How to Have a Successful Open Enrollment This Year

by Christine Lewis | Sep 27, 2019 | Employee Benefits

Health benefits are important to everyone. Your employees need them for their well-being and you need healthy employees who want to stay and work for you. The benefits you offer show how important your employees are to you. Unfortunately, most employees don’t fully understand their benefits or what they cover. With open enrollment coming up, this is the perfect time to educate employees and make sure everyone in your organization is getting what they want out of their benefits plan.

In this post we’ll present:

• Where knowledge about employee benefits breaks down
• How employees get their information about their benefits
• How you can make your open enrollment more effective

Where knowledge about benefits breaks down

Having good health benefits is crucial for being a working adult in the United States. And yet, most adults who have health coverage don’t fully understand it. A poll from Maestro Health showed that 35% – over one third! – of employees don’t fully understand their healthcare coverage, with some saying they know nothing about it. For something that is so expensive and that shapes so many Americans’ employment decisions, this is a concerning blind spot. That ignorance is not surprising given how complicated the medical coverage process can be.

Where open enrollment could be the perfect opportunity for educating employees so they can make good benefit decisions for a lifetime, it often ends up being a time for more confusion and quick, impulsive decisions to avoid digging deeper for information. If your employees have made plan choices that don’t benefit them or don’t do so efficiently, they are in for a whole year of struggling with insurance companies and providers. That can result in employees needing to spend more time away from work and possibly getting into debt from poorly managed healthcare costs. It’s also a miserable process for your employees to experience.

A survey from Aflac shows that 80% of employees say that their benefits package influences their engagement with their job. It also stated that 57% of employees would accept lower compensation in a job if it had better benefits. Clearly the confidence an employee has in their coverage is a very important part of their employment decisions, so anything you can do to make them more confident in the decisions they’re making will make you a more attractive employer.

How employees get their information

If employees don’t fully understand their benefits, where are they getting their information? The most trusted source for benefit information for most employees is another person. A recent survey from Colonial Life showed that, no matter what generation they are from, employees prefer to talk to a trusted person for their benefits information rather than going to a website. More often than not, that trusted person is an HR or Benefits professional, but it can also be family members, friends, or colleagues. The point is, when it comes to something as personal as discussing employee benefits, people prefer a human touch.

Make your open enrollment work better

How can your company make open enrollment the most helpful, educational, and productive time possible for you and your employees? There are a few things you can do to help make that experience work better for everyone.

Ask what employees want

Ahead of enrollment, ask your employees what they want from their benefits. This can be a general question posed to all employees, or a survey with specific questions on each benefits offering. You may find that your benefits program is either missing out on a needed area or is offering plans that aren’t relevant to your workforce. If you find a need for significant changes to your plans, you’ll want to start this process well before you kick-off the enrollment period.

Limit the bombardment of information

One possibly counterintuitive answer to solving the open enrollment puzzle is to limit the amount of information you’re giving your employees ahead of enrollment. This doesn’t mean keeping them deliberately in the dark about their options.

Instead, this means not bombarding employees with everything remotely related to their health benefits and all possible plan options. Without any guidance to prioritize that information, your employees will have no idea what’s relevant to them. This can be overwhelming for employees that are already stressed about picking the right plan options. Instead, start with general information that should apply to all employees. Explain confusing benefits terminology. Walk people through the process step-by-step. Remember that you’ll be educating your employees over time.

Make sure they have the basics

While having information from printed material and online is crucial, most employees don’t find this information useful when they have a question specific to their personal healthcare needs. That doesn’t mean you shouldn’t make this content available, just that it should be supplemented with other channels for benefits information. Make sure to provide all employees with:

• A schedule for open enrollment, including all key dates and deadlines.
• A statement of their current coverage.
• Summaries, changes, and rates that are specific for each individual plan.
• An open enrollment guide and forms.
• Contact information for knowledgeable sources in HR/Benefits  for specific questions or additional help

Communicate all year long

You don’t want open enrollment to be the only time your employees think about their benefits and health coverage. Set a communications plan for letting employees know about changes, deadlines, and general information throughout the year. This can be tailored around changing seasons, birthdays, employee anniversaries, or any other signpost that’s a good time to examine and learn about their benefits. If learning about tackling advantage of their benefits is on your employee’s radar all year long, they’re going to be in a better position to retain what they learn and use that knowledge effectively during open enrollment season.

Let them know about non-traditional benefits

If your company offers non-traditional (more than standard medical) benefits, communicate that to your employees. Many companies are attracting top talent with benefits like tuition assistance or telehealth programs. If benefits like these are options during open enrollment, make sure your employees know about these offerings and help them sign up for what makes sense for them and their families.

Voluntary insurance is becoming more important to employees. These are policies that cover periods of disability, critical illness, or accidents where major medical insurance may not cover costs like deductibles or copays. Again, if this is something you offer your employees, this should be advertised to them along with guidance on how to sign up.

Use alternative modes of distributing information

Employees learn in a variety of ways, and sometimes benefit from multiple sources of information. Some companies use online articles forwarded via email; quizzes and contests on benefits information; brown-bag lunches with speakers; or town-hall meetings to field individual questions. You can schedule these throughout the year, increasing the amount of time people are actively thinking and learning about their benefit options.

Analyze what worked when you’re done

Once your open enrollment is over, take a hard look at what worked well for you and what didn’t. This is the perfect time to solicit feedback on how easy (or difficult) the process was, how accessible needed information was, and what people would like to see in the future. Similarly, check with your management and HR staff to see what could be done to make things easier for them for the next enrollment. Look at that feedback and figure out if the issues are with the processes for getting people informed and enrolled, or if there are bigger issues with the policies your company has available. Also look at your initial survey information to see if there are gaps or surpluses in what you offer currently. The best time to make changes in your plans is well before the next open enrollment.

