- Do you just hand over the extra money for the exact same coverage, knowing you didn’t have enough claims to justify the increase?
- Do you shop around for a new broker?
- Do you start negotiating new terms?
- What can you do to protect yourself, your company, and your employees?
Employee benefits are often the second-largest expense on your P&L, second only to employee wages. As the leader of your company, you must ensure that you get the best value for your dollars as well as for your employees’ financial investment.
Way too often we trust that our broker gives us true, accurate, and timely information that we can use to make sound financial decisions. However, most people don’t know how much real negotiation room exists at renewal time.
My mission at TrendBreakers to educate HR Managers, Benefits Coordinators, CFO’s and Business Owners on what can be done to protect you from losing premiums, losing coverage and throwing that hard hard money down a black hole.
Additionally I will show you how to save as much money as possible on benefits without sacrificing the necessary coverage that your employees need, want, and expect.
In order to get you the most value for your investment there are several things that you must master to go into negotiations fully prepared.
I coined the fitting acronym of L.O.W.E.R. as it will help you quickly LOWER your expenses on insurance benefits.
Learn- At a minimum, you must educate yourself on the basics of how the broker or advisor operates.
Without knowing what to realistically expect from the Broker there is no way to hold them accountable for the dollars.
There are several groups like Health Rosetta, that provide webinars to break down how vendors, brokers, carriers and advisors work. They also talk to companies about what processes are working, as well as where they need help.
There are also several books that can give you a competitive edge when going into negotiations with the broker. Look into the CEOs’ Guide to Restoring the American Dream by Dave Chase as well as The Price We Paid by Marty Makary; that should be required reading for all HR Coordinations, Managers and Health Insurance Brokers.
Obtain Alignment- Most brokers and advisors are paid commission based on how much you, as the employer, are paying.
This can represent thousands of dollars annually to their bank account that you will have to find in your budget, or worse, have to increase the rates the employees pay from their checks. Most brokers are paid commission not only on the medical insurance, but they also get commissions for the Short Term Disability, Long Term Disability, AD&D packages that get bundled in as well. All of this while providing the same exact health insurance coverage they provided in previous years.
Same work. More money.
Some of the questions to ask would be:
- Is your broker aligned with you on compensation, benefits, and value?
- Are they accountable and transparent in revealing how they are paid?
- Are they proactive in providing value to you as well as looking out for the best program for your company?
Withdraw from pre-negotiated plans.
Rather than handing over all of the money upfront, you can do a pay-as-you-go plan rather than allowing the insurance company to keep all of your premium payments even if you have zero claims.
Eliminate add ons.
Much like purchasing a car with all the extra dealership add ons that can be done elsewhere for less cost, insurance bundles are the same way. There are areas that can be cut and purchased elsewhere for much greater savings. With the proper skills, you can enjoy significant savings!
Reassemble the plan
Look at what services you and your employees require. Medical, Pharmacy, Insurance Coverages, Admin, employees expect.
Is it possible to carve these out from different companies rather than bundle them together?
Unlike bundling home and auto insurance or cable, phone, and internet programs, when you bundle medical, vision, dental and prescription services often you will pay exponentially higher rates because the broker, insurance carriers, and everyone involved are buffering commissions on each component.
There are programs like GoodRX that, without revealing any personal information, will tell consumers where to go to get the best rates on medicine without needing the traditional prescription coverage. GoodRX removes the middlemen in the process and gives you, the consumer, direct savings.
Due diligence, research, education and open communication with a broker and/or advisor can save you hundreds of thousands and potentially millions of dollars annually while still providing your employees all of the necessary and required benefits that they’ve come to expect.
Think of all of the ways that you could reinvest those dollars back into your company and employees…Team Building? Continuing Education? Updated Office Space? More Paid Days Off? More Employees to build your company?
Money is leverage, and if you did NOT have to spend funds on a ridiculous price hike for your insurance benefits, just imagine how could you make that money work for you in growing your business.