Depending on your current plan design, finding cost savings and enhancing the total rewards offering to plan members doesn’t always require a wholesale change or a different insurance carrier.
Sometimes of course, it makes sense to complete a comprehensive review to ensure informed decisions are made based on credible information. This might include industry benchmarking, financial analysis, and industry marketing. Effective communication helps to ensure that plan members understand their coverage and know how to use the benefit and services available to them.
Choosing the right benefits plan can be a daunting task. With tight margins, diverse demographics, and a competitive labour market, it’s becoming increasingly difficult to attract, retain, and reward employees. As the group benefits industry evolves, it’s important for stakeholders to be open to fresh perspectives on their benefit offerings and practices.
For many organizations, engaging with an outside team of experts that will invest the time to understand the company’s corporate culture and philosophy can be pivotal to building a benefits plan that provides comprehensive coverage at a cost that’s sustainable.
Employee benefits benchmarking plays a crucial role in measuring the competitiveness of an organization’s group benefits plan within its industry and geographic location. A comprehensive plan review starts with a detailed industry comparison. The output from the comparison provides a credible overview of the competitiveness of the current plan design and identifies areas that are outside industry standards and highlight opportunities for risk mitigation and cost control.
For example, if a group benefits plan allows doctors to indicate no substitution on prescriptions for brand-name drugs even when a lower cost generic equivalent is available, implementing mandatory generic substitution will provide cost control. Under this plan design, coverage is provided for the cost of the lowest-priced generic alternative of the brand-name drug. The plan member can still choose to have the brand-name drug dispensed but is responsible for the difference in cost between the brand-name and generic equivalent. Reinvesting these cost savings in areas like paramedical services and vision care can create better plan member satisfaction without an increase in premiums.
A detailed, strategic analysis of an organization’s group benefits drug plan spend and claims utilization is another key to creating a cost-effective and robust benefits plan. For example, an in-depth review of one of our client’s group benefits plan revealed that its benefits spend was 21% above the industry norm. However, a review of claiming patterns, utilization trends, and cost distributions showed that utilization fell below the industry standard. A retrospective analysis identified that over the past four years the organization had paid a significant amount in excess premiums. Further independent reviews of the most recent plan renewal and the administrative services only (ASO) funding analysis flagged the need to evaluate the funding and negotiate a more cost-effective plan.
Competitive Industry Marketing
To further support the results of a group benefits plan review, competitive industry marketing is recommended. A customized request to quote with a focus on cost savings is advised to allow organizations to evaluate current market conditions. Whether or or not there’s a switch in carriers, industry marketing can help lead plan sponsors to the following potential outcomes:
- Substantial cost savings for both them and their plan members
- Rate and fee guarantees from the incumbent carriers
- Additional value-added services for plan members
Communication is vital to engaging employees on the organization’s success to deliver a comprehensive group benefits plan. . Creating customized plan member communication based on philosophy, culture, and objectives helps to improve the perception of the total rewards value. Educating plan members on how to be smart shoppers can positively impact plan performance.
Taking the time to fully understand your organization’s benefits spend and claims utilization can generate meaningful results. Initiating a comprehensive plan review including benchmarking, financial analysis, industry marketing, and plan member surveys can measure plan competitiveness and identify ways to enhance coverages and provide the best value.