Get a hands-on employee benefits broker

This entire process can be made much easier through partnering with a proactive, hands-on employee benefits broker. A great broker is knowledgeable about all the different employee benefit options available so they can build plans tailored to your workforce’s unique needs and effectively educate your teams to take advantage of those plans. This process is done through in-person education sessions (usually on-site), interactive webinars, and one-on-one phone calls with employees who may have specific questions.

Your next steps

There’s a lot your company can do to make open enrollment the most successful it can be:

• Ask what employees want
• Limit the bombardment of information
• Make sure employees have the basics
• Communicate all year long
• Let employees know about non-traditional benefits
• Use alternative modes of distributing information
• Analyze what worked when you’re done
• Work with a great employee benefits broker

Your employees will be happier knowing they have the right coverage. The sense that their employer is concerned about their health and well-being goes a long way as well. And employees with a well-fitting health insurance plan will also cost your business less in the long-run. Your employees are the most important asset your company has. More than that, they’re the people who want to make your company thrive, so help them engage with a benefits plan that allows them to thrive too.

Are You Overspending on Benefits Your Employees Don’t Need or Want?

by Jim Taylor | Sep 12, 2019 | Employee Benefits

As we approach 2020, businesses are more concerned than ever with being scaled and built for profitability. Teams are leaner than ever, superstar talent carry greater workloads, and businesses that aren’t built for sustained growth are disappearing fast.

In that quest to trim the fat, controlling employee benefit overspend should be a major goal for all growing businesses. Even with responsibly scaled salaries, employee benefit offerings that aren’t well-selected can cause an organization’s compensation costs to balloon, significantly eating into opportunities for profitability.

Moving forward, we’ll explore:

• How benefit overspend can happen to any organization
• Why monitoring benefit overspend is especially relevant for growing organizations
• How to understand which benefits are actually beneficial
• How to bring finance, HR, and senior leadership together to make benefits work for everyone

Why Benefit Overspend is Such a Common Problem

Employee compensation is one an organization’s strongest tools when it comes to talent acquisition and retention. That means that the quality and value of your benefits program is indeed crucial to building a great team that’s fit, happy, and productive.

Unfortunately, however, scaling and aligning those benefit offerings is a complex task. In fact, compensation plan design is probably one of the most difficult tasks HR has to manage. That intimidation factor, paired with the fact that human resources professionals don’t always have the background in finance they need to correlate the direct connection between employee benefits compensation and the bottom line, is why benefit overspend happens in so many organizations.

More is Better, Right?

The biggest mistake businesses (especially new businesses) make when they design a benefits plan is trying to include every form of inclusive coverage and access to any valuable program. In the increasingly competitive war for talent, that kind of an approach can be attractive at face value, but year-to-year, it can become a burdensome anchor on business profitability.

Both benefits professionals and individual consumers frequently make the mistake of assuming benefits are like a stockpile of food for emergencies: it’s maintained in case you need it and provides peace of mind, but it’s not a part of your daily, weekly, or monthly life. If that’s your paradigm, then of course you’re going to assume more is better.

Here’s the truth, though: Impactful benefits programs aren’t the emergency food in the basement; they’re the dry and canned food in the pantry – they’re there for use in a pinch day-to-day. True “benefits” are the offerings that provide value, security, and convenience to employees’ and their families’ everyday lives.

Once you understand that, it quickly becomes clear that bigger isn’t better; usefulness and accessibility improve benefits programs.

Over-Emphasis on Industry Competition

One of the most common ways new or growing businesses fall into benefit over-spend is over-reliance on industry benchmarks to help guide their benefit plan design. While benchmarking is a great tool to help you understand and plan relatively fixed expenses like base salary, benefits packages must be scaled to the individual business and workforce.

Without an incredibly deep and granular understanding of your competition or goal competition’s complete financial picture, you can’t reasonably predict that their employee benefit practices will translate to success in your organization.

Studying the competition’s benefit offerings certainly has value and can inform your planning, but if it’s the main guiding light for your benefits program, you’re making the classic mistake of focusing on the competition rather than yourself. Finance, HR, and overall leadership must work together to articulate a vision of the business, its blueprint for success, and how benefits can be scaled to make that happen.

Lack of Understanding Means Lack of Alignment

Another classic mistake businesses of every size and sector make is that they create their benefits plans for a hypothetical team of theoretical employees instead of letting the real needs of their actual employees shape the process. While that can be quite difficult at outset, after a year or two of benefit program usage, you should have enough data available to create a rich understanding of what people within your organization need to build that daily health and security we’ve discussed.

If you’re not working to optimize your offerings to what people actually use, you’re likely creating or fostering overspend. At the same time, however, your benefits program must also answer and scale to finance goals. In just a minute, we’ll explore how you can leverage HR and finance help create that alignment.

Why Benefit Overspend is a Potential Pitfall for Growing Businesses

Early-stage businesses are incredibly dynamic, but that also means there is the potential for vulnerability. A disappointing quarter or behind-schedule development project can quickly erode a business’ profitability, and without the secure cash holdings of an established company, bloated employee benefits spend can turn into a big red number for a given financial term.

In order for an organization to grow continuously, with an expanding staff and increasingly complex human capital structure, an employee benefits program must account for not just costs at the program’s launch but of the way those costs might balloon, expand, or creep as the company grows. That means benefits plans aren’t just about the design that will land talent right now, they must be plugged into and built with short- and long-term financial and organizational plans in mind.

