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Here’s an example *:
A small business hires a new team member at a $50,000 salary. With benefits, especially health insurance, their cost could hit $62,500 to $70,000.
Why? Consider:
- Recruitment costs: ~$4,700 per hire
- Training/onboarding: ~$1,280 per employee
- Health insurance costs: Often $6,000–$9,000+ per employee annually**
- Other perks (dental, vision, life insurance, wellness programs) add even more
Hidden Health Benefit Pitfalls to Watch
1. Fluctuating coverage needs
Employees might start with individual plans but add spouses or children later, which can lead to increase in your benefit costs.
2. Administrative burden
Manually administering health benefits can burn time and vulnerable to errors. A PEO (professional employer organization) like TriNet can help automate the process and mitigate risks.
3. Compliance slip-ups
Mistakes in health benefit administration (missed enrollments, incorrect deductions) can potentially lead to costly penalties and undermine employee trust.
4. Underestimating renewal increases
If you’re not factoring in annual benefit cost increases, your projections might fall short and can lead to tough decisions later.
Smart Strategies to Help with Health Benefit Costs
- Benchmark using national data to see where your costs may stack up
- Plan for potential 7–8% annual increases in healthcare costs
- Use HR tech or work with a PEO to streamline benefits administration
- Offer benefit options to help balance costs and employee needs
- Educate employees on choosing plans that suit their needs and budgets
Health benefits are essential to attracting and retaining talent, but they don’t have to break your budget. With the right strategy and tools, you can offer competitive benefits that support both your people and your bottom line.
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