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Strategies to Help You Communicate Employee Benefits Plan Changes

Employee Benefits
Article
09/10/2018

Maintaining ongoing employee benefits communication is a key element in boosting employment satisfaction and engagement with your business. While discussing employee benefits has sometimes been regarded as a human resources minefield, it's critically important to have a strategy in place for communicating changes in benefits that fully informs your workforce and doesn't damage employee morale.

Importance of a communication plan

In the Paychex 2018 Pulse of HR Survey, conducted among 300 HR decision makers at U.S. companies (with between 50-500 employees), 33 percent of respondents identified offering competitive benefits as among the top five challenges for HR professionals. A year ago, in the Paychex 2017 Pulse of HR Survey, when 318 small to mid-sized business owners were asked why they offered benefits, the responses were distributed across four types of benefits: health insurance, retirement, FSA/HSA, and ancillary benefits. Considered together, the most commonly reported reason for offering benefits was to improve employee morale, followed by the need to attract talent. These survey results reflect similar conclusions reached by other studies and surveys.

Traditionally, companies communicate with their teams about benefit plans once or twice a year, usually during annual open enrollment periods and performance reviews. HR departments play an essential role in communicating benefits' value to employees, by raising awareness and providing insight into how programs can be used.

But occasional communications aren't sufficient. It may lead to the perception among employees that benefits really aren't a priority within the organization. Developing and executing a plan for ongoing employee communication can help cultivate favorable perceptions that drive strategic business goals.

If you have an employee benefits communication plan in place, this could be the right time to audit it for effectiveness and desired results.

Auditing your benefits package

Offering benefits to your employees is a balancing act between meeting employees' needs and staying within your budget. From time to time, it's a good idea to audit your current offerings and review where things stand in this area. While federal law doesn't require small businesses to offer most types of benefits, many choose to offer additional perks to help their employees, and to stay competitive. Here are key types of benefits you may want to consider:

  • Health care benefits: For smaller budgets, consider health savings accounts combined with high-deductible health plans or qualified small employer health reimbursement arrangements (QSEHRAs). Also, look at flexible spending accounts for medical costs, which don't require any employer contributions.
  • Retirement savings: Help employees save for their retirement by offering a qualified retirement plan. You can so do with no significant cost to you (e.g., 401(k) plans without any employer contributions). A tax credit may also be available for the administrative costs of setting up the plan and educating employees about contributions.
  • Training: You can pay to train employees on the job or enable them to take education courses outside of work. By setting certain parameters, you can arrange for this benefit to be tax-free to employees.
  • No-cost benefits: Perhaps the best types of benefits you can offer have no associated costs. Consider offering flex time, permitting employees to work from home, or other work arrangements that allow workers to better manage their work/life balance.

Offering certain benefits requires you to give certain notice to employees. This notice allows them to opt out in some situations or to take advantage of the offering in others. Examples:

  • Safe harbor 401(k) plans require a notice to be distributed 30-90 days in advance of the plan year, outlining rights, obligations and certain minimum benefits, as well as the timing and method for making salary deferral elections.
  • QSEHRAs: At least 90 days before the beginning of the year, notice must be furnished to eligible employees which states the permitted benefit and coverage requirements to maintain eligibility.

Some benefits are subject to payroll taxes, while others are exempt. Be sure to factor in the correct status when reporting on:

  • Employees' W-2s
  • Quarterly employer tax returns (Form 941)

With changes made by tax reform, be sure that you:

  • Permit employees to submit a revised Form W-4 if they choose. This allows employees to increase or reduce their withholding.
  • Adopt the new withholding rate for supplemental wages. This can include payments for nondeductible moving expenses and fringe benefits paid under a nonaccountable plan. The rate for 2018 is 22 percent if you choose to withhold separately and not combine the supplemental wages with regular wages. There's a 37 percent rate that only applies for supplemental wages over $1 million.
  • Determine reimbursement status. If you reimburse employees for certain costs under an accountable plan, the reimbursements aren't compensation; there's no withholding. But if it's a nonaccountable plan, you must withhold accordingly.

Setting up an employee benefits communication plan

If you don't have an employee benefits communication plan in place, here are some guidelines to keep in mind as you put one together:

Communicate frequently. You can’t over-communicate news about employee benefits. Regularly schedule updates to employees, even when nothing much seems to be happening. Make use of your benefits administration platform to produce information of genuine value. Topics for these updates might include tips from benefit providers and employee benefit success stories.

