Despite the growth of HSAs as an important employee retention tool, smaller employers are looking at other forms of insurance to keep good employees.

According to Pat Cassidy, Director, Small Group Marketing at Reliance Standard Life Insurance Company benefits packages have become a key battleground in this competition for talent.

Claims Cassidy, “too often in the past, large companies had greater access to more comprehensive benefits packages because insurance companies concentrated on the greater profitability of larger employers. But today, more insurance companies see the potential in the 4.5 million small businesses of 10 employees or less.”

“As a result, small group insurance is more widely available than ever. And today’s small group insurance products offer flexible benefit choices and payment options that make them more affordable than in the past,” he added.

Still, while an estimated 70+ percent of small business employees already are taking advantage of their employers’ medical insurance offerings, only about 30-40 percent have life insurance and dental coverage through their employers. And only five percent or less are covered for short- or long-term disabilities. Large companies are far more likely to offer disability coverage, providing a compelling competitive advantage.

Many employees are not aware of the importance of disability insurance – but facts like these may help:

• One in five people age 35 to 65 will become disabled for five or more years before they reach age 65. (1987 Commissioners Group Disability Table, Society of Actuaries).
  
  
• According to a 1998 U.S. Department of Education study, at age 45, an employee’s chances of having a work disability are three times as high as someone in the early 20s. By the time someone is between 55 and 64, they have a 23 percent chance of having a disability that affects their ability to work.
  
  
• Disabilities aren’t just the result of accidental injury. The U.S. Department of Education study found that the top three chronic health conditions that can cause work limitation are back disorders, heart disease, and arthritis.

The low incidence of short- and long-term disability coverage among small businesses flies in the face of logic. Employers should insure the largest or most catastrophic risks first. Without coverage, a single disability can easily cost hundreds of thousands of dollars of lost income — a cost most small businesses can’t cover. And an extended disability to a small business owner or key employee could sink a small business without the lost income protection of disability coverage.

Other Advantages

A group disability plan can keep a small business on its feet and growing when disability strikes. With the availability of small group disability plans that spread the financial risk among everyone covered in the pool of insured small businesses, premiums are more affordable and coverage is more available than through most individual plans. And while individual insurance plans can deny coverage or increase rates to a specific individual, there are small group plans available that are issued on a guarantee acceptance basis for everyone in the group with no increase in premium.

Small group insurance has tax advantages, too. Employer contributions to a small group insurance plan are generally 100% tax deductible.

So, as small businesses gear up to compete for top talent in the months to come, they should recognize that a competitive benefits package makes them more attractive in the employment marketplace.

Persistent reports are circulating that health insurers in other states are looking to more precisely tune and adjust policies to benefit from consumers reducing their usage of healthcare professionals and procedures because they are paying for the first dollars.