So why should health care benefits be any different? Health care is the single most expensive purchase a company makes each year, yet it is often left unchallenged.
CEOs need to become savvy consumers of employee benefits. If you are part of the 87 percent of businesses still waiting for renewals, now may be the time to shop around for a new broker. A knowledgeable, aggressive and innovative broker knows how to find the best deals and can make the difference between saving 25 percent or losing 25 percent on employee benefits.
Even if you've already renewed your benefits package, shopping around is worth the effort. There is no rule that says you have to wait until renewal to switch brokers.
When you're searching for a new broker, make sure to find one that is knowledgeable about consumer-driven health plans (CDHPs).
The freedom to choose
With CDHPs, your employees will spend your money as if it were their own, making better-informed, budget-conscious health care decisions. They have the freedom to make their own choices regarding their health care, choosing a la carte health services from both in-network and out-of-network practitioners.
CDHPs pair high-deductible insurance products ($1,000 to $1,500 annual deductibles) with individual spending accounts, potentially offering a significant reduction in overall health care costs. Interest in CDHPs has grown with the IRS's guidance on health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which typically offer employees a year-to-year rollover for funds not spent.
A well-designed CDHP -- one that is nimbly and intelligently negotiated by a skilled health care consultant -- can deliver the best a health plan has to offer. That means health care coverage that allows for preventive health measures, as well as crisis interventions, and is comparable in cost to the existing employee health care program.
To understand how such a plan can save money for you and your employees, you must understand two central concepts.
1. Employees will become better consumers.
When employees pay for health services out of their own accounts, they become more selective buyers. They'll be more apt to research the best mix of quality service and affordable price. But this means employees must have access to information on quality and price as it pertains to medical services, doctors and hospitals.
2. Plans and costs vary by carrier.
Insurance rates have always varied from company to company for similar health plans. CHDPs are no different. Different insurance companies and underwriters have their own outlook, risk-assessment indicators and program pricing structures.
In today's market, some carriers provide absolutely no savings through a CDHP, while others offer substantial savings. Each company believes or "bets" something different about future claims or market share objectives.
Work closely with your health insurance broker to actively investigate and negotiate the best alternatives for your business.
Are CDHPs right for you?
Will implementing a consumer health care plan today save you money? It depends on local insurance carriers and your previous claims experience -- both of which need to be analyzed.
Taking the time to work with your health benefits broker to investigate your options and shop for the best price can't hurt. You'll either realize that your current plan is the best fit for your company or you'll find a better plan. Either way, you win.
Eric Raymond, CLU, is founder and CEO of Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He is a frequent guest speaker at insurance and HR conferences and serves on the board of directors of Albert Einstein Medical Center. For more information on what benefits service brokers offer, including development of CDHPs, go to www.corpsyn.com or call Corporate Synergies at (877) 4-CORPSYN (877-426-7779).
Premiums continue to climb, and companies dedicate significant time, money and human resources to provide employees and their families with health insurance. Employers continue to pay more than they realize for a number of reasons, chief among them that many business owners don't work with a benefits services broker.
A good benefits services broker acts as a direct insurance advocate, an aggressive benefits partner that can leverage experience and clout for more than just great rates. Insurance carriers and benefit plans are loaded with loopholes and complicated clauses and faults that cost employers dollars.
According to an industry billing study, 3 percent to 4 percent of total premium costs are wasted due to incorrect billing. Carriers overcharge companies, or worse, charge for employees who are no longer employed.
Employers don't realize that they are writing checks that are too large. Benefits services brokers can streamline paperwork and help HR personnel manage benefits plans effectively by assisting in services such as billing consolidation and reconciliation.
Minor paperwork mistakes can morph into major liability issues that cost companies thousands of dollars in court -- another indirect expense. Employers shoulder far too many responsibilities to keep track of legal logistics.
In fact, many employers overlook legal issues simply because they do not understand laws such as HIPAA (Health Insurance Portability and Accountability Act). Designed to reduce industry inefficiencies and fraud, the legislation also places parameters on business owners' hiring (and firing) decisions.
For example, if an owner opts to release an employee and knows about the worker's extensive medical costs, the employer could be held liable. An employer is not permitted to fire an employee knowing that person might be responsible for high insurance claims.
A broker can ensure that employers know the rules and are following regulations in order to avoid potential lawsuits. Penalties are serious for employers who neglect personnel policies or paperwork concerning insurance. In the worst case scenarios, CEO and HR managers can wind up behind bars.
Industry lingo and complicated plan provisions create confusion and stress for employees, as well, which ultimately contributes to the cost. A benefits services broker can run interference for employees.
Employee productivity, retention and satisfaction ride on a business owner's ability to provide workers with an effective benefits program. Companies lose worker productivity every day because of ineffective benefits programs.
Having to hold on 800 numbers and waiting for return phone calls from claims representatives waste an employee's valuable work time. When employees are forced to resolve benefits issues in an inefficient administrative process, employers pay the price.
When a benefits services broker acts as an employee advocate, it alleviates employees' stress and delivers value to a company's bottom line by saving workers time. For example, when employees turn to HR personnel to help solve insurance snafus, complicated claims paperwork can bog down the department.
HR departments often work with multiple carriers, thereby further complicating the administrative process with redundant activities that consume time and, ultimately, money.
The bottom line is that efficiency, protection and employee satisfaction can have a positive impact on the bottom line. Effective insurance services brokers design and implement creative solutions that pay off for employers.
Eric Raymond, CLU, is founder and CEO of Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He is a frequent guest speaker at insurance and HR conferences and serves on the board of directors of Philadelphia Trust Corp. and Albert Einstein Medical Center. For more information on what benefits service brokers offer, go to www.corpsyn.com or call Corporate Synergies at (877) 426-7779.