Understand the differences in plan funding models.
Different models offer different risks, fees, commissions and residual costs. Understand the differences between insured, ASO, HSA or hybrids of different types
Don’t Keep Jumping Carriers
IBNR fees will be lost every time you leave a carrier (approx. 8+%) of your total premium. Better still, find out if your carrier gives you an option to get your IBNR reserve back
Ask If Your Broker Discloses his commissions
The norm within the industry is not to divulge his/her earnings. This is because likely the worse job they do, the more they get paid because their compensation is tied to premium costs.
Scrutinize your renewals
Ask things like what are the fees, does your carrier work off a 12 month or 15-month trend factor, what cost containment initiatives are available to help create a sustainable plan. Put your broker to the task to help come up with some solutions
Insist Upon a Disability Management program
Some carriers will charge you for this service but in actuality, it will reduce claims and should drive down premiums. This service should not be an add-on cost
Don’t be afraid to question your benefits broker
Many use confusing terms and insurance vernacular. Don’t be made to feel like an idiot. You have a right to scrutinize anything you don’t understand. I sat in the client’s seat for many years and understand how they operate.
Start Your Plan Design Conservatively
The phrase “Go Big or Go Home” should not apply here. Start small and see how your costs trend. You can always increase the benefits at any point down the road.
Assess what value-added benefits you’re entitled to
Dealing directly with an insurance carrier may not be getting you as great a deal as you might think. Small and medium-sized companies (10-500 employees) would be better served using a reputable TPA instead
If the price is too good to be true, then it is
Insurance companies will buy your business and then justify their substantial increases at renewal. The only long term sustainable solution is imposing cost containment strategies and efficiencies when you’re setting up your plan.
Encourage employee education to help contain costs
Look to the users of the plan as the keepers of the plan and you will be rewarded. A knowledgeable workforce is usually a sympathetic workforce.
Chris Coulter is the Founder and President of The Finish Line Group. He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies, enable employee retention strategies and allow them to exit their businesses on their terms.
Chris’ passion for what he does evolve from the mistakes he made in his first business; by not diversifying his risk and not utilizing many opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on avoiding many of his former oversights and ultimately controlling where their finish line ends.