When benefits are well-scaled and well-aligned, they support an organization’s internal team, maximizing their ability to do great work while also maximizing the organization’s chances for profit as well as their ability to make informed financial projections. Finance leaders, HR leaders, and CEOs must come together to create that robust, clear vision, or they’re not really thinking about or planning for growth.

Defining “Benefit” in a Way that Makes Sense for Everyone

Increasingly, employers and employees alike are aware of the fact that employee benefits are actually an opportunity to create mutual benefit. The old way of thinking was that businesses offered benefits to be competitive and benevolent. Now, however, the cards are on the table, and people understand that part of the benefits game is keeping employees present and productive.

That doesn’t mean the pendulum has swung back and benefit plan design can be all about making the books look good, however. Medical care, prescription drugs, and hospital visits are only increasing in cost, and more people than ever have complex, potentially expensive medical needs.

Creating an approach to benefits that works for everybody and supports growth truly requires finding a balance between the needs of the actual people within your organization and the financial needs of the organization as a business. You can’t serve either purpose exclusively and expect to solve the problem in a satisfying way; both sets of values must be accounted for.

Understanding What People Really Need

As we’ve said before, one of the best ways to understand your actual organizational healthcare/benefit needs is to understand your employees’ actual healthcare/benefit needs. There are two main ways to do this: by asking them using surveys or other tools or by reviewing your carrier’s usage reports. The best approach involves using and weighing both.

Too often, employers are scared to talk to their team members about benefits because they’re scared all they’ll hear is that the programs aren’t good enough. While there’s sure to be a certain degree of that feedback, the discussion can also provide the best-possible understanding of what people actually want, need, and value. If you can get the buy-in you need to build an authentic data set, a lot of your most important questions can be answered for you definitively.

Those usage reports from your carrier will fill in the quantitative data to help you understand which offerings are most accessible and well-used (which, remember, means “valuable”). You can also build a very strong understanding of where the dead weight in your benefits program might be.

Understanding What the Business Can Bear

Once you have a strong grasp on your human needs, the next step is to determine what kinds of plans and packages your organization can reasonably offer. Obviously, the goal is to create packages that deliver consistent, satisfying offerings while still leaving yourself the best chance to predict and achieve business growth.

If identifying and eliminating overspend is your primary goal, this is really the most important point in the process. HR needs a clear picture of the finance goals so that they can create plans accordingly. At the same time, finance requires HR’s understanding of day-to-day employee needs in order to do their work in an accurate manner. Bringing those two data sets and approaches together can seem incredibly challenging at first, but it’s actually your best chance to get benefits right in a way that works for everyone.

Embracing the Push-Pull

The intersection of HR and finance can be tricky to navigate because both sets of professionals come from very different backgrounds and come equipped with what some might say are competing sets of values. With that said, they share the most important common ground of all: they’re responsible for setting up operations for success.

Getting your employees the benefits they need while keeping the business lean and scaled for profit and growth is a tall task, and frankly, no one person can make it happen. It takes a major commitment from leadership and a willingness between finance and HR to work together, plan together, and commit to seeing things through each other’s lenses (at least some of the time).

When your organization can articulate an approach that makes HR, finance, and the executive suite or boardroom happy at the same, that’s how you know you’re onto something really great.

Key Takeaways

Employee benefit overspend is rampant across business, and part of the problem is that many organizations don’t understanding how or why their approach to benefits isn’t aligned with their employees’ needs or business goals. In order to create impactful benefits packages that delight your team and drive business, it’s important to remember:

• More is not better when it comes to benefits because overspend can be devastating to potential profitability
• In early-stage or growing businesses, benefit overspend can be especially damaging
• Overspend usually happens because organizations either lack a strong understanding of employees’ actual needs or feel the need to offer exhaustive benefits in the name of competition
• To truly be “beneficial,” offerings must be impactful and see actual use
• When it comes to determining which benefits are actually essential, ground-level employees (and their usage data) are your best resource
• Part of getting benefits right is learning to manage the dance between humanistic priorities and business priorities

Still Fully-Insured? A Growing Business’ Pathway to Self-Funding

by Stacey Gierut | Sep 5, 2019 | Employee Benefits

Most businesses begin their employee benefit journey fully-insured for good reason. Early in a business’ growth cycle, it’s highly advantageous to keep monthly healthcare expenses predictable and under control, with any variation squarely the carrier’s problem.

However, once a business has grown past that developmental stage and stabilized with a properly scaled workforce and projections of continued success, self-funding becomes increasingly attractive. When businesses self-fund, they gain more granular access to their bottom-line healthcare expenses and can potentially save money in the long term by assuming increased benefit management responsibilities and opening themselves up to a little more risk.

Moving forward, we’ll explore:
• Why growing businesses should transition toward self-funding
• First steps for businesses looking to self-fund
• Important planning considerations for organizations hoping to self-fund
• The advantages and disadvantages of level funding

Why Transition Toward Self-Funding?
Shifting toward a self-funded benefits program is a major decision for any organization and not something that can be accomplished without a great deal of planning and follow-through. While the process may sound daunting for HR and finance leaders accustomed to fully-insured processes, there are tangible benefits available for those brave and organized enough to make self-funding a priority.

Leveraging Your Business’ Stability to Reduce Overspend
Self-funding uses organizational size and stability to reduce average monthly costs, as the employer significantly lowers overhead by paying a variable monthly fee based directly on employee claims (healthcare usage).

While there are increased internal management responsibilities for benefits professionals on the HR team in self-funded scenarios, there are also significant gains, as organizations reduce administrative fees and take power back from carriers when it comes to dictating monthly costs. That kind of overspend reduction can help tighten up an employee compensation budget for HR departments looking to stay streamlined for company growth, even if headcount begins to rise.

