Welcome to Ask an Adviser, EBN’s new weekly column in which benefit brokers and advisers answer (anonymous) queries sent in by our readers. Looking for some expert advice? Please submit questions to
This week, we asked Taylor Lindsey, a partner with Employee Benefit Consultants, to weigh in on the following: How can I keep from passing along annual healthcare cost increases to my employees?
This is obviously the $64,000 question in our industry, so let’s unpack how we can make it happen. One of the most basic rules of effective management is the ability to make sound choices. It is true of every phase of your business, including health plans.
Employee health spend comprises anywhere from 10% to 25% of revenue. Understanding how health plans are built and the opportunities within the plan are critical to making sound choices. Yet, when it comes to employee health insurance, employers often feel they have limited options for group health plans that could control costs and remove any financial burden on their employees.
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Despite how it may feel, there are multiple choices when it comes to health plan design and cost. The trick is working with an adviser who offers education and choice for long-term planning and is completely transparent about his or her compensation. Simply shopping the same three or four fully insured carriers every year is not a strategy that resolves any problems. It simply changes who is willing to buy risk.
Employers can, and should, expect more from both their benefits adviser and health plan. This requires curiosity and a proactive stance in selecting the right health plan adviser to help hatch the right strategy. But start this search well in advance of your next renewal period.
Here are some questions they should consider asking your adviser:
- I am confused by the terms “broker” and “adviser.” Which are you, and what does that mean for us?
- Can you define your role in the design, selection, implementation and ongoing management of our plan?
- What spectrum of plan design options are you prepared to help me evaluate?
- How will you help us understand how each plan works and the pros and cons of the options?
- What is your experience with level-funded and self-funded plans?
- What potential sources of compensation would you receive (directly or indirectly) from us, regardless of plan design?
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Employers have been forced to make decisions without having all the information to understand what they are buying. They have been led to believe they have only one basic plan option, which costs more every year.
There are plans that offer better coverage at a better price for the company and lower out-of-pocket costs for employees. Be sure to look for an advocate with deep knowledge of the industry and trends in employee health plans who will help you find that solution.
