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Benefits of a Limited Benefits

There are many benefits to  employers, associations and agents for enrolling a Limited Benefits.   Some of the benefits of enrolling a limited medical plan are:

  • Guarantee Issue – every employee is accepted regardless of condition
  • Pre-Existing Condition Clause – this may be waived or not waived depending on the limited medical carrier.  Many Limited Benefits waive the Pre-existing condition clause, making limited medical plans the only type of health insurance to cover all conditions for the employee immediately upon enrollment.
  • Reduces Turnover
  • Decreases Absenteeism
  • Increases Attraction and Retention of Employees
  • Flexible contribution requirement from the employer.  In some cases employers do not have to contribute anything and the limited medical plans can be 100% paid for by the employee.
  • Flexible Eligibility and Participation Requirements – Limited Medical Plans typically have flexible participation requirements and in some cases can have participation requirements as little as 10% and sometimes even as little as 1% or even no participation requirements.
  • No Coordination of Benefits:Limited Benefits typically will pay regardless of any other insurance plan or benefits in place.
  • Fully Insured:Limited Benefits are typically fully insured
  • Self Funded: Limited Benefits can also be self funded
  • Maternity Benefit
  • Universal Rates – Rates are typically standard and universal around the country, and are the same regardless of age, sex, location, health condition or other demographics.
  • Assignment of Benefits
  • Easy to understand
  • PPO network
  • Flexible Billing Options: these can include electronic billing, paper billing, list bill or self bill, and options for missedbilling or different payroll deduction periods.
  • Flexible Enrollment Options–Internet/Web Enrollment, Telephonic, In Person Meetings, one-on-one, orgroup meetings, or negative enrollments.
  • COBRA Eligible
  • HIPAA Compliant
  • HIPAA Creditable Coverage – Some Limited Benefits apply as HIPAA Creditable Coverage

Below are some statistics that really support implementing a Limited Benefits:
8% of covered insured have no claims
61% of covered insured have less than $1,000 in claims during the year
85% of insured have less than $5,000 in claims during the year
97% of insured never exceed $25,000 in claims during the year
5% of members account for 50% of plan costs

Benefits Offered in a Limited Benefits:

  • Doctors Office Benefit
  • Wellness/Preventative Care
  • Emergency Room Treatment
  • Diagnostic Testing and X-rays
  • Hospitalization
  • Surgery Benefit
  • Mental Illness and Substance Abuse
  • Skilled Nursing
  • Life Insurance
  • Dental Insurance
  • Vision Insurance
  • Short Term Disability (STD) Benefits


Attraction and Retention of Employees through a Limited Benefits
Retaining, attracting, and reducing employee turnover and absenteeism is the primary concern and goal of every employer in the United States and why many employers implement a limited medical plan.
Turnover and absenteeism costs negatively affect a company's profitability, productivity, and bottom line. Surprisingly, these costs are rarely analyzed by employers or the human resource department. Even if they do track these costs, most employers simply do not know what to do!
 Numerous studies have shown that turnover costs range from $3,500 to $11,609 for each $8/hour employee lost to turnover. Imagine the turnover cost to employers for employees who make $15 to $20 per hour or more!
Examples of costs of turnover are:

  • Administrative costs in dealing with turnover
  • Advertising for a new position
  • Interview costs
  • Temporary staffing
  • Lost productivity
  • Lost sales
  • Lower customer service
  • Training costs and more.

Turnover costs for a company with 10,000 employees making $9.13/hour with 87% turnover can cost a company approximately $70 million a year. Absenteeism costs for this same company can cost as much as $411,200 a month or $4,934,400 a year.
Absenteeism costs an employer significantly in the area of lost productivity, lost sales, decreased customer satisfaction, and more. One of absenteeism's highest factors is a lack of easy access to health care and absence due to preventable sickness.
Limited Benefits and worksite products provide many ways to help employers reduce absenteeism and turnover and to help employers attract and retain quality employees. A Limited Benefits almost GUARANTEES to reduce turnover and absenteeism and to keep employee satisfaction and retention very high. Employers can save millions of dollars every year by implementing a Limited Benefits program.
Recent employee turnover cost studies include the following:
Case Sources *Turnover Costs at $8
per hour per employee
• Society Human Resource Management
• Workforce Magazine-FAX Facts Survey
• Cornell University Hotel School Study
• Cornell University Hotel School
$ 3,637.00
$ 4,100.00
$ 5,333.00
$ 4,800.00

