When it comes to group insurance and employee benefits plans, we know our stuff. With over twenty years in the industry, Benefits by Design has learned some of the secrets that make up a successful benefits plan, and one of those secrets is cost – but not in the way you’d think.
You Get What You Pay For
Cost is at the forefront of employers’ minds, particularly in our market of small- to medium-sized businesses, so we’re no strangers to the cost conversation. When we talk about cost in benefits plans, it largely comes down to balancing cost with value, i.e. “you get what you pay for”.
Some insurance companies might come in cheaper at the forefront, but if they’re not priced for sustainability, the plan is all but guaranteed a large increase in rates at renewal. Then employers are left with a tough choice – accept the huge spike in rates, or walk away and find a new carrier and repeat the process again and again. Even worse, some employers might decide to scrap the plan altogether, leaving employees without coverage and more than likely a little… ahem, disappointed.
Focusing on sustainability and longevity of a benefits plan sets a business up for success, and although the rates might be higher, they’ll generally be more sustainable over time than those that are discounted. We believe in the importance of sustainability and longevity in employee benefits plans, and we think that Advisors and employers alike should consider the same. It all starts with a change in mindset.
Changing Your Mindset
When approaching the implementation of a new benefits plan, either from the perspective of an Advisor selling the plan, or the employer taking it on, it’s important to approach it with the right mindset. Think of the benefits plan not as a box you’re checking to please current or prospective employees, (“Yep, we’ve got a good company culture, vacation hours, and now a benefits plan… Check, check, check!”) or a quick sale, but instead as an investment in your business and its future.
We’ve got two main points to make here:
1. Offering a benefits plan is proven to make employees happier, more engaged, and drives increases in productivity that can translate into real value very quickly. All of that better positions employers and their employees to build a better, more efficient company. Investment in the future? Check.
2. To plan for the future, you’ve got to be in it for the long haul. Group benefits are an investment – one that can take time to bear fruit. That means that to get the most out of offering employee benefits, they need to be in effect for a while, and just because you can’t immediately see the results, doesn’t mean they’re not there! Changing plans and providers frequently is a hassle for all parties involved, and it opens up the potential for liability issues should things get lost in translation during the shuffle.
When it comes to offering benefits to employees and their families, a forward-thinking approach is best. Employers who plan for the future, whether that be employee growth, opening new locations, or large increases in the volume of business, are better positioned to maintain the stability of their plan over time.
Consider Your Benefits Philosophy
A benefits philosophy is the “why” behind a benefits plan, and it should be more developed than “to protect employees” (although that’s a good start). Perhaps an employer is looking to attract and retain top talent, or maybe in their last job interview a candidate asked about a benefits plan that didn’t exist, and declined a job offer over it. Sometimes it’s as simple as, “my employees are asking for one”.
But the next step for both Advisors and their clients is to dig deeper – what do you want to achieve with a benefits plan? Attract and retain talent? Keep people healthy? Remain competitive? All of the above? The answers to these kids of questions will help frame the benefit package you offer and the sort of plan you build together.
No matter what you decide to offer or why, sustainability is an important part of it. Because as we discuss next, it’s easier to add coverage than it is to take it away.
Roll Forward Not Backward
At this point, we feel we’ve sufficiently showcased why we believe sustainability in benefits is important. Even if you agree with our position, the cost factor remains, and you may feel that, although sustainability is nice and having to pick a new plan when discounted rates expire isn’t ideal, you just can’t afford it.
In this case, employers and Advisors might consider a slower start to benefits, rather than a deep dive. Our reasoning here is pretty simple.
When you give someone something, they’re thankful.
When you take something away, they’re less than thrilled.
Basically, it’s much easier to add new coverage to the plan later on as funds become more available or gaps in coverage are identified than it is to take things away when it becomes clear the plan is unsustainable. The same principle applies when it comes to choosing a plan that is sustainable upfront because when it comes time for renewal, employers may need to make some tough choices that could potentially leave employees unhappy and without coverage.
Summing up Sustainability
To maintain a benefits plan in the long-run that will keep employees happy, healthy, and financially secure, a focus on sustainability is a must. How can you rely on a plan knowing that, when renewal comes, a huge rate increase is practically guaranteed? How can you reliably plan for the future with the looming threat of a bad renewal on the rise?
Paying for the sustainability of a plan upfront and planning for its longevity as a solution to keep employees healthy is arguably the best way forward. Crafting a lean, more affordable plan to start can be a viable path to building a sustainable plan (remember: roll forward, not backward), and always keep your benefits philosophy at the forefront of any decision-making.
Renewals don’t have to be a scary, costly thing. If you plan for the future, you’re better prepared for any surprises that do come your way.