As a Mid-Market business (100-499 employees in insurance terms) you have access to a wide array of insurance markets and possess great advantages in how you can healthcare to your employees. Unfortunately, you’re also faced with a conundrum when choosing a broker or consultant. Are you the largest client of a firm who typically deals with small groups? Are you a smaller client of a large national or regional brokerage who bypasses strategy in exchange for outperforming “trend”? BenefitU can help you avoid common mistakes, show you available options, and help your company and its employees.
The Definition of Insanity
It’s 90 days before your upcoming health insurance renewal and every broker you’ve ever met is to bid your business with the promise of lower rates or better service. You may have the information or may have to ask your current broker which tips them off that you’re looking at other brokers.
Over the next 60-75 days your current broker will be slow to deliver relevant information because it hinders the other brokers. At the same time, the other brokers will be trying to figure out how to unseat the incumbent.
After all the legwork and promises by other brokers, they all submit the exact same proposals to you. A bunch of promises such as “we have an amazing team that provides incomparable customer service, our carrier relationships are better than anyone else’s, and we’ve around since Henry Ford perfected the assembly line.” If that doesn’t entice you to change brokers, you are inundated by offers of value-added services.
This Isn’t Rocket Science
If you provide 100 brokers with the same data and send them to obtain health insurance quotes, all 100 will return with the exact same proposals. There’s no difference between the multinational, publicly traded brokerage and your brother-in-law’s cousin who works out of his house.
As a small business you’re much more likely to run into Cousin Eddie than Corporate Kent but in either case, don’t simply accept an annual auction as the only way to control costs. Remember, the barrier of entry to become a health insurance broker is a one-week course that you can take online and 24-hours of continuing education every two years. The person who cuts your hair requires more training and certification than someone managing a top three business expense for your company! If the price of your haircut doubled every four years you certainly wouldn’t put up with it, don’t do the same with your broker.
The Game is Rigged
When an insurance carrier receives a request for proposal on behalf of your company from multiple brokers, they know that they possess the leverage in the negotiation. You can’t possibly have a serious strategy for your upcoming renewal if you haven’t even chosen a strategist.
This is assuming that your current broker even conducts a proper market evaluation. If your broker comes in with a spreadsheet and says “we scoured the market and your current carrier is still the best option” you can be confident you’re renewing with the insurance carrier that has the largest market share (and bonus payment) for their firm. Brokers follow up tired statements about how lucky you are that they negotiated a few points off the renewal.
Ask to see the physical proposals from each carrier that was considered and watch the terror on their face. You can take solace that before you change brokers, they will have felt a small fraction of what you felt each time they delivered your renewal with yet another rate increase.
UNDERSTANDING YOUR OPTIONS
Stop Pulling Your Hair Out & Change Your Buying Strategy
To put it bluntly, Insurance is a commodity. The plans and pricing are the same regardless of who represents your organization. Sending multiple brokers to quote your benefits each year creates an environment where brokers spend the majority of their time focused on how to beat their competition and not on what is best for you and your organization.
Interview brokers & consultants outside of your annual renewal period and ask them the following questions:
- Why do our costs increase continually?
- How can you decrease those costs or improve the benefits?
- Can we speak to other employers who have experienced those results?
Once you’ve conducted these interviews that have focused strictly on strategy, select one firm to represent your organization. Any broker who offers to quote your benefits without having you as a client should raise suspicion. If you choose them this year, next year they’ll be out there offering to work for free for even more non-clients which takes away from time spent working on behalf of your company.
Too Many Cooks in the Kitchen Spoils the Broth. This is true for insurance as well. Choose a broker partner and let only that broker present your business to the market.
It is not uncommon for employers to offer one set of benefits through a broker, and another set of benefits through a different broker or carrier rep. The most common occurrence is having one broker to manage your “Core Employee Benefits” like Medical, Dental, Vision, Employer Paid Life, STD, LTD, etc. and a separate broker/carrier rep to manage your “Enhanced Benefits” like Accident, Critical Illness, Hospital Indemnity, etc.
In this scenario the representatives from each brokerage or carrier likely don’t have a comprehensive understanding of the entire benefit portfolio. Employees miss an opportunity to understand how all of their benefits, both employer and employee paid, work in concert to build a program that fits their needs.
The lack of coordinated benefits can result in unintentional over-insuring, unnecessary over-spending for you and your employees, and also creates disruption and stress both in the workplace and at home. Fortunately, this is easily corrected by choosing a single brokerage to represent all of your benefits.
What You Don’t Know Can Hurt You – Understand the Markets
Many insurance brokers would prefer that employers see their employee benefits as an enigma and not truly a controllable expense. If that were the case the barrier to become an insurance broker would be far higher than a one-week course that you can take online.
As an employer you should demand a baseline understanding of the pro’s and con’s of the various markets available to you for purchasing health insurance. Since all of the markets are the same regardless of the broker, you should be focusing on finding a firm who can take you from the market you are currently in to the markets that you want to access that you probably don’t even know about.
You would be shocked how many of our new clients are able to generate significant savings simply by looking at a market they’ve been able to access for years that their previous broker overlooked or simply refused to evaluate.
Judging a Book By Its Cover – Better Delivery of Benefits
For most small employers, the HR department and broker are typically tasked with the distribution of information, implementation of open enrollment, and execution of employee elections.
It happens far too often that insurance education & enrollment consists of voluntary all-staff meetings; or worse, emails or memos that go unread. Making matters worse is the incredible number of employers who are still executing this process manually using paper. In today’s world there is no excuse for not using online benefit platforms even if this still requires a personal touch in the first year.
By adopting the Counselor Assisted Enrollment process used by most voluntary benefits carriers it is possible to conduct 1 on 1 enrollments with your workforce, allowing you to use that opportunity to move your benefits administration online, and deliver a first-class benefit buying experience for your employees. This will make your employees happier and will present your company in the most professional manner possible.
HOW BENEFITU CAN HELP
Healthcare and health insurance are notoriously vague in their pricing. You deserve to know who is being paid, how much they are being paid, and what services are being rendered. We apply transparency to everything that we do, and you will know exactly what our firm is being compensated. You may think you know your broker’s compensation today but there are numerous bonuses, overrides, and contingency programs that are not reportable on the Form 5500.
Transitioning Your Health Plan
Health insurance is fundamentally broken and the only way to bring predictability and stability to this top three business expense is to work with a partner who understands the business models of all parties to your health insurance.
By developing a risk profile specifically for your organization, we leverage existing and emerging markets to build a benefit program that eliminates high profit margins and waste currently being retained by insurance carriers, pharmacy benefit managers, third party administrators, and other parties to your current health insurance program.
You wouldn’t be reading this if you weren’t frustrated with your employee benefits program. We wouldn’t be here if we weren’t equally frustrated with an industry that consistently spikes the ball when beating “trend” that the industry itself developed! By taking 30 minutes and providing 5 data points we can tell you more about your benefits expense than all beautifully bound benchmarking reports consultants have slid across your desk for years.