The effect of inflation on the cost of health care and other employee benefits is another factor that employers should keep an eye on as an area of opportunity to improve compensation packages for employees. There are important advantages to allocating a greater part of the investment in employee compensation to employee benefits.

First, the employer-paid portion of health insurance premiums are considered 'fringe benefits' that may be considered a business expense, and therefore, tax-deductible at both the state and federal levels.
Second, there are a number of issues that truly distract employees from being productive while at work, and the top concerns are their physical health or the health of their family members, and the worry associated with the cost of treatment if they get sick.
Finally, investing in providing full coverage for employees' health benefits, or covering a larger part of the cost of health insurance, or life and disability insurance, can have an impact on productivity and help with long-term retention. But, having all employees covered because an employer contributed so highly to their health plan, can have a longer-term positive impact on costs, by lowering the overall risk and therefore premiums of the whole group.

Employers have been looking at creative ways to improve the perceived value of employee benefits beyond just covering the traditional insurances, but in today's environment of both pandemic illness and inflation, finding a more human side to providing rewards and benefits will become increasingly important. Providing coverage that will protect employees' health and financial wellness in both the short term and long term, and ensuring those benefits are tax-deductible, should be a win-win for employers and employees in this challenging time.

Instant Insights /

It's time to think differently about benefits and compensation packages

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