Businesses don’t need to be large to benefit from self-funding, either. In the right scenarios, self-funding is possible at almost any scale, as long as the employer truly understands what their employees need and will use in terms of healthcare.

Why Variable Cost can be Preferable to Fixed Premiums
Many risk-averse planners might be tempted to stick with the predictability of fixed-rate, fully-insured plans because the number you know is much less daunting than a worst-case-scenario figure. However, stop-loss and excess-loss coverage are specifically available to limit the financial blow of catastrophic claims scenarios, which means that a month of coverage for a healthy workforce could, in many situations, be significantly cheaper than a month at the fully-insured rate.

Furthermore, if the employer maintains a healthy workforce where daily wellness and preventative medicine are values and priorities, expensive trips to the emergency room and invasive procedures are minimized through plan design and education. That means self-funded companies can exponentially increase their benefit if they establish a (or take advantage of an existing) meaningful culture of wellness.

Leveraging a self-funded plan might seem like a risky and costly expense, but it’s actually a long-term investment in the company’s ability to grow and work better. In the same way, the potentially increased cost of self-funded insurance is mitigated by the opportunity to reduce inefficiencies and overspend in most cases.

Providing Exactly What Your Employees Need
Of course, in any conversation about employee benefits, the benefit of the employees needs to be a central focus. Working for a company with self-funded insurance is beneficial to team members throughout the organization, as the savings from reduced administrated costs can be passed down from the employer to individual policy-holders.

Additionally, self-funding means the employer has more specific control over benefit offerings and, with a strong understanding of employee needs, can design plans in a more thoughtful, specific, and employee-focused way than ever before. Of course, businesses can only achieve that if they have a rich, detailed knowledge of their employees’ and their families’ medical needs, claims-related behaviors, and emerging trends and technology that connect employees with medicine and medical professionals in innovative and cost-effective ways.

Maximizing a self-funding transition requires incredible preparation and a robust base of knowledge about both plan design generally and each individual organization’s specific finance picture, needs, and goals.

Preparing to Self-Fund
Achieving self-funding is a journey unto itself that forces HR and finance to work together to establish the best-possible understanding of needs, possible solutions, and the impact of each on the bottom line.

The Importance of Preparation
In short, if a self-funded employee benefits program is not designed and scaled correctly, it can significantly harm the company’s ability to maximize profitability. On the other hand, though, getting self-funding right opens the door to a variety of gains for both the business and its employees. The difference between those two outcomes is good planning.

Altering a benefit funding model is a paradigm shift that no one professional or department can make happen on their own. Cross-department planning and collaboration must occur in order for all relevant decision-makers to get a full picture of current healthcare costs, the possible impact of transitioning toward self-funding, how benefit offerings will change, etc. That means input from HR, finance, the boardroom, and beyond is necessary to plan for a strong, positive transition.

When HR, finance, and senior leadership have a shared understanding of how self-funding will reduce overspend without tying the company’s hands in a way that impacts profitability, then the real design work starts.

Understanding and Planning for Risks
One of the reasons self-funding is such a cost-saver is because, in self-funding, a business assumes a great deal more variable risk. In a fully-funded scenario, a catastrophic accident or life-changing diagnosis to an employee impacts a company’s healthcare fees very minimally – that security is part of what businesses pay for. Once a business is self-funded, however, a major uptick in claims or a string of big-ticket claims can certainly eat into profitability for the month or quarter.

Minimizing those risks requires researching stop-loss and excess-loss coverage and determining how that coverage should be scaled to your workforce and its needs to provide the business with the profitability protection it requires. Reducing the risk of such high-cost events from occurring through employee health and wellness offerings (which are significantly cheaper than the cost of reactive medical care) is another crucial proactive planning measure.

Maximizing the Data Available to You
Designing a self-funded plan requires a rich understanding of the benefits and services employees absolutely need. By studying the healthcare utilization data available through their providers, HR leaders and CFOs can get a very clear, specific understanding of what kind of services employees are using regularly and what their actual costs are.

That data is incredibly valuable in planning what a standard “month” of real expenses in a self-funded scenario might look like compared to current fully-funded costs. Again, the transition toward self-funding cannot be made or even attempted until that data story is fully understood, or else the company is simply self-funding for the sake of self-funding, rather than making an educated, profit-minded decision to improve healthcare efficiency.

Scaling Your Benefit Plans to Your Funding Goals
Once a commitment to self-funding has been made and HR and finance have worked together to understand how the transition will support company growth and translate to more efficient spending, the next step is to think about how the change in funding model will affect specific benefits offerings.

To be blunt, plan design is more important than ever for HR to ensure self-funding is efficient at scale and supports growth. Armed with utilization data and other measures of employee need such as surveys, internal leadership must work with a benefits broker who understands the transition plan and the importance of plan success in order to create benefits packages that are highly valuable to team members while remaining mindful of the bottom line.

To guarantee success, no HR leader or department should be working on their own during this period. Input from leadership, finance, and your benefits broker can be incredibly useful to ensure proper perspective is maintained and the transition plan is well-aligned with short- and long-term company goals.

Meeting in the Middle: What about Level Funding?
Some organizations looking to transition away from a fully-funded approach without completely losing their safety net may be interested in what is known as “level funding.” Level funding provides a middle ground between fully- and self-funded benefits programs, in which the carrier and the employer share responsibility.

What is Level Funding?
In a level funding scenario, an organization pays a set monthly fee to an insurance carrier, as in traditional fully-funded plans. However, the carrier tracks actual employee usage and claims throughout the year so that at year’s end, the difference between the actual claims and the monthly fees can be determined.