Recent employee turnover cost studies include the following:

Case Sources

*Turnover Costs at $8 per hour per employee

Case Sources Turnover Cost

• Society Human Resource Management

$ 3,500.00

• Coca-Cola Retailing Research Council $ 3,637.00

• Workforce Magazine-FAX Facts Survey


• Americans Hotel and Motels Associations $ 4,100.00

• Cornell University Hotel School Study


• Advance Online - Merion Publications $ 5,333.00

• Cornell University Hotel School

$ 5,688.00

• American Management Association $ 4,800.00

Position Specific Turnover Issues

Number of Employees in the Position


Turnover Percentage


Average Annual Compensation


Average Tax & Benefit Cost as % of Salary


Average Number of Candidates Used Per Opening


Average Number of Candidates Assessed Per Opening

$50-$500 Per Day

Separation Costs

Cost of Exit Interviewer (1 hr @ $30/hr for each turned over employee)


Administrative Cost Related to Termination (2 hours at $12/hr)


Separation Pay (1 week salary and benefits)


Increase in Unemployment Tax (marginal rate increase + add tax)



Replacement Costs

Preemployment Administrative Costs (3 hrs at $12)


Costs of Attracting Applicants (Ads, agencies, etc.) $250
Cost of Interview Process Per Applicant (# of interviews X $16/hr X open positions) $1,392,000
Assessment Cost ($220/test taker X open positions) $19,140,000

Background Check Costs ($7/test taker X open positions)


Staff Costs to Meet & Confer (3 Mgrs X 1/2 hr time X $30/hr rate)


Staff Travel Costs


Travel Costs to Interviewee


Moving Expenses 0
Postemployment Admin. Costs (Payroll, benefits, records, etc.) $162,286
Postemployement Medical Exam 0
Sign-on Bonus 0

Training Costs

Cost of Informational Literature & Manuals


Salary/Benefits Paid During Training (Daily pay/benefits X 20 days)


Cost of Trainers Time ($100/day X 20 days)


Salary/Benefits Paid During Post-training Ramp-Up Period $25,828,125
TURNOVER (typical results) YIELDS A


Absenteeism Cost Factors

  • Hiring last-minute temporary staff
  • Paying more overtime to current employees
  • Adding new staffing to replace anticipated labor loss
  • Lost wages/salaries due to paid sick leave
  • Substandard production (quantity and quality)
  • 3–6% of any given workforce is absent every day
  • Overstaffing up to 10–20% to compensate.


In 2005, the cost of absenteeism was $660 per employee per year for companies with high employee morale, and an estimated $1,320 for companies with poor morale.
“When employees go to work sick they risk infecting their co-workers and will most likely not be as effective in their work.”
Absenteeism due to stress can be as high as 20% of the cost of absenteeism.
Personal illness remains the single most common reason for last-minute worker no-shows (32%).
It is estimated that one out of five absences is due to stress.  The average cost employers spend on absences is estimated to be about 2%–14% of payroll. (Use 10,000 employees example) cost = $8 an hour $3,328,000

To calculate your organization’s absenteeism rate we suggest this formula.

a. Number of Employees in the Company/Department


b. Average Monthly Salary per person (or expected pay)


c. Benefits (estimated 35% of monthly salary)


d. Total Monthly Compensation


e. Average number of workdays missed in the month


Confinement Benefit for Skilled Nursing

$50-$500 Per Day

Total Cost of Absenteeism Annually


Average Cost of Absenteeism Per Day



1. Total work hours lost to employee absenteeism for the month


2. Average wage/salary per hour per employee


3. Cost of employee benefits per hour per employee ($10.00 x .30)


4. Total compensation lost per hour per absent employees
a. If employee absences are paid ($10.00 + $3.00)
b. If employee absences are unpaid (Line 3)


5. Total compensation lost to absent employees (paid sickleave) (124 x $13.00)


6. All other costs incidental to absenteeism not included in the above items (for the purposes of illustration only, this is a random number)


Total cost of absenteeism for the month ($1,612 + $2,500)


An absence is unscheduled time off, not including vacation time, holiday or a granted leave of absence.

Total cost of absenteeism for the month ($1,612 + $2,500) $4,112.00

For more information on a limited medical plan please contact us at


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