It’s About More Than Just Healthcare & Discounts
The results are in: Even when wages are lower than competing businesses, studies show that companies with better benefits packages tend to hold on to their employees. In fact, 80% of employees would prefer an increase or upgrade in their benefits over a wage increase.
Sadly, the veterinary field hasn’t kept up with this deep employee desire. Veterinary benefit plans often lag behind those of other employers that steal our team members with the promise of better compensation that goes beyond just the paycheck.
While it’s true that more and better benefits will get employees to stick around even when times are tough (like during a pandemic!) those benefits don’t need to break the bank. Let’s take a look at benefit options, and how you can choose benefits that will be of the highest value to your team.*
The two sacred, non-negotiable, must-have benefits for every practice are:
- Health care insurance
- Paid time off
Hospitals that do not offer these, or offer a sub-standard version of these, will struggle to attract team members. This is especially true now when we are experiencing the most extreme employee shortage in recent memory.
In the iVET360’s recent Practice Manager Report, we found that over 20% of hospitals are not offering their teams health care. Considering millennials see health care as the most important benefit an employer can offer, these hospitals will be fishing for applicants in a very shallow pool.
Paid Time Off (PTO) is another crucial benefit that must be offered to attract and retain the best possible candidates. Most companies provide a minimum of 21 days of vacation and holidays, plus sick time. The veterinary field averages 13 days of vacation and holidays with little or no sick time. This results in sick and tired team members that make everyone else sick and miserable.
PTO tends to mean something different to everyone. In many cases, it includes vacation and holidays, while in others, it includes vacation, holidays, and sick pay. We don’t necessarily recommend separating out vacation from sick leave or lumping it all together. What is more important is that if you do package it as PTO, you still provide enough time off for both vacation and sick days.
Many companies start employees with two weeks of PTO + sick leave and eventually build to 6+ weeks off. Although the veterinary industry, in general, is not fond of offering PTO, being the hospital in town that offers the most will gain you the reputation of being an “employer of choice” in the area.
Holidays are another important factor. While many companies are closed on several federal holidays, animal hospitals tend to only close on Christmas, New Year, and Thanksgiving. If you cannot offer paid holidays off for Labor Day, Independence Day, Memorial Day, etc., we highly recommend paying time and a half to those who work those days as a show of goodwill. Such a gesture goes a long way in gaining employee loyalty.
Structure your benefits package on a foundation of health care and PTO.
For Health Coverage
We recommend finding the best health care insurance you can afford to offer, then pay no less than 50% of the employee premium. Offering several options helps team members who need less health care pay a little less each month.
- Year 1: 1 week of PTO plus holidays (as many as possible, either paid off or time and a half when worked) and 7 days of sick time
- Years 2-4: 2 weeks PTO plus holidays and 7 days sick time
- Years 5-9: 3 weeks PTO plus holidays and 7 days sick time
- Years 10+: 4 weeks PTO plus holidays and 7 days sick time
Retirement plans are rarely offered at hospitals. However, millennials find retirement plans to be a very important aspect of a benefits package. It makes sense: they watched their parents have to go back to work after retiring when the economic downturn happened. They don’t want to work until they die—they want to plan for fruitful retirements.
Retirement plans don’t have to be complex. In fact, most hospitals can offer their teams a 401K program at little to no cost to the practice. Some 401K programs don’t require a match, but these plans still give the team a way to contribute pre-tax dollars to their retirement fund. We work with many hospitals that offer such programs, then deposit a profit share to each participant’s account when the hospital does well.
Offer some kind of retirement plan to your team. If you can match contributions, even if it is 1%, it will increase loyalty to your hospital. However, even a low-cost, non-matching retirement plan is considered valuable to employees and can be implemented with little to no cost to the hospital.
Pet Care Discounts
This is one of the hardest benefits to talk about because there are a lot of varying opinions about the desire to provide care benefits to our team members’ pets. Some hospital owners see this as a non-negotiable, must-provide benefit. Others see it as something that is nice but not necessarily required to take care of their teams. Some owners feel it is unfair to offer thousands of dollars in discounts to some employees each year, while team members who have no pets miss out on the financial benefit. Still, others do away with discounts altogether in favor of subsidizing pet insurance premiums.
When it comes to pet care discounts, here are a few things to know:
- Any pet care discount over 20% is considered a taxable benefit by the IRS. If the hospital were to be audited (which is happening more often these days as the IRS sees the veterinary field as an untapped source of income), and pet care discounts are not being taxed, the hospital will be fined and charged back taxes. The team members can also be fined and charged back taxes, too. This helps no one.
An example of how this works: If the employee’s bill is $1000, and you offer them a 60% discount, then $200 of the discount would be non-taxable, while $400 of the discount would be taxable. The $400 discount would be reported on the employee’s paycheck as taxable income.
- Pet care discounts should always be capped and come with strong limitations. For instance, discounts should apply only to the employee’s own pets, which can be defined each year if necessary. We recommend capping the number of employee pets that can qualify for the discount at no more than four.
