In times like this it pays to be flexible and your benefit plan should be no different. We are fielding a lot of calls from clients worried about the future and unsure of what to do with their expenses.
If you're looking to squeeze out a little razor thin sliver of silver lining in a time like this, it's that you have the opportunity to review costs and make critical decisions.
We often get calls in our office because the price of someones benefit plan went up. We NEVER get a call when someone's price is going down. However, this is a tremendous opportunity for you to add value to your plan and cut your costs. Rarely do you see price decreases but when we do they're never because the insurer was just feeling charitable. Actually, its typically because your staff are using around 50% or less of what you are being billed and they have been for an extended period of time.
It often makes sense at this point to review your usage report. The objective of this review is to find underused areas of your benefit plan and see if you can better utilize those dollars. In a lot of cases, you could take something like paramedical coverage (massage, physio, chiro etc.), strip it off the plan and replace it with a health care spending account.
A health care spending account is simply a side a account that the company funds directly for the employee to use for all or specific health care related expenses. The account is given a maximum and when employees hit that maximum they are done for that plan year and the account resets the next plan year.
The major difference here is that if the employees under utilize this account, you get that money back at the end of the year instead of it going to the insurance company profit. Your employees will love the flexibility of the account and you can be happy knowing your spending your benefit dollars as wisely as possible.
The process couldn't be easier, the accounts are all managed by a third party and the only information required from you is a list of the employees you're looking to cover and the bank account you'll be making withdrawals from.
So if you would like a free report to see if there are any benefits your staff are under utilizing, feel free to reach out to us directly.
Communication is key or at least that's what my wife tells me...
So why aren't your professional advisors talking with one another? Everyone has professional advisors in their lives. Whether it be your financial advisor, your lawyer, accountant, group benefits consultant or even a parent or spouse. These advisors are people that you trust to look after areas that you know you aren't going to spend the time to fully learn and be able to do yourself. Because you trust them, in a lot of cases you implement their advise with mostly blind faith, and that's okay, but I'm here to suggest you ask for a little more out of them.
Before you implement any changes your advisor recommends, you should take this step. Have an active list of your professional advisors and send them an email. Tell them about the change you are looking to make and ask them Is this change going to have an impact on any of their existing plans that they already have in place or are planning to have in place for you. Most times, everything will be just fine or they may need to ask that advisor some additional questions. Sometimes, it could have a severe impact and that may need a change of course. Here's an example.
A business owner sets up a group benefit plan for themselves and their staff, on that plan is a disability insurance policy. That business owner has ensured that policy will cover him for most of his earnings in the event that he should be unable to show up to work. He is in his fifties and in the home run stage where he is looking to secure his earnings for retirement, so a disability could be potentially catastrophic. A few years down the road his accountant suggests that the owner switches from a salaried income to drawing dividends. While the accountant had their reasoning for suggesting the change it had a very large and potentially catastrophic impact. Because the business owner switched over to taking 100% dividend income he is now offside with his disability income policy as that policy will not cover dividend income. So for the last few years the business owner has been paying a hefty sum for a disability policy that had virtually no chance of covering his income and neither the accountant or benefits advisor was aware. Luckily,
we were able to catch this before a claim but this could have potentially cost him hundreds of thousands of dollars in lost income. Never mind the thousands he's already lost on a policy that wouldn't pay out.
Luckily, this issue has a very simple and free solution! Introduce your professionals to one another and let them know that it's important to you that they leave the lines of communication open. This way, before a major change is made the two parties have coordinated with one another and ensured it won't have a massive impact on your financial future.
If you would like a review to know if your policies are still going to do what you're wanting them to do. Click "contact us" for your free online review.
I think the number one question every employee benefits consultant gets asked before they meet with a potential client is the same, “what can you do about the price we’re paying”? We definitely understand, the bottom line is important and we need to ensure that we’re being cognizant of that. However, I find a much better question would be “Am I overpaying for benefits.”
When you buy a new vehicle you more or less know what the price of the vehicle is, you just don’t want to find out your friend is paying $10,000 less for that vehicle than you are.
Start with the 4 key areas of plan management and this will provide you with some better answers
So it’s important to ensure that you are comparing apples to apples but you also need to make sure you’re positioning yourself well within your industry. This is why a very important practice is to look at benchmarking. Benchmarking will let you know how your plan sits in comparison to other employers in a similar industry with approximately the same amount of employees. The plan you’re going to have in place for a Vac Truck business with 12 staff is going to look much different than a plan for a 80 person law firm. A lot of people understand the risk of offering a plan that is subpar compared to their competitors but it is often overlooked that you may be offering a plan that is way over what your competition is offering. Often your staff may not even care about the excess benefits, especially if it wasn’t designed with their needs in mind. So you may have a Cadillac plan and just be throwing money out the window as it doesn’t add to the overall satisfaction with the plan.
We’ll typically do a deeper dive into employee satisfaction, but I don’t mind sharing with you the number one cause of dissatisfaction, COMMUNICATION. I have sat down with companies and they have thrown their benefit booklet on the table and said you need to fix this our plan sucks. I open the booklet and flip through it only to find that they have platinum coverage, literally everything is covered at 100%. So what was missing? Communicating that value to the staff. The employees would hit their 3 month mark, they would have to go and ask if they got benefits, someone would tell them that they should be seeing something soon. Then, their booklet comes in, they don’t understand anything inside of it because it’s all insurance company jargon and next thing you know, poof, the plan sucks. Sound familiar? A clear policy of how the benefits are communicated to the staff is free and it goes miles when adding to the overall plan satisfaction.
The plan administrator is the person tasked in your office with looking after the group benefit plan and ensuring staff understand everything. Often times, I sit down with a plan administrator that might be the second in line to get the lucky job and they just look at me like a deer in the headlights. The truth is, this job can be very simple if the person knows where to access information easily and who to contact when they can’t find it. Sadly, this is often not the case. That being said, when that plan administrator makes errors, it can cost unnecessary money. So again, ensuring that your plan administrator knows this information can save you a ton in potential liability. We’ve made it easy for them as well, you plan administrator can join our monthly training webinars for FREE.
These are the benefits for the executives that are typically charged with overseeing the direction of the company and ensuring the ship stays on course and everyone gets to stay employed. Again, it’s an area where we often see they aren’t covered correctly. For example, executives are often relying on the disability income coverage through their group benefit plan. Often, they are the one who actually take the time to complete the medical insurability form that gets them the full amount of coverage they’re qualified for, because they want to be proactive. That being said, the first question I ask executives is, “do you plan to answer a work call or email while you are away from work with a disability”. If they answer yes to this question, there is a really good chance that will put them offside with their group benefits definition of disability. It’s important to make sure the people in those key roles are covered correctly so that they can get back to work as quickly as possible with minimal collateral damage to the company.
When we have our first meeting we dive more in depth than this but these are some of the key areas where we find employers may be overpaying for benefits. If you would like to go a little deeper to find out if you are potentially overpaying for benefits, click here book a time to chat with us.