Many up-and-coming small businesses wonder what the right mix of offerings is to attract and retain employees. A common consideration is offering an employee benefits plan. But the costs and administration can seem daunting or out of reach. 

Unfortunately, you might lose out on great potential employees if you’re not offering competitive employee benefits to attract and retain them. But not every kind of benefits package is right for every small business. 

We encourage businesses, regardless of size, to consider multiple variations of benefits. They can range from traditional health and dental plans to more innovative and flexible options such as wellness accounts (physical and mental) and telecommuting.

Employee benefits for small businesses

Do you have a small business and you’re considering implementing a benefits plan? This is a big decision for a company to make. It’s one that should be entered into with a lot of forethought, which is why we’ve compiled some useful information on the subject.

Keep reading, because you won’t want to miss what our colleagues at HB Consultants have to say on this topic.

What factors impact the cost of a plan?

As a small business owner, the discussion about employee benefits usually comes up when hiring new employees. It’s a wonderful tool to attract and retain quality staff. But, you might hold off on implementing these benefits because the financial cost seems too great. 

Here are some points to consider about the cost:

  1. Your rates will be based on your employee demographics, occupations, your industry, and the plan design chosen. What your friend pays per month for their company plan may be completely different than what you pay. Start with a basic plan design to keep costs low.
  2. There’s a relationship between premiums going into the plan and claims going out. This applies for Health, Dental, and Short Term Disability benefits. So, if claims exceed your insurance company’s “breakeven” levels, your rates will go up. Luckily, if claims are low rates will also drop! Have this discussion about breakevens with your group benefits specialist. And of course, compare several quotes.
  3. Healthcare inflation is much higher than inflation in our general economy. People are always surprised to hear this! But it’s due mainly to new specialty drugs being introduced each year in the marketplace.  It’s wise to budget for a 10% rate increase each year. As mentioned, if claims are low your rates may drop at renewal. But it’s important to track claims experience with your benefits specialist throughout the year.

Implementing a new plan at work can come with its particular challenges, whether it’s an employee benefit plan or for other human resources issues. Click here for the secret to preventing chaos as you implement your bullying and harassment prevention program.

These are a few points to consider about the cost of employee benefits. Now, here are a few other things to look for in a plan. 

What to look for in an employee benefits plan

Small businesses should start with a basic plan design that’s affordable. Look for the highest possible breakeven and block arrangements where you are pooled with other businesses for better rate stability. 

Attraction and retention is a critical factor in a company’s success, no matter its size. If you’d like help with these and other human resources issues, have a look at our services. From attraction and retention to workplace investigations and conflict resolution, we have the expertise you need! 

Want to learn about other creative ways to attract and retain employees that are right for your company? Contact us at or reach out here

For more information on the article above contact our guest blogger, Elizabeth Harris, Independent Employee Benefits Advisor, HB Consultants.

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This article was originally published on May 1, 2018, and has been updated.