Employee benefits costs continue to rise, putting more burden on business bottom lines. Yet even as costs go up, employers can’t plan ahead for these costs—at least not using the traditional benefits planning process. It’s no wonder that employers are frustrated with the entire benefits renewal process.
In this blog, we’ll discuss a new approach to help brokers improve benefits renewals, one that puts employers in control of their budget.
The traditional benefits renewal
The traditional approach is familiar to brokers and employers alike. The broker presents several plan options to the employer, including the total cost for each one. The employer, with the broker’s guidance, chooses the plan(s) that best fit their needs. Once the plan(s) are chosen, the employer must figure out how to pay for it (the premium share conversation).
So what’s wrong with this approach? Budget isn’t discussed until the end! Employers are unable to plan ahead for their annual benefits renewal, and are often unpleasantly surprised by the amount they must pay after going through the tedious renewal process. Unfortunately, they often end up passing some or all extra costs off to their employees, which isn’t ideal either. However, there is a way to improve benefits renewals for employers, using a different approach.
In this approach, the broker starts with the employer’s budget and works from there, only presenting plan options that fit the initial budget framework. It completely changes the conversation, integrating premium share into the fold from the beginning, and creating a more consultative approach for the broker.
Here’s an example of how it would work:
- Let’s say your client has a 15% renewal coming. Ask how much they are comfortable paying—what fits in their budget. Maybe that number is 6%. That is the budget you begin with.
- From there, you only present plan options that fit within a 6% increase. For instance, if you can’t get that renewal plan to fit a 6% increase (using contribution strategies or other budgeting tactics), then you just don’t present that plan. Brokers who use this strategy often get creative with their plan design options, manipulating premium share, deductibles, adding HSAs or HRAs, etc.
- Now when your client choose a plan, they know exactly how much they will pay, helping them make an informed decision (and greatly streamlining the renewal process for both of you).
Want more tips on how to improve benefits renewals using a budget-based approach? Be sure and read our latest e-book, Budget-Based Benefits: A New Approach to Renewals.