All Employee Benefit Plans Should Not Be Created Equal
When setting up an employee benefit plan, not enough attention is paid to future sustainability and the important considerations that need to be taken into account setting up an employee benefit plan or changing benefit providers.
Weigh these tips very carefully when going through the set-up process and you can avoid going through the same exercise at the first renewal:
1. Do you understand the differences in funding models?
Different funding models offer different fees, risks, commissions and residual costs. Make a point of having your benefits broker explain the differences between insured, ASO, Retention Accounting, HSA or a combination of these types.
2. Don’t Keep Jumping Carriers
There’s more to the cost than the initial price that grabs your attention. There’s a cost to forfeiting your existing IBNR reserve, staff costs to educating and implementing a new plan. In some cases, it’s too attractive not to turn down but ensure you have guarantees in place beyond the first renewal. With almost 90% of our clients, we are successful in keeping with the existing carriers. In the end, this is often the best solution for all parties involved.
3. Make Sure Your Broker Discloses His/Her Commissions, Bonuses and Retention Incentives
Many brokers have considerable incentives with certain carriers. Make sure your broker is willing to disclose the compensation arrangement and how much they are making on your case. Transparency of fees is the first step in establishing trust.
4. Utilize a Disability Management Service for your LTD Benefits
Not only will this service assist your HR Team in managing claims but also ensure your employee is properly supported and will get them back to work sooner. This service will also reduce your disability claims, thus reducing your LTD premiums.
5. Scrutinize Your Renewals
Let’s face it; these things are meant to be easily interpreted by clients. Get your broker to start acting as your advocate and get them to come up with many cost containment suggestions. That’s what you’re supposedly paying them to do!
6. Don’t Be Afraid To Scrutinize Your Benefit Broker
Typically, benefits brokers talk in insurance vernacular, get them to slow down and explain anything that you don’t understand. You must be an informed consumer
7. Start By Making Your Plan Design Conservative
The problem with so many carriers, they make their initial package very attractive financially. Don’t be lured in by the initial cost unless they have specific guarantees in place to ensure the plan’s sustainability. A rich plan looks great in Year 1, but when the renewal comes in with a 30% increase, you need to look at whether paying the increase, paring back your plan is going to accomplish what you’re hoping to achieve long term.
8. What Are Value-Added Components By Dealing With Your Broker?
In this competitive landscape, there are several incentives to help sway your decision to one carrier or the other. It could be a Cancer Rider, enhanced Employee Assistance Program, an employee-incentive program like WorkPerks, a Disability Management Service. Find out what additional perks are available to enhance your plan for your employees. Most can be included at no or minimal cost.
9. Encourage Employee Education
This is often the biggest opportunity that is overlooked by companies when initiating a benefit plan. By being proactive, you can save the benefit plan a lot of unnecessary costs on the back end. Even educating employees on how a benefit plan works with employees goes a long way in helping to create a mutual and sustainable solution.