How Limited Health Plans Help Hospitality Hiring and Retention

by Justin Randall, HUB International

T​he hospitality industry has managed to stay afloat during the COVID-19 pandemic, but a labor shortage threatens the recovery. Operators can look to a little-used arrow in their quiver to attract workers: Employee benefits, health insurance in particular.

Worker shortages have been endemic during the pandemic; half of former hospitality employees have said they won’t return to their former jobs, due to low pay, a lack of benefits and stressful work, according to one survey.[1]

In response, the hospitality industry has bumped average pay to $16.21 an hour for non-management workers, up a full dollar an hour over three months.[2] But the pay hike hasn’t proven enough for some restaurants, which have been forced to cut hours due to the labor shortage.

Benefits can help manage the labor gap, though the hospitality industry doesn’t have a stellar track record in offering them: In 2019, only 31% of restaurants offered medical insurance, while only 18% offered a 401(k) plan, 14% offered paid family leave and just 11% offered disability coverage.[3]

Limited health plans offer a viable option

In hospitality, given the number of part-time hourly workers, medical benefits help attract and retain employees. But employees who work less than 30 hours a week usually can’t afford the premiums and deductibles of a major medical plan. However, many can afford limited medical insurance, with far lower premiums and deductibles.

Also known as “fixed indemnity” medical plans, limited medical plans reimburse lump sums through a network, offsetting the costs of common services and procedures. Telehealth is typically free. The premiums are low; there is no deductible. Coverage is provided weekly and can include qualified dependents. The plans can be built out to include other benefits like pharmaceutical, dental and vision.

Outside of administrative costs, limited medical benefits cost the employer nothing. But they represent something of value for employees who typically do not have any benefits. Limited medical benefits not only help with recruitment but can reduce long-term turnover.

What to focus on:

​Hospitality employers considering adding limited medical to their benefits package should proceed on three fronts:

1. Understand employees, and what they want and need from benefits. Persona analyses geared specifically to the hospitality industry provide insight into employees, helping customize benefits that will energize recruitment and retention.
   
   
2. Offer value. Because limited medical plans are voluntary, employees won’t bite if there’s no value in the plan. A limited medical plan needs to offer access, cover preventative services like mental health and address gaps in care.
   
   
3. Emphasize employee communications. A third-party vendor can handle administrative tasks like integrating plan management with payroll systems and managing COBRA, but not necessarily employee communications. Employers need to make sure their vendor offers strong communication and education capabilities, so employees will know the value in the limited medical plan and will actually sign up.

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Sources:

[1] Business Insider, “A third of former hospitality workers won’t return to the industry during the labor shortage because they want higher pay, better benefits, and a new work environment,” July 8, 2021.

[2] Washington Post, “Welcome to the year of wage hikes. Workers are returning — to higher-paying firms,” July 2, 2021.
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[3] Restaurant Dive, “31% of restaurants offer health insurance to workers, survey finds,” July 31, 2019.

About the Author:

HUB International is a valued Associate Member of WHLA. Justin Randall is the Vice President of HUB International.

55 E. Jackson Blvd.
Chicago, IL 60604
(608) 225-9882
​www.hubinternational.com

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