The cost of employer sponsored medical benefits globally is forecasted to rise 7.2% in 2021. Are you wondering what will happen to the cost of benefits in your organization? What should you expect to be seeing in your upcoming benefits renewal?
Today, there is no standard employee benefits renewal process. Renewals come in different formats, depending on the carrier and advisor the business is working with. Furthermore, every insurer has a different way of setting and calculating their renewal premium rates.
Plan renewal information that comes from insurance carriers is typically full of industry jargon. With so much technical language, formulas and calculations, it can be difficult to comprehend for someone who doesn’t specialize in employee benefits. This is where your benefits advisor needs to excel. Your advisor relies on her expertise to compile all this information in a format that is easy to understand.
Here are some key questions for clients to consider:
Is your renewal easy to understand?
It’s important for clients to understand exactly what factors influence their plan rates, regardless of whether premiums remain unchanged, increase or decrease. Typically, a few weeks before the plan renewal date, clients should receive a renewal package from their advisor. But here is what happens behind the scenes beforehand.
First, the insurance company sends their renewal proposal to the advisor. Then, it is up to the advisor to review, analyze and negotiate the renewal with the insurer before finally presenting the report to their client. The renewal report should have clear and easy to understand explanations and typically will also include visual aids.
It’s imperative for employers to understand the factors that are impacting their plan’s rates. For example, what is the difference between “pooled benefits” and “experience rated benefits”? What part of the plan is “true insurance” vs some of the routine and more predictable expenses? How does that impact premiums? What are some of the possible cost containment strategies that can work for your employees? How to ensure that future renewals stay within budget?
Are you receiving an objective and independent renewal analysis?
Your advisor’s unbiased analysis will determine whether the renewal presented by your insurer is fair, complete and sustainable for the future. Sometimes information might be missing from the insurer’s renewal, and your advisor might request additional reports and/or have to investigate or audit specific claims. Depending on client’s circumstances, it might be beneficial to benchmark, audit and/or market the plan.
How much are you paying your benefits advisor?
Group benefits advisors are compensated for the services they provide through commission paid by insurance companies. This commission is built in to the premiums that clients pay. Currently, there is no legislation that requires employee benefits advisors to disclose their compensation to clients. However, we believe that it’s important for clients to know and understand the compensation their advisor receives. Renewal is an excellent time to review your advisor’s fees as well as the services you are receiving.
Going beyond the renewal
With 2020 being a year of change and uncertainty, now more than ever, it’s important for clients to ensure that they choose an advisor whose work doesn’t stop at renewals. For example, throughout the year, it’s important to monitor your plan’s performance to ensure that claims are on track and avoid unexpected rate increases. As well, it’s helpful for clients to stay informed on industry changes that are affecting benefit plans. In addition to helping you manage your benefits program; your advisor may assist in other areas such as: wellness strategy including mental health and financial health resources for employees, compensation & total rewards, and employee education.
Do you have questions about your employee benefits this year? Get in touch with us for a chat and a free sample benefits renewal report.