Act purposefully - and with flexibility - when initiating your benefits plan re-design.
For most organizations – small, medium and large -- employee benefits are a top five expense, often costing even more than the office lease. In 2014, the average annual premiums for employer-sponsored health insurance plans were $6,025 for single coverage and $16,834 for family coverage.
The Patient Protection and Affordable Care Act (PPACA) is about to make cost management even more challenging. In light of the recent Supreme Court decision, King v. Burwell, looming PPACA deadlines for IRS reporting, the Employer Mandate and the Cadillac Tax will debut as planned.
“Preparing Cadillac Tax projections for businesses is very telling,” said Mike Barone, National President, Employee Benefits, HUB International. “Relative to historic trends, most employers will need to achieve a lower compounded growth rate in their renewal to avoid triggering a Cadillac Tax.”
Creating a strategic 3- to 5-year employee benefits plan is more important now than ever.
Looking 3 to 5 years out
In order to help businesses meet the upcoming PPACA mandates in a proactive and timely manner, HUB created an employee benefits strategic planning process that streamlines and prioritizes plan design changes over the next 3 to 5 years.
Employee benefits strategies“You don’t want to change every element of your employee benefits plan every year,” said Barone. “Instead, like a business plan, the HUB process allows organizations to strategize from 50,000 feet and most importantly, forces company executives to have conversations around benefits in an organized way.”
Just like each organization’s key performance indicators (KPIs), goals and objectives are different, so too are their benefits plan. For this reason, the HUB process stresses flexibility, with gradual change over the first few years. This applies to every category of employee benefits. Here is a sampling of considerations from the HUB 3- to 5-year process:
Value added/voluntary products – Companies moving from rich health care plans to high-deductible plans will want to consider offering voluntary benefits, including hospital indemnity plans, accident policies and more, to maintain a high level of offerings for employees. How will you “make it up” to your employees so they don’t feel their benefits are being reduced?
Funding – With PPACA expanding the definition of small businesses to 99 lives, more businesses will consider self-insurance options than ever before. What is the ideal mechanism for your business to fund employee benefits?
Contributions – Health care reform will force employers to reconsider their employee contribution strategies. Will you continue with the traditional, flat dollar methodology, move to a new salary-based, tiered approach, or a defined contribution in which employees are given one lump sum each year to allocate as they choose?
Communications – The traditional open enrollment packet isn’t enough to introduce a new way of thinking about benefits to your employees. Instead, proactive organizations will create a communications campaign around the new benefits, including the use of e-guides and online tools, like private exchange-decision support. How will you drive engagement, adoption, and understanding as well as proof of offer and declination for your new employee benefits?
“When your business creates a new product, you create a marketing campaign around it that may include digital marketing, brochures and training a sales force with talking points. How much marketing and communications money do you allocate for your employee benefits plan to show employees how to leverage and use it?” said Barone. “You’re spending an average of $10,000 per employee per year on benefits, but you likely spend a fraction of the money effectively communicating it.”
Compliance – The PPACA will usher in many new reporting requirements. Using the 3 to 5 -year strategy to map out your specific compliance requirements (depending on your state, size, industry, etc.) will be critical. How are you going to prove and certify your benefits compliance?
Technology– Technology will play a critical role in your long-term benefits administration goals to ensure the solutions you choose establish, prove, track and maintain compliance today, while supporting your business strategies of tomorrow. How are you going to present new health care plans, add voluntary benefits, implement a wellness program, change how you communicate with employees about their benefits, meet new compliance and reporting regulations, change how your employee benefits are funded and how you contribute to them financially?
Making it all a reality
Regardless of what the organization’s ultimate benefits re-design looks like, being purposeful and flexible will ease the employer and employee transition.
“Once we develop a strategy, each business can decide which lane of the freeway they want to drive in – moving quickly in the fast lane or taking the slow lane and implementing changes over time,” said Barone. “Customization of the 3 to 5 year framework, specific to each organization, is key.”
Critical to this flexibility is an annual evaluation of what worked, what didn’t and what industry or inter-office changes have occurred that will cause the employee benefits strategy to evolve. Conducting an annual “state of the union” will determine the necessary tweaks going forward and will ultimately keep the benefits rollout on track with the predetermined goals from day one.
For more information on the HUB employee benefits strategic planning process, contact your HUB employee benefits consultant.
 2014 Employer Health Benefits Survey, Kaiser Family Foundation.