If the employer organization’s monthly spending equals more than the total of the claims at the end of the year, they are reimbursed the difference. However, if the value of the claims is greater than the amount the employer paid in, they must pay the carrier the difference.

Level funding can be highly beneficial for businesses who understand their utilization picture extremely well and can predict with great certainty that they will be will not stray an acceptable percentage from the projected payments. On the other hand, if an organization goes into a level funding situation without truly understanding their employees’ needs, it can lead to an additional payment at year’s end.

In short, level funding protects businesses from many of the administrative challenges of self-funding but doesn’t carry the same cost-saving benefits as a well-planned, well-executed self-funded approach.

Key Takeaways
The transition from fully-funded insurance offerings toward a self-funded program is one of the biggest and most important adjustments an HR department can oversee. Pulled off successfully, a self-funding initiative can streamline healthcare costs while keeping the entire team productive and well-supported. Scaled, planned for, or executed incorrectly, however, self-funding attempts can put a major strain on a business’ month-to-month profitability.

If you’re an HR professional or finance leader starting to consider whether your organization is ready to begin the journey toward self-funding, remember:
• Self-funding is a great way to reduce healthcare overspend by embracing variable fees month to month
• In a self-funded model, employer healthcare costs are based on actual usage, not projections
• Transitioning toward self-funding is a crucial shift that requires organization-wide commitment and extensive planning
o Healthcare utilization data can be valuable in this work
o Understanding risks and connecting with the coverage needed to mitigate them is crucial
• Partnership with finance is necessary to ensure benefits offerings are scaled with company capabilities and objectives
• Level funding offers a blend between self- and fully-funded approaches that eliminates both the best- and worst-case scenarios for self-funding failure/success
• Working with the right employee benefits broker can help your business smoothly transition to a self-funded strategy

For CFOs: How Healthcare Consumerism Can Reduce Costs and Improve Employee Experience

by Jim Taylor | Aug 30, 2019 | Employee Benefits

As insurers and employers attempt to adapt to increasing healthcare costs, they have moved towards a model that encourages healthcare consumerism. The Affordable Care Act marketplace and the rise of high-deductible health plans mean that employees have more choices and more control over their healthcare expenses than ever before. Since employees have a larger role in controlling healthcare costs, employers should make a priority of guiding them towards becoming engaged and strategic consumers to reduce their own costs. At the same time, the trend towards healthcare consumerism can make a significant impact on a company’s bottom-line.

So what are the impacts of healthcare consumerism on your business’s finances and your employees’ healthcare experience, and how can you help your employees become responsible consumers? In this post we’ll explore:

• Why healthcare consumerism should be a priority for CFOs
• The cost/benefit analysis of healthcare consumerism
• How to help employees become responsible healthcare consumers through:
  • Plan design
  • Employee engagement in the healthcare process
  • Educating employees about healthcare options and best practices
  • Empowering employees by providing them with the proper tools and technology

Why Healthcare Consumerism Should Be A Priority for CFOs

Guiding your employees towards embracing their role as healthcare consumers and helping them become as informed and empowered consumers as possible should be a top priority for any CFO. As control over healthcare decisions and costs shift towards employees, so does power to reduce healthcare costs for employers. Which means that your employees become your greatest asset to reduce your healthcare expenses and manage your budget. Ignoring the healthcare consumerism trend can be extremely costly for employers as their employees will be ineffective consumers who incur unnecessary costs while achieving suboptimal health outcomes, thus decreasing their productivity and job satisfaction.

At the same time, consumerism itself is an enormous opportunity for employers. At its most basic level, it shifts costs from the employer onto employees as deductibles take the place of premiums and expenses are increasingly paid from employees’ health savings accounts. And as responsibility transfers from employers to employees, overall costs go down – especially within the context of increased consumer choice. Insurers and providers have to compete to win over employees’ business, driving down prices while increasing the quality of care where it matters most to consumers. The healthcare industry has to win over individual employees in their millions rather than a comparatively few number of employers, leading to more tailored solutions and disrupting the market to provide new cost-saving opportunities. Healthcare CFOs see consumerism as their number one business challenge and their challenge is your opportunity. They are striving to meet consumers’ needs and generating serious savings for employers along the way.

Looking at the issue from another perspective, healthcare consumerism saves companies significant time and effort because it allows employees to craft their own solutions and manage their own healthcare. Instead of having to assemble a health insurance plan that covers each employee’s needs, employers can work with their benefits brokers to create a range of options so that employees can opt into what works best for themselves and their families. This form of healthcare consumerism eliminates waste from unnecessary coverage and makes it easier for employers to provide their team members with the coverage that they need.

Cost/Benefit Considerations of Healthcare Consumerism

The potential savings from healthcare consumerism are significant, but that does not mean that there are no risks or tradeoffs. As for all major business strategies, you should consider the costs as well as the benefits of encouraging healthcare consumerism and guiding your employees to become better consumers before launching any initiatives.

Changing healthcare procedures is expensive, as is employee education and empowerment. Any major push to make employees more enlightened and engaged healthcare consumers might well be met with resistance by CFOs who are more concerned about their short-term bottom line.

There is also a risk that moves such as implementing HDHPs will be seen as attempts to reduce benefits and shift costs onto the employee. As such, it is incredibly important to approach these topics carefully and strategically, always focusing on the benefit to the employee. It is also another reason why tiered plan structures are a great idea because HDHPs are presented as an option rather than a mandate.

But it is much riskier to avoid adapting to healthcare consumerism. The market is moving towards a consumer-based model whether employers want it or not. So in addition to missing out on the benefits of healthcare consumerism we outlined earlier, failure to adapt can be extremely costly and result in worse healthcare outcomes for your employees. They will become healthcare consumers, but they will not be informed about their options and will incur unnecessary costs, avoid necessary care to cut expenses, and otherwise harm themselves and your bottom line.

