Employee benefits can be a complicated endeavor to navigate, especially during the renewal period–a time when employers are faced with a staggering amount of decisions to be made in a very brief decision-making window. The ability to negotiate or even explore alternative options feels rushed because most brokers initiate the renewal process a few weeks before the renewal is due, leaving little time to make adjustments and changes. This can be even more troublesome if you are facing a steep increase in costs.
The reality is that the renewal process should begin months before your renewal date. If left unaddressed for too long, you run the risk of renewing a plan that can leave you overpaying or underinsured.
Update, Quote, Review
When your company’s insurance policy is up for renewal, there are a few steps that need to be completed to ensure you have the best, most cost-effective plan in place for your business. First, your plan needs to be updated to reflect the current needs of your employee population. Perhaps your business has grown and you’ve hired more team members, or there’s been a change in key personnel. In either case, you should be looking at benefits that suit the business today because premiums are sure to increase, and last year’s plan may not provide enough value for the cost.
Next, you should evaluate your plans data to understand how your benefits budget was actually spent. Your broker may resist or defer the request for your data because they say there isn’t enough time or assure you the current policy is ideal. But advisors (like us), have tools to make this information accessible to business owners. This data will help you to understand the real value of your plan and if any major difference in cost—either in your favor or against—are present and worth addressing.
Understanding the Data
To design a benefits plan that meets the needs of your employees in a cost-effective way, you need to understand your data and ask the right questions. Several points to consider when designing your plan are:
- Enhance your employee benefits. Part of understanding the information your plan has is knowing which benefits are important to your employees and which benefits could be wasted.
- Explore opportunities for cost-savings and experience improvements. For example, prescriptions are a major source of overspending in benefits plans. Alternative sourcing could lower your costs and your employees’ out of pocket expenses for the same prescriptions.
- Look at your trajectory. If you’re seeing consistent annual increases in your premiums, how long can you absorb those costs before it threatens the business? Knowing that timeline can help you gauge how aggressive or conservative you can be in your planning.
- Know your state laws as well as federal laws. Meeting your unique business needs should also mean avoiding being out of compliance for minimums or transparency requirements (which are changing and evolving each year).
As you have probably started to realize, these suggestions come with several follow-up questions and potential considerations, which is why starting this process is so critical. Renewing your business benefits plan is a lengthy process that should begin in a timely manner. Having an advocate available from the beginning can help save time and even unlock doors to potential savings, illuminating blindspots and giving you access to new options.
We’re here when you’re ready.