Educating employees on benefit plans means more than just explaining what their plan includes and how to make a claim. So how will educating employees on benefit plans create a more sustainable plan?
Many of my clients know how much I emphasize this point with their plan sponsors. It probably is the single most important detail in ensuring that a plan is sustainable for years to come.
A Benefit Plan Is Not Insurance
This is probably the most important concept that an employee needs to understand. I’ve mentioned this phrase several times in the past, “Today’s claims represent tomorrow’s premiums”. How many times have you come up to the end of a benefit plan year and realize that you still have $500 worth of massages still to use. Many employees believe that they better use it or they lose it. Many think it’s insurance. Hey, I thought this way as well until I understood what having 6 massages within two weeks in December did to the following year’s benefit rate.
This is really important for employees to understand particularly if they are responsible for contributing to the overall cost of the plan.
It’s Not Only About Saving The Company Money
Educating employees on how the benefit business works are not only to save the company money. Educating employees also helps to keep money in the employees’ pockets. If it means educating on where they can pay less for their drug dispensing fee, how to read a dental invoice to ensure you’re not paying too much or explaining the difference between brand versus generic drugs, employees want to know how to be better consumers.
I still have people come up to me and tell me how they caught a dentist who put an extra scaling unit on their invoice or how they are on the generic version of Lipitor and are not having to dip into their wallet for the difference.
Benefit Annual Inflation Averages 10-15%
Many of us are accustomed to having an annual consumer inflation index of less than 2%, but many are shocked when I tell them many benefit plans face annual increases of 10-15%. When I ask employees “what effect on your wallet would it have if your household expenses went up by 10-15% per year? This helps employees understand what their employers face and that it’s not a sustainable practice.
Change in Process Versus Change in Benefits
The good news is we can reduce costs without reducing the benefit plan. Most employees, after understanding how the benefit business works are far more amenable to a change in process versus a change to the actual benefits.
Understanding that having a tiered drug formulary and using a Central Dispensing Pharmacy for essentially the same drugs is far more reasonable especially when you can save 20-25% to the overall cost of your drug spend. Most employees get it and are in favour of it when they understand the long term implications.
Why Educating Employees on Benefit Plans is Important?
We want employees to know that their benefits plan is there for their use when they need it. Obviously, the per person budget will vary greatly from company to company. The employee’s contribution will also vary greatly from company to company. By employees being more educated on the benefits business helps to change buying behaviours, become more scrutinizing of suppliers and practitioners and feel like they are contributing to the overall sustainability of his/her company’s benefit plan.
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 a lot of the opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on how to avoid many of his former oversights and ultimately control where their finish line ends.
Educating Employees on Benefit Plans