Company Benefits: Is Your Reluctance to Change Costing You?

“We have to scale down our operations. What’s the best way to go about that?”

I hear some version of this question at least twice a week. It’s a difficult decision that many small and mid-sized business leaders are contending with.

“Before we talk layoffs, or pay cuts, or furloughs, have you looked into cutting your company’s benefit costs?”

I find myself asking my clients this question after we’ve talked through their reasons and their goals. Yet I’ve observed an interesting trend – a hesitation when it comes to exploring benefit alternatives, mid-year.

"Considering that benefits are your second-largest people expense, and cutting that cost could give an immediate boost to your company’s bottom line, why are you hesitant to change?"

Here's what I hear.

Top 8 reasons that may be keeping you from taking action now: (it could be costing you)

1.     To cut my benefit costs, I have to dilute the richness of my plan

Not necessarily. Did you know your tenure with an insurance carrier could sometimes cost you? To provide you with your renewal rates, your incumbent carrier uses your historical claims data, in addition to other actuarial information.

What if this historical claims data includes information that is no longer relevant to your group? Then it means you’re paying for your old claims experience through your current rates. To get away from that right now, you may have to leave the incumbent carrier for a new one.

2.     Medical Health Questionnaires (MHQs) would be a huge inconvenience for my employees

Outside of claims data, MHQs are the only way a new carrier can get your group's health information, to provide you with a fully underwritten medical quote. 

It takes the average employee about 7 minutes to complete an MHQ. Here’s how the process works. 1) The employee receives a secure link with the questions, 2) they complete the questionnaire in about 7 minutes and 3) the information goes directly to your broker or to the insurance carrier. It’s that simple, and you don’t need to handle the data.

Competition works in your favor. MHQs enable alternate carriers to fully bid for your benefits business and it also allows you to leave behind any non-relevant historical claims that could be raising your current fully-insured benefit rates.

3.     My employees would find the process of changing carriers too disruptive

Over the past 10+ years, your employees have had to contend with rising medical premiums alongside the perceived decrease in the quality of their benefits (higher deductibles, copays etc.)

 If your employees understand why the change is necessary and that you kept their best interest in mind while doing the due diligence, they will understand (and even welcome) the change. It’s all in the messaging.

4.     Change will require too much administrative time from my HR/Payroll/Finance team

If your team has to be heavily involved in the transition process, then you have selected the wrong benefits broker. The implementation should be simple and primarily handled by your broker-partner electronically or via paper (paper for the initial enrollment only.)

5.     My employees will lose the amount they’ve already spent towards their deductible

It's common practice for insurance carriers to credit any deductible used during the same calendar year to your new plan. And it’s usually a simple process – Your employee downloads their Explanation of Benefits (EOB) and provides it to your new carrier/broker.

6.    We are locked-in to our insurance carrier until annual benefits renewal time

You’re not. Your provider is obligated to keep your current rates through the end of your plan year, but you are not obligated to keep your company benefits with that carrier.

7.     My employees will lose their preferred doctors

Most of the large (the big-5) carrier networks overlap in major metro areas. It means that many of the same doctors, pharmacies and hospitals will be inside the UHC, Aetna, Humana, BCBS and Cigna "like-networks." If your broker expects network losses, have them draft a quality communication plan to proactively address the concern.

Be sure to give carriers that rent the big-5 carrier networks a chance – you could get access to the exact network at a significant cost-saving.

8.     I have a personal relationship with my broker

I'll give you that. It's really important to have a good relationship with your benefits broker. Its just as important to verify that your broker is continuously bringing you a return on each benefits dollar. Not only does this matter to your bottom line, but it also matters to your employees who pay a portion of the monthly medical cost. What's more? Isn't it satisfying to know that you got your employees the best insurance you could find at the lowest cost?

Well, those are the top 8 reasons I hear most often. Are there others you can think of? I'd love to hear from you.

PS: I am not a benefits broker and I do not sell insurance or make money from insurance. There's no one-size-fits-all solution to benefits. I do help my clients objectively evaluate their benefits offerings to ensure the company gets a return on every single benefits dollar.

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