According to the latest BenefitsPRO Health Survey, an overwhelming majority of insurance brokers (96%) expect the transition to self-funded group health insurance to either hold steady or grow. But that doesn't do enough to rein in costs: employers need more insight into how health care dollars are being spent and the often-inflated and opaque fees charged by health care providers. Health care price transparency is the key to understanding and controlling the claims costs that drive overall health care costs.
How can employers get a better handle on claims costs? Reference-based pricing (RBP) can be a powerful tool. Traditional programs rely on insurance companies' provider contracts that define a discount based off billed charges. But base charges can and do vary widely between providers and hospitals. The lack of a consistent reference point makes it impossible to understand what constitutes a reasonable cost for services or even the value of the contracted discount. The purpose of RBP is to define a more consistent reference point, typically based on Medicare rates (a natural benchmark because they are the most commonly billed). Yet despite the cost-saving potential of RBP, the strategy is under-utilized: a recent survey found that only 2% of employers currently use it. A number of vendors can provide this kind of price transparency, which allows brokers to add value by bringing in the best option.
There are many things brokers can do to help employees make more cost-effective benefits usage decisions, which ultimately helps employers contain costs. Most health care plans offer services that can help control some of the primary drivers of cost, including:
- prescription drugs
- imaging services
- laboratory work
- chronic care
Unfortunately, employees – and many employers – are often unaware of these programs. And even when they know about them, uptake is often low. But education and awareness of the advantages (such as the convenience of refilling prescriptions by mail) can have a measurable impact on usage – and cost reduction.
Brokers can also help lower costs for ex-employees: When a worker leaves a company, they are eligible for continued coverage under COBRA, and even though the employee pays 100% of premiums, there are still costs for the employer. For example, if a former worker with COBRA coverage has high health care costs, it can lead to higher claims costs for the employer. But brokers can also provide education and messaging to direct these individuals to other options that may have lower premium costs than COBRA, such as an exchange plan or temporary coverage for a worker who intends to find another job. Cost-conscious employers may not know enough to look for educational solutions like these, but they are often eager to implement them when brought to their attention.
How can brokers take on those kinds of educational responsibilities more cost-effectively? By offering a more advanced ben admin platform that can uncover employee needs and respond with personalized communications. Here are five capabilities to look for:
- Audience targeting: Employers should be able to talk directly to employees based on demographics like age, location, existing lines of coverage, and more.
- Communication on employees' terms: HR needs to be able to deliver texts, emails, and push notifications based on each employee's personal preference.
- Automation of communication tasks: Communications driven by events such as onboarding, marriage, age, and so on need to be automatically triggered, personalized, and delivered.
- Real-time insights: Platforms need to deliver timely feedback for HR and brokers to assess the effectiveness of their engagement efforts.
- Easy importation of branded content: The ability to copy and paste content directly into platform messages, emails, and surveys makes it easier to create campaigns without reinventing the wheel.
Remote work has underscored the need for holistic benefits that are simpler to access. HR systems are moving away from a focus on internal processes and being reimagined in terms of employee needs. A good example of such integration would be pairing a high-deductible health plan with supplemental critical care insurance and communicating the combined benefit of lower overall premiums with financial protection from large medical bills. There's an opportunity for brokers who can help deliver the benefits, support, and technology demanded by this new model, including:
- A modernized user experience for employees and administrators
- A full array of benefits that care for and nourish the whole employee – and experienced support around that mostly voluntary offering
- Efficient, employee-specific communication that drives understanding, appreciation, engagement – and ROI
Absenteeism is a problem for American businesses – and the bottom line costs are higher than most realize. The Centers for Disease Control and Prevention (CDC) has stated that productivity losses related to personal and family health problems cost US employers $225.8 billion annually, or $1,685 per employee – and the indirect costs of absenteeism may be several times higher2. Another widely quoted study by Circadian estimates the cost for unscheduled absences to be $2660 per shift employee per year3.
Bringing in a third-party solution to oversee absence management can help clients understand and reduce absenteeism while also alleviating administrative burdens. Any company large enough to be covered under FMLA (generally, 50+ employees) could benefit by outsourcing these leaves, short-term disability insurance claims, and other health-related issues to an external leave management resource.
Would your clients welcome more time to focus on core business needs? You can help them assess their current absence management efforts using the Guardian Absence Management ScorecardSM. It will show them how their absence and leave management system measures up to other companies and even provide customized policy and process recommendations that you can help them implement.
Employee turnover is a deceptively costly issue for employers. Gallup estimates that US businesses incur one trillion dollars in losses each year (yes - one thousand billion dollars) due to voluntary employee turnover. For a company with 50 people at an average $50k salary, turnover and replacement costs range between $300,000 and $1.3 million. And it's an issue that's only getting worse, as 52% of workers plan to job hunt in 2021. The main reason given by those seeking a different position? Better compensation and benefits.
So let's go back to the question we started with: do clients see you as a vendor who costs them money or a partner who helps them make money? The more you can make clients aware of the real costs of employee turnover, absenteeism, and low benefits utilization, the more opportunity you'll have to demonstrate all the tools you have to help boost their bottom line.