy decision-makers are seeing the value of voluntary plans to not only enhance a company’s benefits package and competitive status versus larger organizations’ benefits programs, but they can demonstrate to employees that they matter and ultimately help avoid the high cost of turnover.

Conclusion

Once benefit options are added or expanded, it’s critical for employers to effectively communicate year-round about how new benefit options like voluntary insurance can help with high out-of-pocket expenses associated with a serious illness or accident. By doing so, businesses can not only help their workers have a better understanding of the options that are right for them, but also help reduce common mistakes made during the enrollment process, generate stronger retention, and build greater appreciation for their total compensation packages.

Health Photo via Shutterstock

The post Heightened Awareness: Small Businesses Address Today’s Worker Vulnerabilities appeared first on Small Business Trends.

Impact on Retention
Improving benefits communication efforts can have critical business results for smaller companies. To help understand a few revealing workplace realities, the 2011 Aflac WorkForces Report study found that when it comes to making benefits decisions, a mere 8 percent of workers agree that they are fully engaged in making those decisions, a sentiment their employers share. Some 63 percent of companies agree that workers need to be more engaged, and just half feel their employees take full advantage of the benefits they’re offered.

By proactively encouraging worker engagement when it comes to making benefits decisions, employers can help workers be better prepared and protected against an accident or illness, resulting in significant financial implications for both themselves and their employers.

When evaluating workplace benefits communication at small companies, 39 percent of workers agree they would be less likely to leave their jobs if they were well-informed about their benefits. The turnover cost alone is an incentive for employers to make changes in how and how often their organizations share benefits information.

Small businesses must acknowledge the possibility that communication needs improvement. For example, almost half (46 percent) of employees at small companies say their HR departments communicate too little about employee benefit plans, and just over half (52 percent) of HR decision-makers at small businesses believe they communicate very or extremely effectively with employees.

Reap significant rewards by developing more-effective benefits communications, including healthier, more-protected and more-engaged employees. Four best practices include:

1. Being a Valuable Resource
Without real information, employees often turn to less-than-reliable sources for insight and guidance. The majority of workers (62 percent) get their insurance advice/information from colleagues, friends and family. In fact, employees at small companies are the least likely to get their information/advice about employee benefits from company HR professionals (39 percent).

When employees don’t know better, they don’t do better in terms of adequately protecting their income and well-being, leaving many workers underinsured and vulnerable to the financial ramifications of an unexpected health event. Over time, unexpected health events can impact the productivity of a small business.

 2. Using Surveys
Electronic communications have made it easier than ever to survey workers at minimal cost. Unfortunately, little more than half (52 percent) of organizations conduct surveys that increase their understanding of employee satisfaction with benefit offerings. Even fewer—just 43 percent—survey employee understanding of benefits communication.

By taking the time to understand the preferences and needs of workers, employers can increase employee satisfaction with benefits packages and help provide the peace of mind that comes from knowing their employees have adequate protection. Additionally, employers can use these surveys to identify unaddressed health insurance needs, enabling HR decision-makers to better address benefits communication needs and find ways to make benefits information more robust and accessible.

3. Helping Eliminate Common Benefits Mistakes
Roughly 77 percent of workers have admitted to making mistakes about benefits coverage during their open enrollment process, leaving many employees feeling negatively at the end of the year about the process, including being stressed, confused or regretful. A closer look reveals that nearly half of workers (47 percent) say they have made mistakes or have regrets, such as putting too little in their flexible spending account (FSA), or not electing available benefits coverage like voluntary, dental or vision; or chose benefits they didn’t need or chose the wrong level of coverage.

The brevity of annual benefits decisions requires a comprehensive, year-long education and communication program. Best practices include diversifying materials to encompass print, Web, email, and face-to-face meetings; hosting multiple in-person meetings throughout the year; and including spouses in the decision-making.

4. Consider Retaining a Benefits Consultant or Broker
Giving employees the opportunity to speak directly to a benefits advisor or a representative from a brokerage or insurance carrier can be incredibly effective in terms of education. In fact, 50 percent of workers at small companies agree they’d be more informed about benefits if they sat with a consultant or broker during enrollment.

