Particularly for small business owners and their HR staff, the Great Recession has arguably led to the Great Balancing Act — that is, the all-encompassing struggle to balance the needs of the business with the needs of employees. At the root of the business side of the equation is the reality of rising costs, particularly when it comes to health care/medical insurance. Equally important to maintaining balance is the need to effectively manage, engage and leverage workers — after all, a company’s human resource assets can become a company’s largest expense or profit lever. A recent Aflac study “2011 Aflac WorkForces Report,1” identified the top three issues for small businesses (those with 3 to 99 employees) right now, and found increasing employee productivity (51 percent), controlling health/medical insurance costs (47 percent), and retaining employees (43 percent). These findings reflect all too clearly the daily battle faced by small business owners. Such a complex issue can’t be solved by one single measure or tactic; however, adding voluntary insurance policies to the benefits offerings can greatly impact all three priorities for small businesses.

Health care costs are rising. The average cost of a family plan in 2011 was $15,073, with employers paying $10,944, according to the Kaiser Family Foundation.2 For the foreseeable future, employers will continue to struggle to find ways to keep health costs down and provide access to the coverage their employees need. This is particularly true for small businesses, which, due to their size, could be significantly impacted by even a small misstep in managing health care costs. Many small business owners and their employees are looking for more flexible benefits options as they seek ways to manage rising health care expenses. Making voluntary insurance policies available to employees has no direct cost to the employer, and may reduce corporate taxes by cutting FICA tax contributions. Adding voluntary plans to a company’s benefits offerings helps to satisfy the biggest benefit challenge for six out of 10 small businesses — offering robust benefits while staying within budget/cost constraints.1

The very nature of a small business operation is to run lean and mean, squeezing every ounce of productivity out of a streamlined staff. That’s why any loss in productivity can in many cases significantly impact the ability of small businesses to compete. Workers’ productivity is often dictated by personal distractions, including financial and health struggles. For example, 38 percent of employees at small businesses are experiencing a health issue that has impacted their ability to get their work done. On average, employees say 15.9 percent of work productivity is lost due to concern about personal issues.1

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. For example, 62 percent of all personal bankruptcies in the U.S. in 2007 were caused by health problems.3

Despite workers’ clear acknowledgement that “adequate insurance coverage” would have a significant impact in helping them cope with their personal issues, employers aren’t as convinced. Only 17 percent of small business owners and HR decision makers think an overall benefits package is very influential on work productivity.1

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

Labor expenses can be one of the largest expenses for companies today. According to the U.S. Department of Labor, it costs a company nearly one-third of a person’s annual salary to replace him or her.4 These are expenses that can derail the best small business management. Particularly now, as small businesses are helping to drive the U.S. economy and put the recession behind them, having the best of talent in place is priceless.

A company’s benefits package can directly impact retention of employees. 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.1

Voluntary benefit options can not only enhance a company’s benefits package, allowing it to better compete with larger organizations’ benefits programs, but it can also demonstrate to employees that they matter. With no direct cost to the company, adding voluntary benefit options for employees may go a long way in helping to avoid the high price tag of turnover.

As the cost of health care continues to rise, many companies are cutting back on major medical insurance coverage to help keep rising costs at bay. Yet, there remains a great need to help employees improve their health care coverage and prepare for the unexpected occurrences of life. What may have been viewed as a nice-to-have option in years past, voluntary insurance may now be considered as a cost-effective supplement to core benefits packages and has become essential to many small businesses.

• 1“2011 Aflac WorkForces Report,” a study conducted by Harris Interactive for Aflac, September 2010, February 2011.
• 22011 Employer Health Benefits Survey, a survey conducted by Kaiser Family Foundation/Health Research & Educational Trust, May 2011.
• 3Harvard research study conducted by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, June 2009.
• 4U.S. Department of Labor, http://www.hireright.com/Background-Check-Fast-Facts.aspx, accessed on March 7, 2012.