What the numbers mean...

Between the financial lines

“Sell on price…lose on price”

What does that really mean when it comes to a benefit plan?

In all industries, there are always competitors out there willing to take on a new customer for a slashed costing. Undercutting the marketplace to gather new customers into the fold. But as the adage implies, this is a short-term, unsustainable model. This also stands as true in employee group benefits.

Every move to a new insurer or benefit provider causes plan changes. When moves are done to cut costs, companies can be sure that the benefit plan will not match previous coverage whether is a change in coverage definitions for eligibility, greater exclusions, or options removed.

When to “cut”

Benefits are a compensation element for employees. The true measure of how employees appreciate the benefit plan is their ability to use the program, which means claims that are paid in accordance with the policy and how the employer intended the coverage to be utilized. Low participation levels, minimal claims are indicators of lack of performance by the coverage options.

An in-depth review of the data, the plan design, and policy provisions will provide a clearer picture of what is working and what is not. Cutting high use items, is like removing the fridge in your kitchen to decrease electricity costs as well as the cost of the appliance. This is not a long-term sustainable move.

Analysis is key

When considering the value of the benefit plan to the organization, as with any business decision, ensure all the relevant information is presented and analyzed. This goes beyond just the premium discussion, but also involves:

• Does the plan design align with the organizational goals?
• Is there an effective communication strategy human resources are able to use to attract new talent?
• Is there a communication | information | educational plan in place to engage employees to how the benefit plan aligns to make them more productive, keeping their physical, health and emotional well-being top of mind?
• Is the latest technology being utilized for ease of administration and claiming?
• Have duplications been considered and removed?
• Is quality service and timely responses below standard?

Changes incorporated based on one metric alone will typically cause more harm than good and may in fact cost the organization substantially more in the long run than the proposed savings.

Getting meals delivered or going out to eat every day is substantially more expensive than retaining the refrigerator.

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Note: this was written without the aid of Artificial Intelligence (AI)

Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment, taxation, legal vary accordingly. Please seek legal, accounting, and human resources counsel from qualified professionals to make certain your legal/accounting/compliance interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.

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