Welcome to Part 4 of our Employee Benefits Marketing series – Checklist Items for doing it properly and the myths associated with each step.
The 10 Point Employee Benefits Marketing Checklist was created to equip advisors and employers with effective tools and information that go beyond marketing simply based on price. Our checklist is now available in the CloudAdvisors Solution Library, just search for “CloudAdvisors” or contact an employee benefit specialist who is #poweredbyCloudAdvisors to share with you.
Checklist #4 - A Complete Evaluation of Plan Deviations
Benefit packages offered by providers may seem similar on the surface, and while they are comparable, they are not identical. Brokers will often share only a summary of coverage in a “apples to apples” proposal, but each provider has underlying distinctions, some which can be significant. If an employer is exploring options to change providers but not materially impact coverage, it’s essential they investigate these hidden variances. This evaluation process is key to ensuring employers are making genuine informed decisions, and not being lured into savings with a surface level summary.
To begin this evaluation, basic factors such as eligibility, coverage, maximums, coinsurance, deductibles, termination ages, clauses, and provisions should be compared side by side. Advisors should communicate that even if the details seem equivalent, there can still be differences in the provider’s contract definitions, as well as how they administer benefits and pay claims (adjudicate).
Here are some common examples of underlying differences:
- Termination Age is “At Retirement” versus “Age 70”.
Older employees would lose coverage under the new definition.
- Long Term Disability Non-Evidence Maximums are higher.
Results in higher volumes but increases individual premiums for some members.
- Critical Illness coverage includes a different list of covered conditions.
“Pre-existing conditions” are treated differently and spouses or dependents may be excluded.
- Drug Benefit Providers use a different Drug Card and Pharmacy Benefit Manager (PBM).
Members will face different rules for pre-authorization and different costs for medications.
- Dental Benefit lists different procedure definitions, especially medical vs cosmetic.
Routine Claims may be paid differently and Dental Offices may be asked for more information.
- Medical Second Opinion, Health Navigation, and Employee Assistance Programs added or excluded
Additional valuable benefits may be included or taken away with different partnerships with Providers
If an employer decides to change providers, employees are subject to these changes, whether communicated or not. Some employees and their families will gain coverage, some will lose coverage, and others may notice a slight difference in how their claims are paid. During the plan evaluation process, it is the Advisor’s responsibility to disclose these deviations and advise employers of significant risks.
Marketing Myth #4 - Changing Providers Moves a Benefits Plan to a new Provider
False. A benefit plan is a policy underwritten by one or more specific providers; they are not interchangeable. If a policy (contract) is terminated, another one must be created with the new provider(s).
Employers may compare the basics of an employer’s current benefits package against different providers with the assumption that they are equal. The comparison may even show a significant savings, however the differentiation in price may be trying to reveal the real underlying distinctions.
A misinformed employer risks inadvertently and significantly altering coverage for some employees and their family members. This disruption can result in everything from complaints to legal action. The advisor has a professional responsibility to evaluate cost, coverage, and the overall process of changing providers.
Employers should be cautious of any broker that presents only the financials on a spreadsheet, a complete proposal should include a detailed evaluation of plan deviations.