What is the thing you dread most about group health insurance renewals?
If you’re an employer, it might be the wildly fluctuating increases you get – 5% one year, 35% the next.
If you’re a CFO, it might be trying to budget for an expense that lacks consistency, making it hard to know how to prepare for the following year’s renewal.
If you’re an HR director, it just might be all of the work that goes into getting everything ready for a renewal and then having the quote you think is the best denied by the financial decision-makers at your company.
Whatever role you play at your business, you know that renewal time can be tedious, stressful, and often frustrating.
As an Employee Benefits Advisor, I have seen businesses approach the renewal process the same way, year in and year out. And the typical approach often leads to tension among divisions in the company.
It also leads to skepticism.
Many HR professionals, financial professionals, and business owners think there is no way around improving their employee benefits outcomes. They simply feel stuck!
I know that many Employee Benefits Advisors claim to be the answer to your employee benefits problems. But that’s not my spin on things.
I believe that the solution to improving your employee benefits woes lies in these three things:
- Open communication between your HR team and your financial decision-makers
- Understanding what practically needs to happen to prepare for and implement an employee benefits program
- A long-term strategy to control your employee benefits costs
Being that I love employee benefits, I could drone on and on about all of these topics in this article. But for the sake of your time, I want to approach the first two – communication with your HR team and your financial folks and a clear understanding of what practically needs to happen to successfully create your employee benefits package.
In this article, I tackle:
- How to set the stage for success with your HR team and your financial decision-makers
- A clearly communicated guide that will help your team know what needs to happen throughout the quoting process
After reading this article, you will know the nuts and bolts of what practically needs to happen to help your team create an effective employee benefits program.
The most critical first step should be a joint meeting with your HR team, your financial team, and your Employee Benefits Advisor. Each of these players has a significant role in creating an employee benefits package representing your company’s goals and desires.
The HR Team
Your HR team plays an essential role in landing on the right employee benefits package for your company. This team should have a good idea about what is important to your employees — what they want, what they need, and if they are currently satisfied.
Oftentimes, the HR team will meet with the Employee Benefits Advisor to create a plan and then present it to the organization’s financial decision-makers.
This is a big mistake!
When this happens, the HR team will put together a package that represents what they feel is best for the company, only to be told later that financially it isn’t feasible. This is incredibly discouraging to the HR team.
After getting a “no” from the financial decision-makers, the quoting process gets behind; because it essentially starts over.
This leads to the HR team feeling behind and the whole process being rushed. A rushed renewal process limits your Employee Benefits Advisor from exploring creative solutions.
In the end, it usually leaves a sour taste regarding the entire quoting process.
A better way is to include the financial decision-makers in the early stages of the planning. This will allow for the goals of these two divisions to be in alignment.
The Financial Decision-Makers
Your financial decision-makers play a crucial role in determining the best employee benefits package for your employees.
This team has a clear picture of your company’s financial goals and employee benefits budget. Using this knowledge, this team can help create a long-term strategy for your employee benefits program.
By bringing these teams together, you can eliminate a lot of misunderstandings. By verbalizing what matters most to both of these players, your Employee Benefits Advisor can begin to put all the pieces of your employee benefits package together.
By aligning these divisions’ goals, your Advisor will have the information she needs to employ creative funding solutions, explore multiple carriers and networks, and formulate a strategy for controlling your employee benefits costs.
The Employee Benefits Advisor
To control your employee benefits cost long-term, your advisor needs to be well-versed in group health and other employee benefits. They should review your current plan, compliance regulations, and various funding methods with your HR and financial divisions.
Your Employee Benefits Advisor should educate both of these divisions about the vital role each division plays and how they can work together toward the same goals.
2. A Step by Step Look at the Quoting Process
Before the quote
A lot of legwork needs to be done before your Employee Benefits Advisor can get you a quote for the upcoming year. And most of this legwork will fall to your HR team.
You will need to:
- Determine your company’s intent for your employee benefits program
Every business has unique intentions for the employee benefits program. Some wish to entice recruits through their benefits package. Some want only to satisfy their legal requirements. Some want to use their benefits to retain their employees. Your Advisor should have a list of questions to help you identify your company’s purpose for your benefits program.
