If they aren’t there already, advisers have an opportunity this month to get their employer clients back on a successful open enrollment track. The odds are that most of them will need some help: February’s composite Open Enrollment Readiness Benchmark index stood at 35 out of a possible 100 for employers with Q1 benefit start dates.
This poor showing was somewhat tempered by slightly better marks for plan selection, with employers awarding themselves scores of 49 for health plans, 45 for voluntary plans and 49 for pharmacy plan selections. For advisers this is significant, because March was when employers should have been choosing plans for their forthcoming benefits enrollment if they hope to keep pace with the 12-month open enrollment preparation process most benefit experts recommend.
For advisers and clients following this process, “We’re at a point in time where the adviser and the client have pretty much agreed on the plan design for the 2018 open enrollment period,” says Jack Kwicien, a managing partner at Daymark Advisors, a Baltimore consultancy that works with advisers. “The next step is for the adviser to determine how the employer can offer a full range of benefit options to its employees.”
Plan selection, Kwicien says, should be based on a thorough analysis of an employee population’s demographics and how employees have been utilizing their current roster of benefits. The results should serve as the basis for an RFP sent to multiple carriers to ensure employers not only receive the best price, but also the best possible coverage and quality of service for their workforces.
“The adviser needs to quarterback this process,” Kwicien says, “not only throughout the year, but very specifically right now.”
Workforce demographics are a key consideration, Kwicien maintains, because different types of plans are better suited to different types of employees. A highly educated, well-compensated workforce in an industry like healthcare or technology, for instance, may appreciate the tax advantages of a health savings account and how it can offset the costs incurred with a high-deductible health plan.
In contrast, less well-educated employees may have difficulty understanding how an HSA works and view an HDHP simply as a way for an employer to cut costs at their expense.
When selecting a plan provider, advisers should also consider any shortfalls in coverage that may have arisen over the past decade, when employers began increasing deductibles and pulling back on company-paid benefits. To compensate, Kwicien says advisers should recommend a menu of employee-paid coverage options that can help fill gaps.
Demographics are also important to consider when deciding which voluntary and retirement benefits to offer. For example, says Kwicien, a large contingent of an employer’s workforce may be younger than 35, and these employees may have a keen interest in benefits such as tuition loan repayment assistance. Employees who are 35 to 50, on the other hand, will more likely gravitate toward benefits designed to help them save for retirement and pay their kids’ college tuition. Retirement is also likely to be a chief concern for more senior employees older than 50. But in this case, they may be seeking more immediate assistance with retirement planning and devising a strategy to cover their future medical costs.
Some employers, Kwicien notes, may have all three age groups in their workforce, and it’s important for advisers to assemble a slate of employee-paid benefits that address the full range of these concerns. Typically, these coverage options will include a short-range disability plan and some form of life insurance, which — if they are employee-paid — need to be transportable.
“It’s not like it was 20 or 30 years ago,” Kwicien observes, “when an employee would commonly work for only one or two employers throughout his career. Today, the average 20-something employee has already worked for two or three different employers and may work for as many as eight or 10 during his working lifetime.”
As a result, employees need to be able to migrate employee-paid benefits to their next employers if/ when they change jobs. This is in the interest of their employers as well, Kwicien adds, since they are, of course, recruiting prospects from other employers and want them to be mobile.