When I first started out in HR … yes, it's been a while! … employees received double digit salary increases as the norm and the benefits for the employee-only were completely paid for by the employer. I was upset the first time I had to contribute to my own insurance premiums.

While the double digit increases are probably gone forever, I'm finding a lot of small companies paying the full premium for health insurances. I bring this up because it continues to surprise me that companies are doing this today when insurance costs are so high and there are better ways to spend your benefit dollars.

Paying the full cost of your employee's health insurance seems like a wonderful benefit to offer. But you know what? Some of your employees have signed up for your plan only because it's free, not because they actually need it. Are any of your employees married? Do their spouses have insurance coverage? Is your employee also on their spouse's plan? Often the answer is yes.

What does this mean to you? Let's say an employee is already covered under their spouse's plan, but also signs up for your plan just because it costs nothing. What's the advantage for you? Nothing. What's the advantage for the employee? Very little to nothing … the first insurance plan gets named as primary and the other secondary. When a claim is made the primary plan covers it and the secondary plan comes into play only if a specific benefit is better in the secondary than the primary plan. For instance, the employee is hospitalized and their primary plan covers $300/day and their secondary covers $350/day. The primary would pay the $300 and the secondary would then kick in the extra $50 (i.e., the "better" benefit). The employes won't have $650/day coverage because the insurance companies don't pay out like that.

What's the disadvantage of offering company-paid insurance? It's likely that you aren't offering additional benefits because your benefit dollars are already being used just for those insurance premiums. For example, if a premium is $250/month but that employee wouldn't have signed up for it if it wasn't free. That's $250/month, or $3000/year, your company could be using for the administration fees for a 401(k) plan, to offer an Employee Assistance Plan, or to provide a better vacation plan.

I know you'll find this hard to believe but by asking for as little as a $10/month co-pay from the employee for the premium will stop a few employees from signing up for your plan when they already have coverage. Lack of knowledge works against you. Whenever you have open enrollment or new hires, make sure you let employees know that being double-insured doesn't result in double payments for claims.

Then starting researching which other benefits you can add that will improve your recruiting and retention rates with the money you've saved!