Avoid These Common Employee Benefits Mistakes Most Small Business Owners Make
Guest Author: Patrick Shen, consultant at Alliant Insurance
Navigating the healthcare benefits landscape can be challenging.
This is especially true if you’re a small business owner who wants to create a sustainable employee benefits strategy that can improve as your business grows.
3 Common Employee Benefits Mistakes Most Small Business Owners Make
In this guest blog, we gain insight from Patrick Shen, an experienced benefits consultant who has worked with countless small to large employers. He delves into the most common mistakes he sees small business owners make when setting up their benefits program.
Mistake #1: Forgetting to offer a retirement plan.
Business owners are wearing multiple hats when getting their businesses off the ground. One of the most common mistakes is for an employer to forget that they may be doing business in a state (look at you, West Coast) that mandates employers offer a retirement program. This applies whether you have 1 or 100+ employees.
It’s common to take the state-sponsored plan, but why deal with a government plan when plenty of 401(k) providers offer better funds, integration to your payroll, and a user-friendly interface?
Finally, most states do not assign a fiduciary risk to employers, nor do they force employers to match any funds or guaranteed investment performance.
You just need to offer it as an option to employees. Employers not complying with the state mandate may pay a fine for every affected employee and possibly owe the IRS thousands of dollars in fees per year!
NOTE: Check your state guidelines to make sure you are complying.
Mistake #2: Using paper applications to enroll employees onto benefits.
It’s 2024, are we still using PAPER?
The main challenge with paper and manual deductions is human error.
If the new employee accidentally provides incorrect or incomplete information (such as DOB, SSN, home address, etc.), the insurance carrier will kick the application back, delaying coverage.
If your small business still uses paper applications to enroll a new hire into your benefits program, it’s time to consider setting up a benefits administration system.
This platform will make it super easy for your new employees (and current employees) to manage and conduct open enrollment changes digitally.
With a ben admin platform, the application process is dummy-proof.
Plus, any deductions are relayed automatically to your payroll system, reducing your administrative burden on the business.
Mistake #3: Not taking advantage of free resources from their insurance brokers.
There are so many resources for small business owners to get their employee benefits set up. Here are a few examples of the resources available:
HR outsourcing/hotlines – Can’t afford to hire an experienced HR person? Rely on HR outsourcing services usually included with top insurance brokers in your area. These outsourcing services will also help you triage complicated issues regarding employees and let you know whether you will need to enlist the service of a reputable law firm or not.
Healthcare compliance updates—As always, more regulations are being added to doing business in America, especially regarding healthcare, ACA compliance, and others. Knowing the changes will help you attract and retain top talent while keeping your business out of trouble. The last thing anyone wants is to have the DOL or IRS come knocking at your door!
Strategic benefits planning – Looking to find creative ways to attract and retain employees? You must consider your employee value proposition, as it combines pay, culture, benefits, and other intangible items. Reviewing your value proposition to new hires and total rewards package will help your company maintain a growth path.
If you’re interested in learning more about the free resources you could use, contact Patrick Shen on LinkedIn or send him an email. He’ll be able to advise you on how to implement a holistic benefits program for your employees in 2025.
ABOUT THE AUTHOR
Meet Patrick Shen, an experienced employee benefits consultant who works with small to large employers on navigating the healthcare landscape while creating a sustainable employee benefits strategy.
With 15+ years of industry experience, Patrick uses a holistic approach to addressing employee health & wellness, combating rising insurance costs, and helping business owners stay out of trouble. He is currently a consultant for Alliant Insurance, a top 5 insurance brokerage.
