Kevin O’Toole, MBA
Consultant- Health & Employee Benefits
With rising costs, a tight labor market, and a complex healthcare landscape, selecting a partner to assist your organization with its employee benefits strategy is an important decision. From a purely financial perspective, employee benefits is typically one of the top expenses incurred by an employer, behind salary. A proactive partner can help your organization control costs, maximize each dollar spent, and ensure the benefits provided are valued by employees. In contrast, working with a reactive partner can lead to higher increases year over year, disruption to your employee base by constantly changing carriers or raising deductibles, and added stress of a tight time frame to make large financial decisions.
An essential first step before finding a broker or replacing your current broker is understanding the distinction between a Broker, and an Advisor. It is important to understand the delineation between the two in order to determine which would be the best fit for your organization
A good Benefits Broker will bring an array of options to the table for you and your organization. The downside is that this role can often be transactional, and the broker typically engages with an organization mostly around renewal time.
A Benefits Advisor will often provide the services of the broker (above). In addition, a good benefits advisor will also be able to facilitate a process whereby you can assess the best designs, costs, and solutions before going to market to select a service provider. They will give insight into best practices and offer advice and guidance. An experienced Advisor will be able to tie in more than just benefits to the overall strategic objectives including exit planning, organizational perpetuation, cultural wellness, employee engagement initiatives, and more.
Once you have determined what kind of partner is the best fit for your organization, it is important to evaluate a partner firm in the following categories: strategy, transparency, and service model.
Strategy
As mentioned at the onset of this article, the difference between a proactive and reactive brokerage partner can have a huge impact on their effectiveness. Any successful benefits strategy should start with a well-defined roadmap. Proactive brokers/advisors work closely with clients to outline a structured plan that aligns with company goals, employee needs, and cost-containment strategies. Rather than waiting until renewal time to make changes, a forward-thinking broker is always assessing benefits performance and looking for opportunities for improvement.
What could a roadmap look like?
- Initial Assessment: Understanding your company objectives, workforce demographics, and current healthcare challenges
- Data Analysis: Evaluating claims data, utilization trends, and cost drivers to find inefficiencies
- Market Research: Exploring alternative plan designs, funding arrangements, and cost-saving solutions
- Implementation Strategy: Ensuring the seamless execution of any changes
- Ongoing Monitoring: Regularly reviewing benefits performance to make adjustments
One of businesses’ biggest mistakes is waiting until their benefits renewal period to address major financial decisions. A proactive healthcare benefits broker can ensure that discussions about cost-saving strategies, alternative funding options, and plan design changes happen well in advance of renewal. Some of the benefits of planning ahead include:
- More Negotiating Power: Engaging in early discussions allows brokers to negotiate better rates and terms with insurance carriers
- Expanded Options: Businesses have time to explore strategies such as self-funding, level-funding, or reference-based pricing
- Employee Communication: Advanced planning enables employers to educate employees on benefits changes, reducing confusion and resistance
- Budget Stability: Employers can anticipate and allocate funds for benefits expenses without unexpected financial strain
By taking a proactive approach, you can help clients make informed, strategic decisions that align with their financial and operational goals.
Transparency
A foundational element of any successful brokerage relationship is transparency. In a world where healthcare costs are continually rising and the financing of healthcare is complex, one aspect that should be clear and easy to understand is how much you are paying your broker/advisor and for what services. Part of any well-designed roadmap strategy includes a transparent discussion on brokerage fees to ensure that fees are appropriate and aligned with the objectives of your organization, stakeholders, and employees. The rise of fiduciary lawsuits brought by employees against health plan sponsors emphasize the importance of a well-defined, strategic, and transparent brokerage relationship.
It is also important to understand the financial position of a potential brokerage partner. Are they an independent firm that reinvests profit into client services and solutions? Are they a PE-backed or publicly traded firm which has outside investors or shareholders to which it is accountable? While each of these structures can be successful, it is important to understand the makeup and motivations of potential broker partner.
Service Model
Exceptional customer service is a cornerstone of any successful brokerage relationship. Employers and employees alike rely on brokers and their service teams to guidance throughout the year, not just during open enrollment season. When evaluating a potential partner’s service model, some areas you want to consider are:
- Service team structure—It is important to understand the size, tenure, and expertise of the firm and the individual teams with which your organization will interact.
- Responsiveness: Quick responses to claims issues, compliance concerns, and employee inquiries foster trust and satisfaction.
- Employee Education: Proactive brokers offer workshops, webinars, and one-on-one consultations to help employees maximize their benefits.
- Regulatory Compliance Support: A potential partner should have dedicated compliance team members and resources to help you stay on top of legislative changes and ensure compliance with healthcare laws to prevent costly penalties.
If you are considering evaluating your employee benefits relationships this year, our team at TriBridge Partners is happy aid in that process. To learn more about how our team of Benefits experts can assist your organization, please call our office at 240-422-8799 or email Jessica Storck at Jessica.storck@tribridgepartners.com.