How to Help Employees Become Responsible Healthcare Consumers:

Plan Design

The key to consumerism is choice, and your plan design plays an important role in this. To encourage your employees to become healthcare consumers and take control over their healthcare costs, you should work with your benefits broker to develop plan designs that give employees more control and more choice in their benefits selection.

The move towards consumer-driven health plans or CDHPs is at the heart of employee healthcare consumerism. These plans are generally high-deductible, but low-premium, plans (HDHPs) that are coupled with tax-sheltered or exempt health savings accounts. They reduce upfront costs for companies and employees alike and give employees maximum control over their healthcare expenses. Because employees mostly pay for the healthcare they use, rather than paying a high monthly premium, they will make more intentional healthcare choices. For example, they will be more likely to avoid high-cost options such as ERs and opt for cheaper alternatives like urgent cares centers or telehealth consultations.

But while HDHPs give employees control over their healthcare decisions and reduce costs for employers, they do not give employees choice when it comes to insurance decisions. Which is why many growing businesses choose to work with their brokers to develop a tiered insurance structure which includes more comprehensive plans with higher premiums. These plans also generally require employees to take on a higher percentage of the premiums. This way employees can opt to pay more upfront to avoid high-deductibles down the line, but employers still save. Providing insurance choices should be a part of any move towards healthcare consumerism.

Employee Engagement

For your business to reap the rewards of consumerism, your employees need to be aware of their role as consumers and engaged with their healthcare decisions. Otherwise, they will be unintentional and inefficient consumers.

The necessary first step to getting your employees to engage with their healthcare is to give them the ability to shape their healthcare costs and results. This entails offering consumer-driven health plans and often providing a tiered health insurance structure. If employees do not have choices, then there is no room for consumerism, let alone engaged and intelligent consumerism. But it is also not enough to simply provide them with choices: you have to give them the power to achieve positive results by offering them solutions that meet their needs. If you do not, and all of their healthcare options are unsatisfactory, then they won’t put much effort into choosing and will not become engaged consumers. And even if they try to, they will get substandard healthcare and savings results.

So a major focus of your employee engagement efforts should be to craft a healthcare approach that addresses employee concerns and needs. Your benefits broker can be an invaluable asset in developing healthcare options that increase employee engagement with the healthcare process. By conducting anonymous health risk assessments (HRAs) and employee surveys, they can identify demonstrated employee needs and ensure that your plans cover those needs. For instance, they might find that your employees need and value dental care but care much less about vision: these findings would allow you to reallocate resources towards dental and away from vision, creating healthcare options that attract employee engagement without increasing healthcare spending.

Once you have created a healthcare environment that is conducive to employee engagement, it’s time to work directly with your employees to get them to take control of their healthcare decisions. The first step is to educate your employees about their options and how to become better healthcare consumers. We will explore how to educate your employees and what benefits you can achieve from employee education in more depth in the next section, but it should be clear how important of a role employee education plays in healthcare consumerism. All of the healthcare options in the world will not increase consumerism if employees do not understand the options and are not armed with the information they need to choose between them.

In addition to education, you can also execute several strategies to increase employee engagement, including:

• HSA matching to encourage planning and move employees towards CDHPs
• Software solutions to make shopping for insurance and managing healthcare easy and accessible
• Hold healthcare events to educate and engage employees
• Offer wellness benefits to get employees thinking about their holistic health

Employee Education

It’s not enough to just get employees engaged in the healthcare marketplace: that might make them consumers but it will not make them intelligent, savvy consumers. That’s where education comes in. You should provide your employees with the resources they need to truly understand their options and best provide for their health while reducing healthcare expenses for themselves and you as an employer.

The good news is that healthcare providers and insurance carriers recognize the challenge that healthcare consumerism poses and are working to provide consumers with the information and tools they need to choose healthcare options. Which makes your job easier and saves you both time and resources.

Your greatest asset when it comes to employee education is your benefits broker. Unlike insurance carriers, brokers are truly your ally when it comes to reducing your expenses and providing your employees with the care they need. And some of the greatest contributions that brokers can make towards your business’s success come from employee education. They can provide the educational materials that inform employees about not only plan details that help them choose the best options for their health and wallets but also about healthcare best practices so that they can become the most effective consumers possible. They can also hold in-person events in your office, from forums and Q&As to one-on-one guidance sessions with your HR staff and your employees themselves. Your broker is an expert in the healthcare industry: let them use their expertise to educate your employees.

That being said, you still have an important role to play in employee education. Beyond engaging external resources to give your employees access to education, you should maintain consistent communication with your employees about their healthcare options, the tools available to them, and any changes to their benefits. Your employees will have peace of mind and be more able to make intelligent healthcare decisions and leverage the assets available to them. It is also vital that you communicate with them year-round rather than in the lead-up to open enrollment to reduce the pain and expense of open enrollment for everyone involved.

Empowering Employees

Once you have given your employees the insurance options that maximize their role as consumers and the engagement and education that makes them informed consumers, it’s time to provide them with the tools they need to become empowered consumers. There are more options than ever to manage healthcare and reduce expenses, and your broker will likely have connections with trusted providers who can give you these tools.

There are two major categories of cost-reducing tools that you should use to empower your employees. The first is telehealth, which over a quarter of employers currently provide and 96% of employers plan on implementing. The advantages of telehealth are significant: not only do digital consultations cost less than a third as much as traditional doctor’s office visits on average and divert employees away from extremely expensive trips to the ER for on-demand advice, telehealth also reduces absenteeism and increases productivity by allowing employees to access the care they need more quickly, easily, and without missing work to do it.

