If you’re an employer, you spend a lot of money on employees and health insurance is an employee expense found at top of the list. Odds are, if asked why your company is offering a benefit plan, you would probably say something like, “Because we want to recruit and retain top talent.” A particularly savvy employer might say, “An employer-sponsored plan provides me and my employees with significant tax benefits.” However, take a look at the next set of questions. Does your company have consistent and confident responses?
- Why do you offer the plans you offer?
- How do your benefits stack up against your competition?
- Are you overpaying?
- What DON’T you know that you SHOULD know about benefit planning and compliance strategies?
“It wouldn’t be prudent”
If you can’t confidently answer the above questions, perhaps now is the time to start thinking about answers. When you have a budget item as big as employee benefits (especially health insurance), thoughtful and ongoing study is simply the prudent thing to do. What does this look like? It does not mean you wait until 90 days before your renewal to start evaluating the cost, compliance, operational, and strategic planning aspects of your very expensive benefit program.
Knowledge is Power
Maybe your company pays more for benefits than your competition, but maybe your benefits are significantly better. Does that matter? If you discover your benefits package is better (lower deductible, lower employee cost, more benefits, etc.) than 99% of the industry/your competitors, how does that change things? Are you confidently touting those rich benefits during the interview process? Do you have any type of hard data to substantiate the fact that your benefits truly are unparalleled? When was the last time you not only reminded your current workforce of how great your benefits were but also proved it? What if you find out your benefits package is one of the worst in the industry? How does that change the way you recruit and retain talent? Maybe high claims prohibit you from offering affordable coverage or a low deductible. If you can’t afford a low deductible health plan, are there other company perks you can and should promote?
Validation and Future Planning
In today’s modern society, change is inevitable. The workforce is changing. Technology is changing. Regulations are changing. As a result, businesses and industries must adapt. Because everything is so fluid, gut assumptions largely based on past experience are no longer a valid way to make decisions about future plans. Today, powerful forecasting tools and data sets like calculators, benchmarking tools, key performance indicators, etc. exist to empower employers to make smarter decisions about future strategies and plans.
It’s easy for today’s consumer to get overwhelmed with too much information, which is why benchmarking remains such a timeless and powerful tool – especially when it comes to benefit planning. A good benchmark study will serve multiple purposes, however two things are consistent:
- Force a business to evaluate the current program and strategies
- Provide reliable data sets to drive future programs and strategies
Insurance is a major expense. For that reason alone, a business should take 60 minutes a year to go through the benchmarking process. The process can be streamlined by selecting the right benchmarking partner and sticking with it for multiple years. A good benefits benchmark partner will be a 3rd party (i.e. not affiliated with an insurance company), has a long track record of providing consistent information, has the ability to carve out/target data to specific regions (local/national) as well as specific industries. The best benchmark studies provide you with an individual customized report showing how your program stacks up against your competition.
For questions on the benchmarking process or a recommendation on a benchmark vendor for benefits, don’t hesitate to reach out! Contact your OneDigital Health & Benefits Consultant or Advisor and we’ll help answer your questions.