3 Ways to Make Tax Time Part of Your Benefits Strategy
Tip 1: Communicate the real value of employer contribution
Tip 2: Empower workers to take part in the cost-cutting solutions
Tip 3: Equip employees with cost-effective ways to fill coverage gaps
Conclusion

Tax time is just around the corner and, this year, many employees will see a new number on their W-2 statement: the dollar amount the company paid towards their health benefits. The amount includes both employer and employee portions, and is for informational purposes, not taxable. The new requirement, along with employees’ heightened focus on tax season offers a unique opportunity to boost benefits communications and highlight your company’s investment to attract and retain a talented workforce.

Tip 1: Communicate the real value of employer contribution

No matter how well-informed your company believes employees may be about benefits, it is likely employees are still feeling in the dark, and just as likely to believe they are taking full advantage of benefits when in fact they may be missing out. The 2013 Aflac WorkForces Report, a study of 5,299 workers by Research Now, found:

  • Businesses are 19 percent more likely than employees to say they communicate effectively about the value of benefits (62% vs. 43%).
  • Employees are 16 percent more likely than employers to say they are taking full advantage of benefits offered by their employer, as opposed to employers (71% vs. 55%).


An employer-driven health care market has allowed many workers to take a back seat when it comes to understanding health care costs and to making careful decisions about their benefit selections. Though health costs continue to rise, many workers are not aware of the total cost of their benefits or how much they and their employer contribute to their benefits coverage. In fact, the Aflac study found nearly 3-in-5 workers (59 percent) say they truly don’t understand their current employer’s contributions toward their insurance benefits.

The new W-2 requirement for employers offers a unique opportunity to discuss employee and employer share of benefits costs, and to situate benefits as a part of the overall compensation package; salary, health benefits, disability and other supplemental insurance, and retirement benefits. Two ways to help employees understand their company’s investment include:

  1. Annual total compensation report: detailing both earnings along with other employer-provided benefits and investments.
  2. One-on-one benefits and financial consultations: Dedicate time for employees to ask questions about compensation and benefits, as well as to make choices for the financial future. Three in 10 employees (30 percent) prefer to receive benefits information from an HR representative at their company, still external experts may help give employees an unbiased professional to discuss benefits and financial information.

Tip 2: Empower workers to take part in the cost-cutting solutions

It can be difficult to discuss finances with employees, especially as employee benefits costs have increased steadily over the past years. Even the most robust benefits programs have shifted more costs directly to employees through increased copays and deductibles, and other out of pocket expenses.

When discussing the ratio of employer-to-employee paid benefits, it is important to build opportunities for workers to take ownership of their health status and related expenses. This can be especially important since many workers can be skeptical when it comes to rising health care costs and their employer’s ability to offer benefits. In fact, 42 percent of workers say they’ll feel more negatively about their employers if cost-shifting continues because they feel their company could cover more of the costs.

Opening opportunities for workers to both understand and offer solutions can help ease skepticism, offer insight into unnecessary costs (e.g. benefits employees say they are no longer interested in), and offer innovative solutions. Opportunities such as allowing employees to participate in the annual employee benefit design review committees or town hall discussions can improve employee awareness as well as build pride in a benefits program, helping to reduce unnecessary costs and maintain benefits options important to the workforce and to attracting talent.

Tip 3: Equip employees with cost-effective ways to fill coverage gaps

Equally important to improving employee awareness and understanding of their employer-provided benefits is to offer realistic solutions and resources that encourage employees to build their safety net. Many employees admit they do not understand their current health care benefits, or the changes coming in the years ahead, but they do look to their employers to understand the changing health care environment. There are a wide variety of choices, including adjusting your current benefits, considering new Exchange options, or switching to fixed-contribution, self-funded benefits, or a hybrid. As out-of-pocket costs continue to rise, supplemental policies will be a valuable way to help your employees to maintain their safety net. Employees who are offered voluntary insurance are 20 percent more likely to say their benefits meet their needs than those who are not offered voluntary benefits at all. These decisions are complex, so it is often necessary to work with a benefits advisor to define solutions and to potentially negotiate with carriers to reduce costs.

Conclusion:

New W-2 requirements may help your company to leverage tax time as an opportunity to discuss total compensation and the value of health care benefits with workers. As the health care landscape shifts, employees will increasingly look to their employers to help understand the health care changes and how they are affected. Take advantage of this new opportunity to discuss benefits, and educate employees about your company’s valuable investment in their health and well-being.

For more information:

To learn more about the employer W-2 requirement, visit: aflac.com/hcrqa

Visit Aflac Insights at: aflac.com/insights