Let’s talk about group benefits—the thing that every business owner knows they need but often get completely wrong.

Too many business owners treat their benefits plan like a “set-it-and-forget-it” deal, only to realize they’re overspending, underdelivering, or frustrating their employees. Worse yet, many focus on the wrong metrics (like price over value), never review their plan, and completely fail at communicating benefits to their team.

The good news? If you avoid these common mistakes, you can turn your group benefits plan into a powerful tool for retention, employee happiness, and tax-efficient compensation.

Let’s break down the biggest pitfalls business owners make with group benefits—and how to fix them.

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Table of Contents

1. Choosing Price Over Value
2. Not Reviewing Plans Regularly
3. Failing to Communicate Benefits Effectively
4. Ignoring Employee Needs & Feedback
5. Overlooking Tax-Efficiency Opportunities
6. How to Build a Better Benefits Strategy
7. Conclusion

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1. Choosing Price Over Value

The Problem:

Too many business owners pick the cheapest plan they can find, thinking they’re saving money. In reality, they’re leaving employees frustrated with weak coverage and missing out on the real return on investment of a well-structured plan.

Why It’s a Mistake:

📌 Cheap benefits = unhappy employees. If employees feel their benefits don’t cover what they need, they’ll see the plan as useless.

📌 Low-cost plans often mean high out-of-pocket expenses. A plan that covers “the basics” might not help much when employees actually need to use their benefits.

📌 Retention & hiring suffer. Your competitors are offering better packages, and you’re losing top talent over a few dollars per month per employee.

How to Fix It:

✔ Instead of choosing the cheapest plan, look at what employees actually value. ✔ Work with a benefits consultant (like me!) to find cost-effective plans that provide real value. ✔ Consider modular benefits or Health Spending Accounts (HSAs) for flexibility without breaking the budget.

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2. Not Reviewing Plans Regularly

The Problem:

Most business owners never look at their plan after signing on. Prices go up, coverage gets outdated, and they end up overpaying for a plan that no longer meets their team’s needs.

Why It’s a Mistake:

📌 Costs creep up every year. Insurance rates increase, and if you’re not actively reviewing your plan, you’re probably paying too much.

📌 Coverage doesn’t evolve with your business. Your workforce changes, and so do their needs.

📌 New plans might offer better value. Providers roll out new options, better coverage, and improved pricing, but you won’t know unless you review your options.

How to Fix It:

✔ Review your plan annually. Don’t wait until renewal season—be proactive. ✔ Get a comparison quote every year to see if you can get better coverage for the same cost (or less!). ✔ Adjust coverage based on employee feedback (we’ll talk more about this below).

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3. Failing to Communicate Benefits Effectively

The Problem:

Most employees don’t fully understand what their benefits cover. If they don’t understand it, they won’t use it. And if they don’t use it, they won’t appreciate it.

Why It’s a Mistake:

📌 If employees don’t see the value, they don’t care about the benefits package.

📌 HR gets bombarded with the same questions. Without proper education, your HR team wastes time answering the same basic coverage questions.

📌 Employees miss out on key perks. Many businesses pay for wellness programs, EAPs, or coverage employees don’t even know they have.

How to Fix It:

✔ Host an annual benefits session to walk employees through their coverage. ✔ Provide easy-to-read benefits guides with FAQs. ✔ Use a digital benefits portal so employees can check their coverage anytime. ✔ Send out reminders about underused perks (e.g., mental health coverage, vision care, etc.).

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4. Ignoring Employee Needs & Feedback

The Problem:

A benefits plan is only as good as how well it serves the people using it. If you never ask your employees what they need, you could be paying for things they don’t use while missing out on what they actually want.

Why It’s a Mistake:

📌 Different employees have different needs. Younger employees may prioritize vision and dental, while older employees may care more about prescription drug coverage and physiotherapy.

📌 One-size-fits-all plans don’t work. A rigid plan frustrates employees and wastes money.

How to Fix It:

✔ Conduct an employee benefits survey before renewing your plan. ✔ Offer flexible options like HSAs so employees can use funds for what they actually need. ✔ Get feedback on existing benefits to see what’s working and what’s not.

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5. Overlooking Tax-Efficiency Opportunities

The Problem:

Business owners often miss out on tax benefits that come with structuring benefits the right way.

Why It’s a Mistake:

📌 Benefits are a tax-deductible business expense, but many businesses don’t take full advantage.

📌 A dollar spent on benefits goes further than a dollar spent on salary.

📌 Health Spending Accounts (HSAs) are 100% tax-free for employees and reduce payroll taxes.

How to Fix It:

✔ Structure benefits strategically to maximize tax deductions. ✔ Consider HSAs as a tax-efficient way to offer flexible benefits. ✔ Consult with a benefits expert to ensure you’re not leaving money on the table.

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6. How to Build a Better Benefits Strategy

Avoiding these mistakes is easier than you think. Here’s how to build a smarter benefits plan:

✔ Think value, not just cost. Find the right balance between affordability and employee satisfaction. ✔ Review your plan every year. Don’t assume your current plan is still the best fit. ✔ Communicate benefits clearly. Make sure employees understand and appreciate what you’re offering. ✔ Stay flexible. Consider modular plans or HSAs to give employees more control. ✔ Use tax-efficient options. Leverage HSAs and benefits to cut taxes while compensating employees better.

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7. Conclusion: Get Your Benefits Right

A well-structured benefits plan is more than just an expense—it’s an investment in your business. Avoiding these common mistakes can help you reduce costs, improve employee satisfaction, and make smarter financial decisions.

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