Keeping up with complicated, ever-changing regulations is increasingly difficult, especially for small businesses. Partnering with brokers or benefits consultants can help companies bolster their insurance benefits with little impact on the bottom line. Brokers and benefits consultants can also advise and assist in developing effective communication strategies and enrollment processes.

According to Aflac’s study, companies that use brokers or benefits consultants are likely to offer more robust benefits packages than their competitors, believe their benefits packages are more competitive than those of industry peers, and communicate more often about their organizations’ benefits.

Conclusion
Developing effective benefits communications is difficult, particularly when it comes to educating workers about their insurance options. However, using reinforced, year-round communication, small business HR decision-makers can make information sharing simpler for employees, enabling them to make better choices for their families, and generating stronger retention and greater appreciation for their total compensation packages.

Benefits Package Photo via Shutterstock

The post Implement Year Round Benefits Communication appeared first on Small Business Trends.

The 2011 Aflac WorkForces Report, a study conducted by Harris Interactive, reveals that the top three issues for small businesses (those with three to 99 employees) are increasing employee productivity (51 percent), controlling health/medical insurance costs (47 percent) and retaining employees (43 percent). While there is no single cure-all for these three priorities, small businesses are learning more about how voluntary insurance plans can provide a significant, three-pronged impact.

1. Controlling Health/Medical Insurance Costs

With health care costs rising, employers likely will continue to struggle to find reduction strategies while providing the coverage their employees need. This reality has heightened significance for small businesses, which, due to their size, could be significantly impacted by even a small misstep in managing health care costs.

As a result, many small business owners and their employees are looking for more flexible benefits solutions to address rising health care expenses. More employers are realizing that making voluntary insurance policies available to employees has no direct cost and may reduce corporate taxes by cutting FICA tax contributions. Adding voluntary plans to a company’s benefits offerings helps to satisfy a top benefit challenge for more than six out of 10 small businesses—offering robust benefits while staying within budget/cost constraints.

2. Curbing Productivity Loss

Small business operations increasingly require more consistent and higher productivity from smaller staffs. Frequently, any loss in productivity can substantially impact a small business’s ability to compete.

Unfortunately, personal distractions, such as financial and health struggles, often dictate workers’ productivity. In fact, 47 percent of small business employees said they are currently dealing with a health or financial problem that impacts their ability to get their job done. Further, roughly 58 percent of small business owners believe their company has lost between 5 and 20 percent work productivity because employees are concerned about personal issues they are experiencing. Another 32 percent of owners say they’ve lost 20 percent work productivity or more.

A very real connection exists between health and finances—a workers’ financial stability can be threatened by an unexpected illness or accident, and conversely, the ability to obtain adequate medical care can be influenced by finances.

Voluntary insurance plans, including policies for accident, cancer, critical illness, dental, life, short-term disability and vision, help employees cope with out-of-pocket costs associated with serious accidents or illnesses—expenses major medical insurance is not designed to cover. In these cases, policyholders receive cash benefits that can be used to help with daily living expenses, such as rent, gas and groceries, as well as unreimbursed medical expenses.

3. Controlling Turnover Costs and Boosting Retention

According to the U.S. Department of Labor, it costs a company one-third of a person’s annual salary to replace him or her. These expenses can derail even the best small business management. As small businesses strive to profitably help drive the U.S. economy and move beyond the recession, having the best available talent is of paramount importance.

Benefits packages can directly impact employee retention. The Aflac study found that 63 percent of small business owners think their overall benefits package is very influential in employee satisfaction and loyalty, and another 18 percent believe it is very influential in an employee’s decision to leave the company.

Voluntary plans not only enhance a company’s benefits package and competitive status versus larger organizations’ benefits programs, but they can also demonstrate to employees that they matter. With no direct cost to the company, adding voluntary benefits as an employee option may ultimately help avoid the high cost of turnover.

Resolve Three Problems With One Choice
There remains a great need to help employees improve their health care coverage and prepare for life’s unexpected occurrences. Previously considered a nice-to-have benefit, voluntary insurance may now be considered a cost-effective supplement to core benefits and an essential solution for small businesses.

The post How One Decision Can Solve 3 Problems for Your Small Business appeared first on Small Business Trends.