Choosing Employee Benefits Can Be Complicated
Offering an employee benefits plan is an effective way to attract and retain valuable employees in your organization. Well-treated employees work more efficiently, and stay with an organization in the long-run. Unfortunately, too many employers are guilty of the following five common mistakes when choosing employee benefits for their organization. Making incorrect decisions when purchasing benefits can potentially negate the positives of having a benefits plan at all. Here, we review the top five common mistakes employers make when purchasing benefits, with CloudAdvisors CEO Matt Lister.
While it may sounds obvious, many employers do not view the budget for employee benefits as a long-term investment. The cost of benefits is directly related to the cost of healthcare, meaning if the cost of prescription drugs increases, it will increase the cost of insurance. Similarly to other business expenses, the budget must anticipate these increases.
In addition, there are many variables in securing competitive coverage. For this reason, without a long-term budget, employers can find themselves in a short-term cost saving plan and therefore miss the opportunity to create true value for their employees.
2. Advisor Evaluation
Advisors (or Brokers) do not work directly for insurance companies. Rather, they are independently hired by the employer. Typically, Advisors earn a recurring commission on benefits sold, or re-signed to the employer annually. They are traditionally contracted to offer provider plans and quotes for purchasing benefits. For that reason, employers should value their Advisor on their ability to provide ongoing Advisory services such as access to information and advice.
Evaluation questions to ask before hiring an advisor. Do they:
- Offer additional services to enhance your decision making?
- Include recommendations and considerations to stay within budget with the most value?
- Inform you of current marketplace data for comparison?
- Provide ongoing support your organization and employees for issues or claims?
After the budget is in place and you’ve hired an Advisor, your intent should be to evaluate competitive policies within your budget. Provider Benefit Plans may look similar in costs but may offer different value to different employees.
Conventionally, Advisors present employers with a spreadsheet of pricing to show the differences in premiums from various insurance carriers and benefit providers. By focusing on the final cost without comparing the benefit package in full, employers can easily make a poor purchase decision.
Your Advisor should provide a comparison report and plan audit to reveal any pricing or coverage gaps in your industry. CloudAdvisors released a Marketing Checklist to help Advisors find the best policy and lowest premium for your company.
4. Added Values
Insurance providers take pride in offering value-added services to clients. Unfortunately, these values are often left unknown when customers are making decisions around purchasing benefits. Advisors are encouraged to endorse the provider’s additional services such as fraud detection, disability management, and overall member experience.
An Advisor with marketplace access can research the best combination of value. This can be from one large insurer or from a combination of insurers, third party administrators, and specialty providers. In summary, this help employers get more for their money.
Commonly when life events occur employees are unaware of the benefits and coverage that is already in place. While employers pay for many many employee benefits, they’re often considerably under utilized. Employees are frequently unaware of benefits, especially education and proactive health and wellness programs (EAP, Navigation, Second Opinion, Virtual Health).
Creating a clear communication strategy for the employees and their families can help highlight the key benefits that employees have access to. It is just as important to acknowledge these changes as it is to make them, this will help prevent any assumptions or confusions moving forward.
Researching and purchasing Employee Benefits can be complex and employers rely on Advisors for advice. Advisors powered by CloudAdvisors use Canada-wide data to help employers form their budget and compare industry benefits