The second tool you can use to reduce healthcare costs for your employees and your company is a pharmacy savings card. Programs like CleverRX allow employees to purchase prescription drugs at a negotiated rate that is frequently lower than their copays would be. In fact, 80% of consumers could save money using one of these cards. Pharmacy savings cards are just another example of how providing your employees with as many choices as possible helps them become empowered, cost-cutting consumers.

Software platforms should also play a part in your empowerment initiatives. Healthcare management apps like HealthiestYou allow employees to access plan information and health guidance, shop for providers, review pharmacy options and rates, and even receive telehealth consultations all from one centralized platform. At the same time, open-enrollment platforms can make it easier for employees to make smart insurance decisions and cut through the red tape that makes employee engagement a challenge. Online employee benefits portals help employees manage their healthcare, reap the rewards of the benefits you spend so much to provide them (increasing employee engagement and retention), and access educational materials.

Key Takeaways

Healthcare consumerism is a powerful force that can have a huge impact on a company’s bottom-line and on employees’ healthcare experiences and outcomes. As such, encouraging consumerism and helping employees become better consumers should be a serious priority for CFOs at growing businesses. Just remember that:

• Your plan design should allow employees to manage their healthcare costs through HDHPs + HSAs, and also provide them with a range of insurance options
• Engaging employees in their healthcare decisions is the first step in guiding them to become responsible consumers
• Employee education allows employees to make strategic decisions regarding their insurance plans, healthcare, and health behaviors
• Tools and technology such as telehealth, pharmacy savings cards, and enrollment software empowers employees to reduce costs while receiving the care they need

While healthcare consumerism is an enormously powerful tool to reduce costs, it is best used as part of a broader strategy to reduce healthcare expenses. We will be holding a webinar on how to reduce healthcare costs at your growing business on September 19^th at 11:00am CST. Join industry experts including Jack Diamond of Teledoc, Brett Cunningham of CleverRX, and our very own Alex Koglin to learn how to manage your healthcare expenses while providing your employees with the best healthcare possible. Register today!

Getting the Best Bang for Your Buck in Employee Benefits

by Kierra Kniff | Aug 22, 2019 | Employee Benefits

No business that wants to win with talent can undersell the importance of valuable employee benefits, but if HR leaders and insurance brokers spring for every trend or try to find the most comprehensive possible coverage in every situation, those costs can quickly balloon to the point where they become a strain on the organization.

The vast majority of businesses don’t have Fortune 500 HR-budgets, and that means scaling employee benefits with the bottom line in mind requires an understanding of how to maximize the value of what you’re offering employees while keeping costs in check.

Moving forward, we’ll be exploring how HR leaders can maximize the two-way value of their benefits offerings to delight talent and finance alike. We’ll discuss:
• Why more isn’t always better in the world of employee benefits
• Why an emphasis on plan design is crucial to controlling costs
• How to understand which benefits have the greatest value and why
• Why you must leverage employee benefits education
• Why your relationship with your broker is crucial to success

Why “More” isn’t Always Better

One of the biggest mistakes HR departments in organizations of all sizes make is piling on perk after perk and program after program in the name of being employee-centric. While that kind of stacking makes an impressively long list on paper, it doesn’t always translate to actual increased employee benefit, and it invariably ties the organization up with a variety of financial obligations.

Lost Value, Lost Profit
Benefits that aren’t understood by your employees and used with high satisfaction aren’t benefits at all – they’re just costs.

While the big, long list of benefits offerings seems like a valuable tool when you’re trying to land a potentially impactful hire, it immediately transforms into a heavy and costly anchor once they’re on board and elect to only take advantage of traditional coverage or insurance options.

Never Losing Sight of Mutual Benefit
To be a great HR leader, you need to understand the humanistic side of everyday work within your organization in a way that most other senior leaders simply don’t, and advocate accordingly. At the same time, you’re also responsible for making sure human costs are scaled in a way that turns results from your talent into business growth.

That means your benefits can’t just be employee-facing offerings; they must be planned and chosen with workforce maximization in mind. Which wellness programs will keep your employees and their family feeling ready to succeed in work and school? Which retirement or life insurance offerings will make people feel truly supported in a way that builds authentic company buy-in? Which workplace cultural values or perks will keep people energetic and motivated from day to day?

Employee benefits are indeed employee benefits, but when it comes time to select benefit offerings, it’s a useful exercise to ask yourself: “How will this program improve our team members’ lives in ways we’ll be able to observe and celebrate in the workplace as well?” When you can answer that question, you’ll have a much better understanding of which benefits are truly impactful and mutually beneficial in a way that supports business.

The Importance of Plan Design

Ultimately, creating a benefits program that attracts, delights, and motivates employees while remaining scaled to company growth objectives comes down to plan design.

Although benefits plan design is one of any HR department’s most important responsibilities, it’s often treated like a chore. In fact, if you’re stepping into an early-stage organization, there’s a high chance that things have always been handled on the fly and there’s never been a consistent, well-articulated approach to benefits or employee compensation.

Impactful leadership that supports the team while keeping the organization primed for growth is the gold standard. If you can create that alignment, you and your organization are both primed for all-star status. To get there, though, you will need to leverage the expertise of some key colleagues.

The Power of Partnership between HR and Finance

Your CFO, director of finance, or controller may not seem like a natural human resources ally at first blush, but their understanding of the company’s value proposition, business goals, and overall financial operations is crucial to any business leader’s work creating a mutually beneficial benefits program.

When you bring finance into the plan design process, you arm yourself with the expertise of some of your organization’s most important and plugged-in leaders, and you can create plans that are built with alignment in-mind from step one.