- Check for alignment with HR and your financial decision-makers
After determining your company’s intent, you will want to ensure there is alignment between HR and your financial decision-makers. Misalignment between these divisions is the most significant roadblock to creating an effective employee benefits program.
- Survey your employees about their needs and wants
At some point, before the quoting process begins, you may want to survey your employees about your current program. You can also ask them what they desire from their employee benefits package. Your Advisor should have sample surveys to send to your employees. Your Advisor should also approve your survey before sending it out to your employees.
- Decide if you want to use a Benefits Administration System (Ben Admin System)
Using a Ben Admin System will require advanced planning. Before you engage in the quoting process, you need to decide if your business wants to use one of these systems. Also, some insurance companies will provide one of these systems when you utilize their insurance solutions.
During the Quoting Process
The actual quoting process can be quite tedious – especially for your HR team. Your Employee Benefits Advisor needs a lot of information.
I can not overstate how important it is that this information be clean and accurate.
What data will you need to gather?
- Enrollment Data
Your HR team will need to gather your monthly enrollment count per month from the last two years. They will need a list of how much premium was paid per employee per month. You can get this information from your insurance carrier.
- Claims Data
You will need monthly claims totals for medical and pharmacy claims for the past two years. You can get this information from your insurance carrier.
- Past Renewals
Your Advisor will need copies of your last two or three group health renewals.
- Benefit Summaries
Along with renewals, your Advisor will need a copy of your last two or three benefit summaries. These documents will help your Advisor look for changes that have been made to your plan.
- High-cost Claimant Reporting
You will need a listing of your employees’ high-cost claims from the past two years. It is helpful to include any diagnoses with this information. You can get this information from your insurance carrier.
- Current Census
You will also need to give your Advisor a current census of your employees. With this, you will need to include the names, birthdates, and gender of each employee. You will also need to identify which health plan each employee is currently enrolled in.
How long will it take to gather all of this info?
Realistically, you should expect this gathering process to take up to ten days. You may be able to gather the information more quickly unless you need to request information from your current insurance company.
Your Advisor will then present the information you provided to the various companies who will be quoting your employee benefits and group health products. Then the insurance companies will prepare quotes for your company.
You can expect it to take at least ten days to receive any quotes.
Evaluating the Quotes
When the time comes to evaluate quotes, communication must remain open between the HR team, the financial decision-makers, and your Employee Benefits Advisor. Transparency will keep this process moving forward smoothly.
When I say transparency, your HR team needs to have the freedom to discuss their concerns and misgivings about various quotes. They need the opportunity to share what plans appear to meet their goals for your employee benefits package.
At the same time, your financial decision-makers need to express what is financially reasonable for your business. One of the goals of your plan should be to control your employee benefits costs. Without planning, your financial team will not be able to budget this expense year after year accurately.
By expressing concerns and desires to your Employee Benefits Advisor during this time, your Advisor can guide you toward the plans that will help your company accomplish its desired outcomes.
Plan and Goal Alignment
With the help of your Employee Benefits Advisor, you will evaluate your quotes, looking for alignment with your company’s long-term goals and desires.
That being said, the plan that might best align may not always be the easiest to implement. While the best option may seem daunting to implement, it is essential that you don’t follow the path of least resistance. Giving in to doubts and fears will not likely lead to a successful and effective employee benefits strategy.
When you evaluate your quotes it is more important than ever to consider what is best for your employees, your company, and your HR team.
And with employee benefits, it’s also important to remember that your benefits dollars need to be managed appropriately.
The enrollment process includes educating employees about their benefits package, dispersing legal notices, and enrolling them in your program.
For this to go smoothly, your Employee Benefits Advisor should create a plan with your HR team to tackle these challenging tasks.
It is the employer’s responsibility to educate their employees on their employee benefits options. This education should include information on costs, group health options, and voluntary benefits.
Decisions also need to be made on how to disseminate information to the employees. Will this happen virtually? Through a video? Through mailers?
Options like virtual meetings or pre-recorded videos can allow your employees’ spouses to clearly obtain information about benefits. This can make it easier for your employees to explain and discuss their options with their family members.
Along with employee education, you are required during this period to provide all government legal notices to your employees. These notices are required by ERISA laws, the IRS, and other government agencies.
Your HR team will also need to plan for how to enroll your employees. Your team will need to decide the following:
- Will they enroll employees electronically?
