Companies are accepting more of the risks associated with employee benefits packages, and they are offering more options to their employees. Choosing the right plan while remaining within budget parameters usually requires the help of an experienced benefits adviser.
“Because consumer-driven health care initiatives and funding alternatives are available, a company needs to determine what adviser can best steer it through the options,” says Dave Chiappino, sales executive for JRG Advisors, the management company for ChamberChoice.
Smart Business spoke with Chiappino about different approaches that a company can take to maximize employee benefits and minimize expenses.
What benefits strategies are available to companies today?
No single strategy fits all companies. But when a company wants to reduce the cost of employee benefits, it all starts with picking an adviser that you are comfortable with; one that has resources, access to markets and experience.
Many larger companies, those with at least 150 employees, are beginning to explore the possibility of taking on more of the risk associated with different kinds of employee insurance. Usually, the risk involves some version of self-funding. By using that strategy, the companies are putting themselves in a position to accept some of the rewards, which can include lower premium costs. This approach, in effect, removes insurance company profits, overhead and risk charges, and may reduce premiums by as much as 10 percent.
What tactics work better for larger and smaller companies, and is there a big difference?
The big difference is that the larger companies can put themselves in the position of not allowing insurance companies to dictate their policy. That’s where it gets back to hiring a good adviser to review data and implement strategies, such as wellness and other focused initiatives, and to appropriately set deductibles and co-insurance levels based on hard data.
Smaller groups, specifically those with fewer than 50 employees, do not typically have this option because their data is aggregated with other smaller employers.
The focus for smaller groups is choosing the right plan design, carrier and adviser with access to innovative resources to keep as many benefits expenses in check as possible.
How often should a company compare providers and plans?
Large companies should shop every two to three years, even though it is a significant project involving multiple and complicated requests for proposals (RFPs).
For smaller companies, it is not too difficult to simply get rates, so they may shop every year. Smaller companies often consider changing plan designs offered by their current provider or introducing an employee premium contribution model.
Upon what criteria should a company choose a benefits adviser?
Experience is one of the main criteria, and available staff is another. You want a benefits adviser who is your partner; one who will give you the time and the resources you need.
Our industry has trained buyers to shop product, and that is an admissible strategy that can sometimes satisfy the point of sale. But employers should consider factors that are important after the sale, like availability of local staff and technology.
Are price breaks available to health insurance advisers?
Insurance advisers representing the various health insurance companies do not receive ‘pre-arranged’ discounts. However, an experienced adviser armed with solid claims information will be in the position to negotiate lower premiums on behalf of his or her clients.
Are there opportunities for a company to save money with benefits other than health care?
There are always opportunities to save money, particularly with ancillary benefits like disability, life insurance, dental and vision. For instance, companies are beginning to self-fund dental insurance because there are caps inherent in the program. The 10 or 15 percentage points you can save on a dental plan just by changing the funding is pretty significant.
There is no definitive strategy that everyone can use. It depends on the group, the benefits offerings, how they interact with one another, and the employer tolerance to accept risk and change.
With most strategies, the company and the adviser must follow through by giving employees the right communication tools.
What are the right employee communication tools?
Educating employees on plan options, employee cost share and how to best access vendor and adviser information should be included with an employee communication package. The tools used to support this type of communication varies by adviser. We are fortunate at JRG in that we offer a state-of-the-art online communications tool that is easy for employers and employees to use. By engaging employees in this manner, we are bringing them ‘into the process,’ which is critical if we are to have a long-term impact on benefits costs.
DAVE CHIAPPINO is a sales executive for JRG Advisors, the management company for Chamber-Choice. Reach him at firstname.lastname@example.org or (412) 456-7015.