Fewer than one of four part-time employees gets company-sponsored health benefits, compared to more than four out of five full-time workers with such plans, according to the Bureau of Labor Statistics. And for full-time as well as part-time workers, small employers were significantly less likely than large employees to offer health benefits. OPEN Forum spoke with two experts on hiring and benefits to find out why more small employers don’t offer part-time health benefits, and why, as well as how, more might consider doing so.
Mitch Heckert is an employee benefits consultant for Philadelphia-based insurance broker The Graham Company. Joe Weinlick is senior vice president of marketing for career network Beyond, headquartered in King of Prussia, Pennsylvania.
Why should small employers consider offering health benefits to part-timers?
Mitch Heckert: A small employer is not much different from a large employer. Why do companies offer benefits to begin with? A lot of times it’s for recruitment and retention. They’re trying to recruit and retain the best employees they can. Even on the part-time level, offering benefits to these employees is a way to get their hooks into an employee and possibly lead to full-time employment. You can differentiate yourself as well. You can say, “ABC Company down the street doesn’t offer benefits. We do.”
Joe Weinlick: Another thing is that employees who feel valued are going to work harder. Part-timers sometimes are made to feel like second-class employees, although they may be working as hard as full-time employees. Recognizing this motivates part-timers to be more productive.
Why don’t more small employers do this?
Weinlick: It has a cost. And that cost isn’t just money. Once you start adding benefits, it’s more complex. There’s a lot more you have to manage in the organization.
Heckert: HR departments in small companies have a hard enough time administering benefits plans for full-time employees. If you offer benefits to part-time employees, that’s going to add to the workload. Along with that, there’s a cost associated on the insurance end, too. It takes a cost to enroll people, then you have to factor in a higher turnover rate for part-time employees.
How much does it cost? Will it add a lot to compensation outlays? How can these be managed?
Heckert: It’s obviously going to vary. But if you’re rolling out benefits like full-time employees get to part-time employees, you have added insurance cost and that’s figured on a per-head basis. As a stepping stone, voluntary benefits is something we recommend. It’s a much less rich benefit, kind of like a major medical or hospital indemnity type plan.
Weinlick: And there are other types of benefits. When we survey job seekers, flex-time is a top request, and the ability to maintain work-life balance. A lot of people are working part time because they have children to care for. There are things companies can do to help them maintain that balance, such as a concierge service that helps them get their dry cleaning or other errands done. A small company can look at it creatively. There are things you can do that don’t have great costs but have value to employees.
How about risks? Can you go wrong offering health benefits to part-time employees?
Weinlick: One risk is that it’s very hard to go back. Once you give people benefits, it’s hard to take them back. Every year healthcare costs go up, but people get very used to the benefits they have. So make the decision carefully.
How should employers tailor offerings with minimum hours, probationary periods, etc.?
Weinlick: There has to be some limit on the hours. Thirty or so hours a week is a starting point. Full-time employees in most companies also have a probationary period, so it makes sense to mirror that. And it also makes sense that the benefits should not be the same for part-timers. It should be commensurate with hours worked.
Generally, what are best practices when it comes to part-time benefits?
Heckert: Offer a low-cost option to see what type of engagement you get out of employees. If they really like voluntary medical benefits, like hospital indemnity plans or disability policies, you can make a deeper dive. You don’t have to necessarily jump right in and offer full-blown health benefits. See what your group has an appetite for.
Where are we going with this practice? Will it become more common? How will the Affordable Care Act affect it?
Weinlick: I do think the topic is becoming more common. When companies get to the size that they have an HR person, one of the first things on their minds is convincing management to bring in benefits. In the idea of socially responsible business, a core value is to treat employees well. At larger companies it’s a part of the vision, but large companies start small. There are small companies that say they value part-timers and will provide benefits. I do think that’s a trend we’re going to see growing.
Heckert: I definitely think it’s going to become more common. You’re seeing that now with the effect of the Affordable Care Act. As you see cost increases on federal and state-run exchanges and part-time employees get to a point where it’s not cost effective for them to be on exchanges, it opens up a door for smaller employers to bring them back into the fold. It’s not always cost-effective to have the smallest number of people in your benefits plan. Sometimes, it’s better to spread the risk out among more people.
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