Keeping clients on their toes
Employee benefits are not the sexiest part of a business, but they can be the most troublesome. If not managed properly, benefits can lead to serious financial burdens for an employer. That’s why John Clay, president at Better Source Benefits Company of Somerset, Ky., wants entrepreneurs to take a keener interest in their benefits offerings.
Referring to what he terms “the blue ocean mindset,” Clay says he wants employers to apply the same drive and aspirations to their benefits programs as they do to their core business.
“Turning the entrepreneurial mindset inward and applying that lens to a facet of the business, like handling and administering benefits, unlocks a wealth of opportunities to get more out of your business,” Clay says in his book, Breaking through the status quo: how innovative companies are changing the benefits game to help their employees and boost their bottom line. “When the employee benefits program is strategically aligned with the business goals, you can still go as fast as you want, but get more for every dollar in the budget.”
To get his clients where he thinks they need to go, Clay isn’t shy about going further afield of benefits with the advice he offers them.
“I understand that having a benefit adviser talk about the dangers of corporate silos and the value of opening channels of communication across the organization can seem out of place at first,” Clay says. “But if you want an adviser to come into the business and just hock their line of benefit products, you can call up any insurance company. Those advisers are everywhere.”
Better Source Benefits client Lisa Compton, the executive vice president and cashier at Citizens National Bank of Somerset, Ky., found value in Clay’s approach. She credits him with helping to break down communication barriers within the bank’s executive team and the workforce as a whole pertaining to the cost and affordability of health benefits.
“[Clay] sends us information on benefits that we share among the employees,” she says. “As far as benefits within our plan, we keep that information promptly updated on our intranet, which all of our employees have access to. If there are any changes to be considered, we’re able to convey those in a more timely fashion than in the past.”
Another fan of Clay’s philosophy is fellow adviser Randy Hansen, the president of PSG Washington, an insurance and benefits firm based in Everett, Wash.. Hansen agrees that a client’s executive leadership cannot simply rely on HR and needs to have a better understanding of its benefits offerings.
“HR people tend to look at what makes everybody happy instead of ways to save money,” Hansen says. “I don’t think a typical HR person is as excited about transparency and the growth of earnings before interest, depreciation and amortization as someone who is running the business.”
Questions for clients
To ensure an employer is working with a broker who has its best interests in mind, Clay says there is a short list of questions that every business operator should consider before engaging an adviser:
· Will the broker work with you to develop a self-funded or level-funded health plan?
· Does the broker’s benefit plan preserve capital but also help to retain key employees?
· Does the broker make use of an automated benefits platform with direct feeds into the payroll system?
· Does the broker’s benefits plan take an aggressive approach to managing the cost of prescription drugs?
· Does the broker’s benefits plan take an aggressive approach towards value-based pricing for physicians and healthcare providers?
If the answer is ‘no’ to any of these questions, Clay argues that the employer has an opportunity to reduce costs and improve outcomes by rethinking its benefits plan. “You do not need to be an expert to recognize when you need one,” he says, “and this simple checklist will give you a starting point for engaging with one.”
To reinforce his point, Clay relates a story about a construction company client with roughly 30 employees. The firm used a packaged benefits plan provided by a construction association, a standard practice for the industry. The company’s executives thought they were making the smartest move because of the prestige they associated with the health plan provider—Blue Cross Blue Shield.
“The problem with this approach, beyond its inflexibility,” Clay says, “is that a rate increase year over year was also standard. And traditionally—and this has been an unshakable industry trend—that increase in premiums also comes with a reduction in benefits.”
Clay switched the construction company over to a self-insured, level-funded plan that provides a richer set of benefits for its employees, including a 24 by 7 benefits concierge with telehealth access to a physician; tools to find more affordable drug prescriptions; electronic enrollment and a mobile app custom-tailored to their plan. The voluntary benefits included in the plan were upgraded as well.
By going the self-insured route and dropping its fully-funded plan, the employer saved $40,000 a year, $32,000 of which it rolled into its employee 401(k) plan.
“That money could have been used to reward the company’s leadership or reinvested in any aspect of the business, such as marketing or product development,” Clay says. “Instead, they gave it back to the employees.”