Seven steps for medicating your health insurance cost headache
By Wendell Willis, for SBT
Since 1998, southeastern Wisconsin has witnessed high double-digit increases for health insurance premiums each year. You’ve heard it all before as to why the system is broke.
Hospitals continue to build, and physicians are charging too much. The pharmaceutical companies and insurance companies make too much profit. Some experts say the government needs to step in. Enough already!
With no true relief in sight, while politicians argue and healthcare players continually shift the blame, your business is struggling with how to provide a benefits package to employees that is competitive, comprehensive and within your budget.
Many employers are asking, "What can I do?"
Unfortunately, there is no one solution, but there are no absolutes either. In today’s environment, an employer must be creative and willing to make tough decisions. That may also require more employee involvement. Recognizing the current landscape, the following are seven steps your company can implement to help control benefits costs.
Step 1: Establish goals – When establishing the goals of your plan, consider the following questions:
Where do you want your benefits program to be in one, three, and five years?
What is your goal in providing employee benefits?
What benefits are important to you and your organization?
What do you perceive as the value in providing employee benefits?
What benefits are important to your employees, and of those benefits, which carry the highest priority?
Step 2: Assess your current plan – The key is evaluating your plan when you are not in the renewal process. Have you looked into the total cost of risk for providing employee benefits – not just premium dollars – morale issues, turnover, mis-hires, disability or illness?
What percentage of your company’s revenue does your benefits package comprise?
How is your current plan being utilized, is it over- or under-utilized?
How do employees view the benefits, as a right or as a privilege?
Do employees know how much you’re spending on benefits?
Do your current benefits provide a value to the employees?
Your current plan should be evaluated, and employees should be surveyed to find out what they think about the plan and determine if they understand how the plan works.
Another strategy you may consider is creating an employee committee where their opinions can be voiced. Although management makes the final decisions, employees can express what they value. You may find out you’re paying for bells and whistles that are not necessary.
Step 3: Get informed – You are in your business because you know about your field, not health insurance. You probably had no intention of spending as much time and energy trying to understand the nuances of benefits.
In today’s environment, you have to keep up with marketplace changes that occur. Hopefully your broker, the Internet, or other business owners are assisting you in this process.
Obtain as much information as possible about what’s happening in the industry from a variety of sources. This will allow you to be creative in providing solutions.
Once you have enough ideas regarding varying benefit options, you can make informed decisions and begin to problem solve.
Step 4: Implement a plan and consider benefit plan adjustments – Once you’ve gathered all the information, assessed your current plan and set clear goals, it’s time to take the appropriate steps immediately. The longer you wait, the more your bottom line will be affected.
Identify insurance partners who are aligned with your goals and priorities. Once you’ve selected the right broker, together you will identify the carriers in the marketplace that can meet your needs. That ensures all three partners are focused on the same goals and are working from the same page.
Step 5: Education, education, and education – Now that you’ve taken the time to become informed, it’s time to get your employees up to speed. Companies spend a fortune on benefit costs, and it’s time to invest in employee education.
Whether it is spending time or money, this is crucial in making the plan successful. Educate employees on the state of the industry, the cost of providing benefits and how the decision was made regarding the benefits being offered.
Then educate your employees on the benefits themselves and how they can be best utilized.
Step 6: Strengthen your relationships – Work on developing a solid relationship with your insurance partners, which includes your agency/broker, as well as the insurance company and its representatives.
Your agent should have a solid relationship with the insurance carriers and the representatives working on your account. The more carriers know about your business, the more they are willing to work with you.
Step 7: Review and reevaluate – You want to avoid taking a reactionary approach, which results in temporary solutions. You’ve put a benefits plan in place, and no matter what, it’s costing you money. Take the time every three to four months to review the program you’ve implemented. Reevaluate your plan and make the appropriate changes when necessary.
Through this process, you can initiate a proactive approach that provides long-term strategic solutions that integrate risk management and business planning.
By evaluating your benefits program only at renewal, you’re relying on a reactionary approach that will yield short-term solutions, which end up costing your company more in the long-term.
Wendell Willis is a benefits specialist for HNI Risk Services, a full-service insurance agency in New Berlin, providing insurance, risk management and loss control services to businesses (www.hni.com).
Sept. 19, 2003 Small Business Times, Milwaukee