Human Resources Toolkit: Insurance

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Insurance is another non-cash benefit that offers psychological security and could help an employer retain employees, even more than an equivalent salary increase. Explain your organization's insurance program and how it works in a written policy.

Health Insurance

Health and hospitalization insurance often is the most attractive employee insurance benefit. Coverage and administrative programs vary. Group programs might be as small as coverage for one office, or as broad as coverage for an entire metropolitan area, state, or nation.

A health insurance program can be administered via an endorsement or contract with a commercial carrier, such as Blue Cross/Blue Shield or Prudential, or through alternatives, such as self-insurance programs and health maintenance organization (HMO) plans. Plans are available with varying deductibles and first-dollar coverage. The policy should define and address if your organization requires premium sharing.

Group policies usually waive the requirement for a physical examination before providing health or life insurance coverage. An employee who otherwise is unable to obtain coverage on his or her own may find this attractive.

Life insurance programs may serve as an additional means of attracting and retaining employees.


Since health-care costs continue to rise at an extraordinary pace, companies will need to devote even more attention and resources to cost containment, preferred provider plans, premium sharing, increasing deductibles, alternative care programs, employee assistance programs, and retiree medical coverage.

Accounting standards recently established by the Financial Accounting Standards Board dramatically impact the balance sheets of all organizations -- future projected costs for retiree medical insurance coverage must now be accrued and carried as a liability on financial statements. And, as costs escalate, organizations might have to shift the cost of retiree coverage, in whole or in part, back to retirees, thereby reducing their spendable income.