It should be no secret: The employee benefits broker of the past will not provide the necessary strategic approach required to achieve the goals of a successful and comprehensive employee benefits program.
The traditional broker-employer approach of gathering census information, marketing to insurance companies and implementing changes close to open enrollment deadlines is a Band-Aid solution for one year at best. In today’s world an employer needs to evaluate the level and expertise of service when it comes to risk management, creative solutions, consulting and compliance.
Smart Business spoke with Michael Galardini, director of sales at JRG Advisors, about the most progressive ways to develop and manage your employee benefits.
How should business owners be adapting with employee benefit management?
Old habits can be hard to break. In the wake of the Affordable Care Act (ACA) and costly health insurance premiums, a company’s strategy and approach needs to adapt to the changing health care landscape.
A company should focus on the four Cs of employee benefits — cost, creative solutions, consulting and compliance. The concept of this four Cs approach is maximized by using a three-year strategy in developing a benefits program.
The traditional broker will not achieve significant cost reductions by simply raising their plan deductible, co-pays, shifting contributions to the employees or leap frogging from insurance company year after year to save a few percentage points on renewal increases.
What exactly is involved with implementing each of the Cs?
- Cost: Utilizing risk analysis software tools, a company can now identify medical conditions that are present within their employee population. This risk analysis can also be done by properly dissecting claims, if the employer is large enough to receive appropriate data from the insurance company. Armed with an accurate risk assessment, the broker can work with the employer in a variety of ways to correct or improve the identified medical conditions and implement a customized risk management solution tailored to the group’s specific needs.
- Creative Solution: Various strategies can then be implemented in order to shift the curve to lower costs and favorably impact premiums. These strategies can include gap insurance, self-funded/level-funded premium options, defined contribution-private exchange or voluntary insurance products to help offset employees’ out-of-pocket costs.
- Consulting: Through ongoing consultative analysis an experienced, knowledgeable broker should work closely with the company’s HR team or benefits administrator to closely monitor the changes and results throughout the benefit year. Proper monitoring of the benefits strategy and a proactive approach to any needed changes are imperative to ensure the program is on pace to meet the goals of the company. The broker should also conduct periodic strategy meetings to provide both the employer and employees on-going education, as well as updates on industry or insurance company changes.
- Compliance: Employers need to consider legal issues relating to employee benefits and the increased taxes, reporting and penalties imposed by the ACA. Choosing a broker that can provide specialized knowledge, experience and guidance with ACA and the Employee Retirement Income Security Act of 1974, or ERISA, is critical to ensure that any audit fees and penalties are avoided.
By following this approach to employee benefits, employers are able to identify the risk in their employee population, implement a risk strategy through creative solutions and monitor results through consultative analysis to ensure they are achieving their coverage and budget requirements.
Insights Employee Benefits is brought to you by JRG Advisors