“The traditional 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,” says Michael Galardini, director of sales at JRG Advisors.
Smart Business spoke with Galardini about how organizations need to take a strategic approach to employee benefits.
Rather than a traditional approach, how should employers address employee benefits today?
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 4Cs of employee benefits — consulting, creative solutions, compliance and cost. The concept of this 4Cs approach is maximized when the company uses a three-year strategy to develop a benefits program.
The ‘traditional’ broker will not achieve significant cost reductions by simply raising the plan deductible, copays, shifting contributions to the employees or leap frogging between insurance companies year-after-year to save a few percentage points on renewal increases.
What do the 4Cs actually mean in practice?
Consulting: The analysis and review of an employee benefits program should start with an interactive dialogue, research and gathering of data by an experienced, knowledgeable broker working in tandem with the employer’s HR team or benefits administrator.
Once the risk is quantified, a strategy can be developed to target options designed to help the employer manage the risk within the parameters of coverage, network and premium funding.
The benefits program results should be monitored throughout the 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.
Periodic strategy meetings should also take place to provide both employer and employees on-going education, as well as updates on industry or insurance company changes.
Creative solutions: The results of a thorough consultative analysis and risk assessment will identify solutions to achieve desired outcomes within the employee benefits program. Various solutions can then be implemented in order to shift the curve to lower costs and favorably impact premiums.
Creative solutions can include negotiation, gap and voluntary insurance, cost transparency tools, benefit administration platforms, alternative premium funding and streamlined services administration.
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 who can provide specialized knowledge, experience and guidance with ACA and the Employee Retirement Income Security Act is critical to ensure that any audit fees and penalties are avoided.
Cost: The implementation of a consultative strategy, creative solutions and adherence to compliance regulations will ultimately help the employer achieve manageable budget objectives, reduce risk and better predict costs for their employee benefits program.
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