Ancillary benefits

Recent Survey: Health Benefits Not on the Chopping Block

According to a recent survey by Workscape, the vast majority of employers are not reducing health care benefits or forcing workers to shoulder more costs despite the state of the economy. Only 20 percent of responding companies reported a reduction or reconstitution of benefit offerings.

The fact that most companies are not decreasing their commitment to employer-sponsored health benefits, even though they are often the costliest of benefits, underscores the critical role of such plans in the overall compensation mix,” said Tim Clifford, President and CEO of Workscape. “Most organizations realize that in order to survive the recession and be poised for growth when the economy rebounds, employees must remain healthy and have peace of mind knowing that their families are protected.”

This is clearly good news for the industry and good news for most small businesses and employers. One way or another, employers are finding a way to make this work and doing everything possible to not cut health benefits. Forty-four percent of companies responding to the Workscape survey are opting for high deductible plans to offset costs, but all indications are they’re still funding those plans at 100 percent for employees. Some employers are taking steps to cut 401(k) or disability benefits. A small percentage of employers are going to higher employee contributions to pay for their benefits, although the vast majority are not.

The bottom line is to this point, employees’ health benefits are still sacred.

While disability and 401(k) plans as well as ancillary products may suffer cuts in the short term, that’s much better than the early predictions about how the steep recession would impact the health care sector. Instead of a catastrophic impact, this survey shows that employer-sponsored health benefits have withstood the economic downturn and are, in essence, considered the very last to go when a company is struggling financially.

As brokers, we think that’s absolutely the right decision. Health insurance is critically tied to employee satisfaction and is necessary for sustainability. In most industries, benefits are a retention tool. Most employers realize they need to offer quality health insurance to attract and retain quality employees. When considering two jobs that are of equal interest, a savvy talent will usually gravitate toward the superior benefit package. This is especially true in the small- to mid-market space and the technology sector.

When one employer offers quality benefits and another doesn’t, that makes the decision for the sought-after talent rather easy. There’s no way you’re going to recruit someone away from another organization without offering a quality benefits package, and there’s little chance of holding onto a top talent for long without benefits good enough to keep him or her put.

Our job as brokers is to work with clients to make sure offered benefits fit within their budget while still attracting or retaining key personnel. It makes little sense to offer an overly rich benefits package that you can’t afford. But it makes a great deal of sense to offer a solid health insurance plan to your employees at a fair price. There are high-quality yet value-priced health care options out there that are still going to make your employees happy. That’s what a good broker helps you achieve as part of the broker-client partnership.

Make sure you can have open, honest communication with your broker to say something like: “Hey, times are tough and we need to tighten our belt. What other strategies can we utilize to not break the bank while still offering good benefits?”

If you’re an employee considering a new company, talk to an experienced broker or experienced professional who can help you determine which benefit offering will best serve you.

If you’re an employer or small business owner, don’t destroy your business offering unaffordable, unsustainable benefits. There are affordable alternatives out there that will allow you to still offer quality benefits and retain top talent without breaking the bank. And if you don’t have an experienced HR department or have offered the exact same benefits to your employees for years, you better have a good broker take a look under the hood. Chances are you’re paying much more than is necessary, and without a sound strategy in place you’ll suffer though huge premium increases on outdated offerings.

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How to Trim Ancillary Benefits While Protecting Employee Morale

In tough economic times, sometimes annual reviews reveal a pressing need for benefit cuts. When companies are forced to scale back the benefits employees enjoy, ancillary products are always the first to be affected. It’s in dental or disability or life insurance that employers first look to make reductions. And in just about every case, there’s a deep concern that “taking anything away” from employees will be perceived as a harsh negative that can have widespread ramifications.

Our job as brokers is to help groups figure out where they save money—while still keeping employees satisfied.

Sometimes it’s as simple as doing a review and switching carriers to get a better rate. Sometimes, it’s changing contribution amounts to be able to keep the benefit. The reality is there are a number of things a broker can do to help a company not lose an ancillary benefit entirely even when facing severe budget restrictions.

A lot of it just comes down to strategy.

It comes down to having a good relationship with your broker where you can sit down and truly be honest about the situation. That can be a tough conversation for people to have—to admit it’s a tight time where they need to save money. But those are the conversations you need to be able to have with your broker. That’s because there’s not just one or two options a broker can give you. There are a whole slew of things that can be looked at to improve the situation without eliminating benefits. If the benefit can be saved, it will continue to be an employee retention tool.

A great example is with dental benefits. As a broker, we can run usage model analyses for groups. With the information we obtain, we can find alternatives that don’t disrupt employee benefits while still saving the employer money.

Perhaps a group has a $2,000 annual maximum on its dental plan, but nobody is using more than a thousand dollars. So, we reduce that down and there’s a cost savings. But that reduction has zero negative impact on employees because no one was using that second thousand anyway.

It’s rare to find a scenario without multiple solutions. The unfortunate truth is many brokers just don’t have the incentive to find those answers, while others haven’t adapted to the times and aren’t aware of them. It takes a lot of effort to really talk with a client, do a thorough review and research other carriers. Many brokers would rather keep things status quo rather than look out for a client’s best interests by being more aggressive and forthcoming.

The problem in the small group space is clients are not getting the attention from their broker that they should, in most cases. They’re just a file in the drawer. When renewal comes up, they get their token letter or e-mail, but there’s no outreach. There’s no push for something else—something better or more appropriate—because either the broker hasn’t stayed up with current trends or is only reactive (instead of proactive). Often it’s in the client’s best interest to make changes, but regrettably in the small group space often that client isn’t aware of what the options are.

No employer wants to go back to its employees and say, “We’re cutting benefits.” It’s hard to do. But when it’s essential to make cuts to important programs, your broker should be engaged and helpful in keeping benefits as rich as possible.

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