By Ed Walker, ArmadaCare
The discussion surrounding executive compensation is largely focused on cash compensation and various forms of equity arrangements for key C-suite leaders. With the emphasis on these forms of compensation and tying them to performance, other components of the executive compensation package are overlooked. Yet, such benefits can be regarded as highly valuable by the C-suite. One such aspect that often gets missed—or is simply misunderstood—is executive health benefits.
I suspect the reason for this is twofold: you may think it is no longer possible to provide additional health benefits for just a few, or you may think that health benefits should be a one-for-all, all-for-one proposition. In both instances, I would argue, there is far more to the story.
With the right structure (in the form of excepted benefits), executive supplemental health benefits are alive and well. In fact, many leading organizations are making them an integral part of their executive compensation packages. In effect, executive health benefits are similar to supplemental retirement or disability benefits where you provide more to executives. Unlike some of those benefits, health coverage continues to top the list as the most valued benefit you can provide. (Source)
Even more, executive health benefits are a financially savvy way to boost compensation. As insurance, they are not subject to payroll taxes, so the company can deduct that expense while the reimbursements are non-taxable for the executives. This translates into employers investing the same amount but offering more than a comparable level of cash compensation.
That brings me to the second rationale, equality of health benefits. Health benefits are important to everyone, but offering an extra layer to retain current and future leaders makes good business sense on a number of levels. First, you don’t want these key people distracted by the frustrations and shortcomings of most primary health plans. Offering a benefit that makes healthcare easy is a strategic way to safeguard productivity. Second, the nature of executives’ high pressure jobs puts them at higher risk for disease. (Source) And the ripple effects of an absent or distracted leader can have significant negative impact on the company’s bottom line. (Source) Thus, providing executives with enhanced health benefits is critical. For all of these reasons, you want to encourage (and pay for) proper preventive actions such as executive physicals, provide emergency evacuation services and offer guidance to top specialty care—all of which serve to support productivity and save the company from the monetary loss associated with travel emergencies and health disruptions.
Expense reimbursed insured plans are far from a perk or luxury benefit, and more companies need to take a holistic view of executive compensation packages to make a place for them. These plans provide a cost-effective means to care for those who can make or break the company’s success today (as well as the ones you are developing for tomorrow). It’s time to support what no company can survive without: the health of its leaders.
Ultimate Health is a supplemental expense reimbursed insured healthcare plan that provides up to $50,000 or $100,000 of annual coverage. Designed for busy leaders, the plan includes an Executive Physical Program, fully-paid medical air evacuation and more.
Ed Walker is the CEO of ArmadaCare, the Managing General Underwriter of Ultimate Health. With 28 years of executive experience in sales, marketing, business development and strategy, Walker is highly regarded within the insurance industry as an expert on supplemental insurance and emerging healthcare solutions.