- Will they use a benefits administration system?
- Will they enroll employees through paper filing?
- How long will you set your enrollment period?
- How will you communicate enrollment procedures to your employees?
- How will you collect waivers from employees who opt out of your group health program?
- How will you confirm your employees’ benefits choices?
With so many factors to consider regarding enrollment, your Employee Benefits Advisor should work with you to establish a strategy for a successful enrollment. Your advisor should also provide a timeline for effectively completing the enrollment period.
After you have enrolled your employees, you will need to confirm they are enrolled in the proper plan and that everything was set up correctly.
To lessen frustration on behalf of both your HR team and your employees, everyone should expect some errors to occur. You may have employees that don’t receive their cards. Sometimes, an employees’ family members may not be properly registered on their group health policy.
Whatever the case may be, you should expect there to be a few hick-ups after the enrollment period.
To prepare for those hick-ups, your HR team should communicate with employees what to do if they encounter a problem.
- What should your employees do if they don’t receive their id cards?
- What should they do if they show up at the doctor’s office and their child is not listed on their policy?
- What should they do if their id card is going to arrive late — what do they do in the meantime?
Your Employee Benefits Advisor should help you prepare for these errors. Being prepared ahead of time will make it easier to deal with the problems when they arise.
Ongoing Communication with Your Employee Benefits Advisor
The best employee benefits programs include ongoing communication between your HR team and your Employee Benefits Advisor throughout the year.
To effectively evaluate your employee benefits program before your next renewal, your Employee Benefits Advisor should gather information from you continually.
Your Advisor should check in to see:
1. How is your plan running?
Your advisor routinely should ask you these questions.
- Is your plan running higher or lower than expected claim levels?
- How about high-cost claims?
- Are there more or less high-cost claims than expected?
- Are the costs of those claims higher or lower than predicted?
- How are your employees utilizing the program?
- Are your employees using the various components of your employee benefits program?
- Are they utilizing options like telemedicine?
- Are they participating in wellness programs?
- Are they using the hospital over standalone clinics?
To proactively prepare for next year’s renewal, your advisor needs information on how your employees are using their benefits.
2. What complaints are your employees making about the plan?
Your Advisor will want to know how the plan is working for your employees.
- What are their primary complaints?
- What is not working for them?
- What challenges have they had with the program?
3. How are claims impacting your group health program?
Your Advisor should help you analyze your employees’ claims.
- Who is making the claims?
- Where are they spending your group health dollars?
- How are they utilizing your pharmacy options?
This data is fundamental when creating your group health plan.
By gathering information throughout the year, your Advisor will be better equipped to help you tweak your current plan during your next renewal. This information will also reveal if your current plan aligns with your employees’ actual use of the plan and their needs.
Six months before your renewal
The companies with the best employee benefit program outcomes are the companies that proactively engage in the renewal process—typically starting six months before the renewal process will produce the best results.
Six months gives your advisor time to evaluate your company’s group health data, whether your plan complies with government regulations, and consider alternative programs and funding methods you may want to consider.
If you don’t allot enough time to the renewal process, your Advisor will be limited in the creative solutions they can offer to your organization.
What else do I need to know to create an effective employee benefits program?
While understanding the nuts and bolts of preparing for your renewal and working on your employee benefits package is essential, it’s only the tip of the iceberg when it comes to your employee benefits program.
Knowing what each division needs to do for your renewal process will make the process smoother for your business. And that definitely is a win!
What it won’t do, however, is create a long-term strategy for an effective employee benefits program.
When I say effective, I mean a program that leads to controlling your employee benefits costs while providing a robust employee benefits package to your employees.
Most businesses employ the strategy to control their costs by cutting benefits or raising deductibles to make their group health renewal affordable for the business. This methodology has problems of its own. The most significant issue is inconsistent and high renewal rates.
At Baily Insurance, we have a different plan of attack when it comes to employee benefits. We believe in addressing the underlying factors that cause your group health insurance costs to go up each year.
We believe every business can control its employee benefits costs!
If you would like to understand what those underlying factors are and why they need to be addressed, you can check out this article, 6 Step Strategy to Creating an Effective Group Health Insurance Plan.
And once you’re ready to begin the journey to controlling your employee benefits costs, you can get some time on my calendar by clicking this link.
I am looking forward to talking with you!