- Discounts should be fairly applied regardless of the doctor seeing the patient. Some doctors will be more generous than others, and will sometimes throw in free medications, free exams, a “quick x-ray,” etc., in an effort to help the team member out. This harms the practice by reducing the income from that patient, which should at least cover the expenses behind the treatment or diagnostic. Intentional or not, it also harms practice culture by showing preferential treatment, even when it isn’t intended.
Offering a pet health care insurance subsidy is a great and fair alternative to providing a pet care discount. These usually are much cheaper to the practice than offering a discount—and also having to collect on employee balances, which tend to be the last ones to be paid.
One more important thing to remember is that many veterinary employee pets are “train wreck” patients who have long lists of pre-existing conditions (it definitely comes with the territory!). This means that some patients will not receive much coverage even if they do have a pet insurance policy paid by the hospital. If this is concerning to you, we recommend offering a 20% discount on any services that are not covered by the insurance to offset this imbalance.
Define your discount policy. If you offer more than 20%, be sure that any discount over 20% is reported as taxable wages.* Cap the number of pets that can qualify for the discount and limit the discount only to employee-owned pets. Require that all employee charges and discounts are entered by a supervisor or the practice manager to avoid missed charges (unintentional or otherwise).
If you choose to offer a health insurance subsidy instead, be sure to cap the number of patients that it may be applied to per employee. You can choose to offer an additional discount if you offer health insurance subsidies to cover things not reimbursed by insurance, but we would recommend capping this at 20%.
*If you choose to offer a discount over 20%, but do not plan on reporting it as taxable wages, we highly recommend asking employees to sign a document that states they understand that their discount should be taxed and that they will not hold the practice responsible if they are audited and fined.
Sweeten The Pot: Other Benefits
In general, the following additional discounts/benefits are popular and low-cost:
- Gym memberships
- Paid birthday off
- Employee development programs
- Continuing education (should be available to all team members, not just credentialed ones!)
- Employee wellness programs/ Employee Assistant Programs (EAP)
- Profit sharing
- Commuting assistance
- Tuition reimbursement
- Paid parental leave (of any duration)
- Schedule flexibility
- Childcare assistance
- Extra days off around the holidays
These perks are also highly valued by team members:
- On-site massage/ spa services
- Drink fridge (that is always stocked)
- Company-sponsored sports teams
- Offsite events
- Food (just make sure you take credit for it and tell them it is to appreciate them!)
- Paid community service time
Creating A Benefits Plan
One of the most important factors to consider when creating a comprehensive benefits program is fairness. Team members these days have a heightened awareness of what they are getting compared to what others are getting.
A primary example of how a team member may feel their benefits package is “unfair” is when the employer pays a portion of the health care premium for employees’ children. While this is highly valued by those team members that have children, those who do not see it as other employees getting thousands of dollars in benefits each year that they are not. Alternatively, team members who have one healthy dog may balk at the tens of thousands of dollars in pet care benefits some of their teammates get for their aging menagerie.
The best way to fight this is to create a benefits menu system. Here’s how it works:
- Evaluate how much you are currently spending on employee benefits per employee. Consider:
- Healthcare benefit payments
- 401K contributions
- PTO days (total number of days divided by average wage)
- Pet discounts (be prepared—this one will hurt!)
For the example below, let’s assume an employee making $46,500 in total compensation (wages and benefits) and $33,280 in wages. This means the hospital is currently spending $13,220 in benefits for this team member
- Choose two or three main benefits that all employees get. These will usually be healthcare, baseline PTO, and a 401K program.
- For the above employee, let’s say the health insurance costs $6000 per year, and the 401K costs $1000 per year, leaving $6220 in “unused” benefit money.
- Don’t include the baseline PTO in the main benefits cost, as this cost can vary greatly depending on the team member’s position and experience.
- Create a menu of other benefits the employee can choose from, each associated with a cost. For example:
- Pet care discount: $150 per month
- Employer contribution to family health care: $500 per month
- Additional days of PTO: $150 per day, per month
- Tuition reimbursement: $100 per month
- Gym membership: $40 per month
- Paid volunteer days: $150 per day per month
- Paid parental leave: $500 per month
- Life or disability insurance: $100 per month
- Childcare subsidy: $200 per month
- The employee can take the unused benefit money (the $6220 referenced above, or $518 per month) to “shop” for their benefits. For example:
- One employee can choose to have their family’s health care coverage partly covered
- Another employee can choose two additional PTO days per year, plus a pet care discount
- A different employee can choose a childcare subsidy, a gym membership, and tuition reimbursement
Administering benefits in a menu system like this allows team members to choose the benefits that are best for them personally. This increases the feeling of fairness and causes them to think twice before looking elsewhere for employment. Most millennials and centennials prefer benefits to be administered this way.
Another benefit of this type of benefits program is that you can add money to their “shopping fund” in lieu of a raise. In cases where funding for raises is limited, providing benefits can be an excellent retention strategy that costs the hospital much less than raises would. Considering 80% of employees would prefer new or additional benefits to a wage increase, this turns out to be a good deal for the hospital!
*Please note: Some states have specific laws surrounding benefits, benefits options, and benefits administration. Be sure you talk to an attorney when making changes to your benefits program to remain in compliance with state and local laws.
WAGES AND BENEFITS