Trends in employee benefits and HR outsourcing bode well for brokers and advisers who are poised to guide their clients through increasingly complicated healthcare and compliance challenges, according to new industry research.
One-third of employers outsourced all of their benefits administration in 2014, which was up 20% from the previous year, notes the Guardian Life Insurance Company of America’s third annual Workplace Benefits Study. In addition, nearly two-thirds of this outsourcing involves multiple vendors compared with 48% in 2013. More than 1,000 benefits decision-makers and 1,706 benefit plan participants were polled in two online surveys conducted in 2014.
Ray Marra, SVP for group products at Guardian, says producers are often well-positioned to evaluate their clients’ internal resources and recommend outsourcing solutions that will have the greatest impact. “Employers rely on their benefits brokers not only to advise them on plan offerings and design,” he observes, “but increasingly on the servicing and administration of those benefits programs.”
The findings suggest this level of expertise, coupled with the right service providers, help companies “transform their benefits package and offer a broader range of employee benefits and related services,” according to Marra.
Among the areas the study says are ripe for outsourcing growth: managing employee absences to comply with FMLA, ADA and ADAA requirements, as well as expanding wellness initiatives and providing more assistance for disability claimants who return to work. One chief indicator of this growing need is that only half the survey respondents are confident in their company’s ability to track and manage leaves of absence, especially among smaller firms.
Open enrollment was cited as another area where benefits decision-makers can use a helping hand. Nearly two-thirds of the respondents outsource aspects of this annual process, with about half of them each citing as examples preparing materials and giving presentations.
However, the study points to a potential strategic blind spot. Just one-third of the companies studied farm out the development of their overall enrollment strategy. “Having a decentralized approach lessens the effectiveness around enrollment activities,” according to a statement announcing the findings. “It will best suit employers to outsource enrollment strategies to integrate services which support employee decision-making.”
Since employers expect their compliance and administration efforts to increase, many of them are turning to brokers, third-party administrators and carriers for assistance.
One key area mentioned was help navigating changes related to the Affordable Care Act, which Guardian suggested could raise interest in self-insurance and health insurance exchanges. Lack of understanding was cited as a driver of this trend, with more than half the survey respondents admitting to little or no knowledge of the ACA essential health benefits provisions and about 60% saying they need compliance help.
“Nearly 8 in 10 trust that their broker is highly knowledgeable about healthcare reform provisions,” Guardian noted, while about 25% of the respondents report that their broker presents at benefits meetings.
