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Trends In Employer Benefits: Do You Have The Right Broker?

In the 1993 movie, Groundhog Day, Bill Murray’s character, Phil Connors, finds himself living the same day over and over again. In the short-term, he relishes the change and uses it to his advantage, but he later comes to the realization that he is doomed to spend the rest of eternity in the same place, seeing the same people and doing the same thing every day. In one scene, Phil asks someone: “What would you do if you were stuck in one place and every day was exactly the same, and nothing that you did mattered?”

I have often equated the premise for this movie to the traditional work conducted by benefits brokers.  Many meet the client once a year with a medical renewal that has a double digit, with some plan design changes, and with a spreadsheet of other carrier rates to show the customer. Oftentimes, employers choose the lowest cost plan regardless of carrier, communicate the changes to the employees, and move on. The same thing happens the next year…and the next…and the next…you get the picture!

With the advent of the Affordable Care Act (ACA) though, the traditional “Groundhog Day” strategy does not work, at least not in the sense of it being an effective long-term strategy to control costs, offer competitive benefits, support a healthy workforce, and navigate the complexities of the ACA. In fact, there are several industry trends that go way beyond the traditional tactics and that require a more sophisticated, consultative approach and skill set.

Industry Consolidation

  • Health systems
  • Physician groups
  • Insurance carriers
  • Benefit brokers

Each of these groups and others within the industry are rushing to consolidate to gain economies of scale and compete in the new ACA world.

Network Changes

  • Fee-For-Service payments vs. quality of care payments
  • Accountable Care Organizations (“ACO’s”)
  • Limited networks
  • Narrow networks
  • Value-based networks
  • Value-based formularies

The traditional provider networks and formularies are undergoing major changes as a means to control costs, and purportedly, to improve patient health.

Alternative Funding

  • Traditional or non-participating fully-insured
  • Experience-rated or participating fully-insured
  • Minimum premium fully-insured
  • Level funded self-insured
  • Graded funded self-insured
  • Traditional self-insured
  • Captive

Over the past few years, as a result of the ACA, older funding alternatives have become vogue again and new funding alternatives have emerged in the marketplace, creating tremendous options for groups with small and large group employers.

Prescription Drug Analysis

Prescription drug costs, especially specialty drug costs, have become a major cost driver for employers.  What programs are currently in place, what drugs in particular are driving the costs, and what options are available to mitigate the costs should be on the forefront of any employer’s benefits strategy.

Compliance with ACA and Other Regulations

The ACA has made the effort to comply with mandates, regulations, and other HR policies extremely voluminous and complex. In fact, the government is primed to conduct an unprecedented amount of audits to ensure that employers are in compliance with the plethora of new regulations – and older ones. Penalties may apply.

Technology

The need to on-board new employees, manage benefits and payroll, and comply with certain ACA requirements has become a very hot topic. Employers of all sizes are rushing to implement technology as a means to stay viable in this complicated environment. In fact, millennials are becoming a major part of the workforce, which will continue to increase in the coming years. This generation has grown up on technology and will expect nothing less than state of the art and mobile technology from their employers.

Employers, make sure your benefits broker is not steering you down a strategic path that feels like Groundhog Day - a path that is still mired mainly in transactional work and stale tactics. Instead, ensure you have a trusted benefits advisor who is educated on the emerging trends in the industry, who can expertly educate you on the impact and pros/cons of each, and who will recommend a strategic path that will balance the difficult equation of keeping down costs while still offering the best benefits to employees.

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