Managing Benefits is a complex process. It involves understanding products, services, plans, analytics, reporting, communications to name just a few. This blog will help identify the top 10 critical decision points in selecting a benefits consultant as selecting the wrong broker may be your most costly mistake.
What is consulting?
Benefits consulting, in its purest form, seeks to create and maintain your benefits package. The goal being to keep benefit levels as high as you wish, cost as low as possible, while at the same time making sure that all plans are compliant with minimal work for your internal human resource department. Benefits are a part of the employee compensation package and should be communicated to your staff so they can appreciate what is being offered.
Obviously selecting your benefits consultant should not be based on relationship or friendship, but quality. Quality is the tough one. How do you gauge quality in someone who advises you? You need trust. Someone who looks out for your interest and not theirs. They need to bring solutions to the table and then manage the solutions, not just drop them off at your doorstep. They need to be do-ers, not just find reasons for why you can’t get what you want. You often hear “we are the biggest” and “we have boots on the ground at all of your locations”. Guess what, those locations usually don’t communicate effectively with one another. Besides, how does being big help you? You need to visibly see passion from your consultant, they should exude it. Passion creates people who want to solve problems, your problems. They are the ones who will go to the ends of the earth to get what you need.
Questions to ask prospective brokers
- Question and discuss. Your benefits consultant needs to know more about your benefits than you do so they can recommend the best products for your company. Make sure your benefits consultant does their due diligence by considering and discussing the following with you before any recommendations are made:
- Are you paying more per member in cost for your benefits than your competition?
- What has your own company’s 5-year inflationary increases been and what is the cause?
- Are your employees and families happy with their benefits?
- How do the member contributions compare to other companies?
- Do your benefits attract and retain employees?
- Are you using the right vehicles to fund your medical and dental plans?
- Are the medical and dental rates underwritten correctly?
- Are high risk reinsurance provisions removed from the reinsurance agreement?
- Are negative provisions removed from the administration agreement?
- What are the merits or disadvantages of the following benefits designs?
- One plan vs multiple plans
- High vs low deductibles attributes
- Appropriate out-of-pocket costs
- Appropriate Rx co-pays
- Health savings accounts options
- Are incentives designed to foster engagement and participation?
- How do we make sure the best industry healthcare management tools and solutions are selected?
- How can we implement a high level of healthcare literacy, engagement and outreach education platforms to employees and their families?
Do your due diligence
- Make sure your benefits consultant’s philosophy aligns with yours and they are placing your interests above their own.
- Talk, talk, talk. Talk to other employers who have worked with your consultant and can provide a reference. Talk with insurance carriers they have worked with, also. Ask about not only the consultant, but also what is the reputation of the agency and how is the service the entire team provides?
- Find out how much are you are being charged for the consulting service. Keep in mind that if you have under 50 employees on the medical plan, the fee is already set. However, if you have over 50 on the medical plan, you get to choose how much your plan carrier will pay in commission. You can also demand no commissions paid and then you are able to negotiate an annual consulting fee directly with your consultant. Find out if you consultant is profiting by any of the following:
- Do they build commission fees into the products they sell you? If that’s the case, are they selling you a product for the right reason?
- Do they charge you an annual consulting fee and if so, will they allow you to negotiate that fee, and will it cover all products and services?
- Do they accept bonuses and overrides from the carriers and vendors? These are dollars paid to agencies from carriers/vendors as a reward for placing business with them. Since this can go against the philosophy of finding someone who places your interests above their own, you might want to demand that no bonuses or overrides are accepted on behalf of your business.
The bottom line is you can decide how much you pay your consulting group in annual compensation, commission and overrides!
Other things to consider
- Will the consultant that you have been working with during the sales process be the lead consultant involved on your group? Often, agencies will send their best troops to the front lines during the bidding wars, but you will need to find out which team will be with you for the long run.
- What is the knowledge level and experience of the consultant’s team? Because you will have a day-to-day team that will support your group, you will want to ensure that they are also well educated in compliance laws, self-insurance and knowledgeable about all your benefit plans.
- Make sure your consultant is a leader not a follower. You want someone who will be uncovering new innovative programs, rather than simply bidding out the programs you already have.
- Are daily useable management reports offered? You want reporting that will drive decisions and not merely look complicated while giving useless information. The reports should tell you:
- How do costs compare to the original expectations?
- Why are costs running higher than projected?
- What options exist to rectify?
- Do they have a compliance department that can work with you to make sure all your programs are compliant; including HIPAA, Cobra, ERISA, state and public entity laws and more?
- Do they take the annual budget you are willing to spend on medical and dental plans, life, disability, health savings accounts, etc., analyze them all independently, and then bring it all together in an affordable benefits package?
Remember, the purpose and function of the benefits consultant is to provide ideas and solutions to keep costs lower than industry norms, and to advise on benefits that will attract and retain employees and increase their workplace satisfaction. Consulting agencies offer lots of bells and whistles that are not always necessary. You should always select your consultant on what solutions they offer to solve the issues your company faces. Your job is to remain open to new ideas, not becoming complacent and allowing the consulting firm to limit your options.
As a leader in your organization, the more you continue to question the benefits process, the better opportunity you will have to achieve better outcomes. Your company’s interests should always be in the forefront when advice is solicited. In addition to your vendors, you should always demand that your own management team make business decisions rather than personal decisions. This will help negate the number of decisions made from a relationship basis and help keep an eye on corporate interests.