Consider sending out value-added messaging over the course of the entire year. These messages should:

  • Be easy to understand
  • Take little time to read while creating real value for employees
  • Avoid the alphabet soup of acronyms common in today's benefits literature
  • Foster positive impressions regarding workplace benefits

Examples of effective communications include spotlights on optional benefits programs such as pet insurance, tips from benefits providers on how to make the most of a program, and employee success stories.Strive for clarity at every point and if you must use industry jargon, be prepared   to explain exactly what it means.

Get started ASAP. When it's clear changes in benefits are imminent, begin preparing your presentation to employees. Rumors can take on a life of their own, and once they get started, it's hard to conduct effective damage control. At the same time, be sure to have all the facts in place before making any official announcement. If a new plan is going to be implemented, you want to answer employee questions as clearly as possible.

Frame the message in a positive light. Employee reactions will depend on how favorably you frame the message about changes in benefits. For example, if you are canceling an established plan, your company should make clear you aren’t cutting benefits across the board. Instead, you may want to communicate that you are providing access to improved benefits that have been chosen with employees in mind.

Don't cloud the message with industry jargon. The areas of health insurance and other employee benefits can be cluttered with insider jargon. Many employees don't know the terminology, so including these terms in your message can increase confusion and uncertainty, rather than reduce them. Strive for clarity at every point and if you must use industry terms, explain exactly what it means.

Tailor your communications efforts. Your workforce is most likely comprised of different demographic groups, with unique benefits concerns at each individual's life stage. One group might value information regarding time off or flexible work schedules, while another might value detailed information about retirement options. Tailor your communications to fit your specific business strategies. Consider developing unique content streams with collateral and communications targeted to different groups, such as college recruits or senior executives.

Use all distribution channels at your disposal. You can't always be sure how employees receive important information, so it’s a good idea to "use a variety of methods to reach employees, such as videos, blogs, social media, town hall meetings, lunch-and-learns, and benefits fairs," says Paychex HR consultant Kirsten Tornow. "Some workers tend to appreciate more face-to-face enrollment meetings, while other workers may prefer getting details on their devices, with important information delivered in short, concise bites."

Consider the following:

  • HR portal: This channel can promote self-service access, automated notifications, news postings, and online tools that are spotlighted every time an employee logs in.
  • Mobile devices: Share information with messages optimized for smartphones, tablets, and text messaging for employees who have opted in to this communication method.
  • Electronic: Reach out to remote workers and multiple offices through email notifications, videos, and online satisfaction surveys.

Offer printed materials and online resources. Producing easy-to-read printed pieces can be very helpful, particularly those pieces that offer side-by-side comparisons of:

  • Premiums, projected employee contributions, and/or deductibles
  • Lists of in-network and out-of-network medical facilities and consulting physicians
  • Changes in plan offerings from the past year and the one coming up

Try to anticipate the kinds of questions employees will ask, and include detailed FAQs with this printed piece (a PDF version on your company's intranet can help, too).As soon as it's clear that changes are coming, begin preparing your presentation to   employees.

Use HR data analytics to streamline benefits management

HR data analytics can provide HR departments with better data collection, reporting, and the information needed to make data-driven business decisions. Whether a business unit manager needs the latest information on time and attendance to streamline their scheduling process, or a quick payroll audit by the HR manager to address a problem, analytics help make data accessible to business leaders.

HR data analytics can also streamline the management of benefits and other services within human resources.

Consider the reporting that is needed during open enrollment. With an analytics-driven reporting system, it is easy to see who is enrolled and where decisions are pending. Analytics can also help HR managers understand which benefits are being used and perceived as valuable by the workforce, and which ones are underleveraged. HR analytics related to benefits can also help companies gather the information needed for compliance reporting with ease.

All of this valuable data can inform your employee benefits communication plan as well. When conducting HR data analytics, be on the lookout for information you can boil down to a clear, straightforward message to share with your employees. This information can focus on how these benefits improve their lives, both at work and in their personal lives – information they can share with others and which can boost your recruitment efforts.

Benefits administration doesn't have to be an overwhelming task. You can easily manage all your employee benefits from one place, through an integrated platform. With this resource, you get a new level of oversight over your company's benefit plans, helping improve productivity, communication with employees, and your ability to make well-informed business decisions. Learn more about how a single integrated platform can make managing employee benefits hassle-free.

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This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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