Of course, from an HR perspective, it’s also your responsibility to serve as an advocate for your team throughout this process. Working with finance doesn’t mean letting them design your program in a way that reflects their values and sensibilities; it means using their valuable perspective as a lens through which to demystify how plans should be scaled to bottom line goals.

Understanding What’s Valuable to Employees

“Know your audience” is a valuable axiom in comedy, business, and life in general. If you’re creating a program that’s of real value to your team members, you can’t possibly do it without a deep understanding of their actual needs, goals, and insecurities. In fact, if you’re planning on sitting down with finance to talk about plan design, a great first step is to conduct a little research to figure out exactly which benefits your employees truly need and value.

Employee Surveys
Workforce surveys are a quick and easy way to build a data pool around overall satisfaction with your existing benefits program or to build a better understanding of what employees say they need to feel supported and do a great job. Thanks to technology, surveys are quicker and easier to create and quantify than ever before.

Of course, getting good data from an employee survey requires asking the right questions and providing your staff with a clear, easy way to express themselves. Measuring satisfaction for your benefits program on the whole or for individual elements using a 5-scale or 10-scale can be useful, as it creates easy-to-digest quantifiable data.

At the same time, any employee survey about benefits must also embrace the qualitative and humanistic. For example, if you have team members whose lives (or whose families’ lives) have been changed positively by a program you offer, or whose lives could be changed by the addition of new offerings, you need to hear those narratives and take them into account.

Workforce Healthcare Utilization Data
While surveys are a great tool for learning what’s on employees’ minds and what they’re willing to tell you, they don’t tell the full story. The good news is that you can fill in many of those gaps using workforce healthcare utilization data from your insurance providers.

Specific, granular medical records and information are protected under HIPAA, but as employer, you can still access a wealth of usage and billing data that helps you gain a fuller understanding of how widely your health benefits are being used, what they’re costing your employees, and what they’re costing you.

Your employee benefits broker can be incredibly valuable in helping you mine these numbers for takeaways to inform your plan design process. Ask yourselves:
• Which aspects of these programs are actually being used?
• What do the average healthcare needs within your organization look like?
• On average, are employees doing a good job selecting the program that’s most beneficial to them?
• Are we currently offering any packages that are largely unused or just plain inefficient cost-wise?

Benchmarking/Industry Research
Once you’ve leveraged employee data to build an internal understanding of needs, gaps, redundancies, and excesses in your own benefits program, it can be useful to look outside your organization to understand the trends and common benefit practices among your competitors.

As we said at the outset, buying into every trend and jumping for every perk that sounds good at first blush is a crucial mistake, but if you’re trying to build value for your organization and your team members, there’s nothing wrong with seeing how businesses of comparable size and goals are doing the same. The exercise also gives you a better understanding of what you’re competing against in talent recruiting and retention scenarios.

Once you have an understanding of what your employees want, need, value, and actually use, you have the information you need to understand what value and benefit at scale for you and your team members actually looks like.

The Incredible Value of Employee Education

Employee benefits are only as valuable and useful as they are accessible. By maximizing each team member’s understanding of their benefits, you significantly increase the chances that they will select the plan that makes the most financial sense for themselves and the business, leverage health and wellness benefits that keep them and their families healthy and productive, and take advantage of the offerings you bring in that pack the most value.

Education has the power to significantly reduce inefficiencies in employee benefit usage and build a better experience for everyone. Advocate with leadership to get professional development time with each department or team in the lead-up to enrollment time, and plan a learning experience that helps everybody understand their options, the value of the benefits you offer, and the importance for themselves (and the business) of getting the best bang for their buck. Your employee benefits broker can help you develop and execute on a highly-effective employee education strategy.

Maintaining a Strong Broker Relationship

One key stakeholder we haven’t delved into yet in this post is your employee benefits broker. The right broker is another experienced planner and a valuable ally for you and your finance colleagues when it comes to understanding which benefit options are best scaled to your business and goals.

What a Good Broker Looks Like
Great brokers are dedicated to getting your people the coverage they need while also lowering your healthcare costs. They’re strategic, innovative, and understand how emerging technologies are changing the world of medical coverage and healthcare benefits.

A great broker is a true partner who wants to build a well-scaled benefits program that improves employee experience and maximizes business potential. They’re not trying to sell you on what works for them or what will jump off the page the most; they’re working to understand your goals, needs, and challenges, as well as those of your employees.

Why You Should Always Be Shopping
Even if you have an established relationship with a broker who has provided value for your organization in the past, it’s always good to maintain your own understanding of how the marketplace is evolving and continually work toward upgrading both your own experience and the employee experience. That means not being afraid to shake things up and bring in a new perspective, especially if you are in the process of re-planning your entire approach to employee benefits.

More than half of businesses shop their health insurance every year because the market is constantly evolving, both from a healthcare capability standpoint and a business perspective. A business leader looking to maintain a valuable program always has their ears open for the latest innovations and can’t allow their vision to be limited by what one broker offers or says.

Key Takeaways

Scaling your employee benefits program in a way that’s well-aligned with business goals and maximizes the bang for your buck is one of the greatest challenges modern business leaders are faced with. However, success is absolutely possible, as long as you keep in mind:
• More isn’t always better when it comes to employee benefits
• At the end of the day, a benefits program needs to be mutually beneficial
• Maximizing value requires dedication to plan design and finance-minded thinking
• Building value for employees requires a deep understanding of wants, needs, and actual behavior
• Getting the most out of a program requires strong employee education to ensure team members know what’s possible and how to access valuable programs
• Your broker should be a valuable strategic ally in your quest to maximize your bang for your every benefits dollar spent.