Entrepreneurship · HR

What is the main consideration for Large Employers HR Benefits when choosing Health Insurance?

Diane Bernard Chief Digital Marketing & Growth Officer For Hire, CEO, Virtual CMO for Technology, Healthcare, Pharmaceutical, Consumer

December 20th, 2017

Looking to understand the world of Employer insurance, HR Benefits and relationships with Consultants.

Zachary Weinberger Global Total Rewards Advisor and Consultant at Remuneration Resources

December 21st, 2017

Hi Diane,


I agree with David's comment that "it depends". I also agree with Curt that cost is a big driver of what it depends on. Other things that an employee benefits program depends on is the organizational philosophy and culture. For example, does the employer have a lot of emphasis on stability for employees, in which case they may offer one set of benefits. Or is the emphasis on high risk, in which case there will likely be a different set of benefits. Another example of something it depends on is competitive practice in the industry or geography where the employer operates.


With regard to consultants, I think you can divide us into two major groups though it is sometimes hard to tell the difference. The first is consultants that sell employee benefits. They will help you design a benefits program usually using products they sell. This may very well meet your needs; particularly in a smaller organization with limited complexity.


The second are consultants who don't sell anything other than consulting. They tend to be more strategic in their approach and can help you design a a program or plans that support your business culture and objectives. They may be able to refer you to vendors who will provide the benefits you want. This is more likely the way to go with a large or complex organization.


All that said, choosing the right kind of consultant also depends. It depends mostly on your needs, comfort and confidence in your advisor. Happy to help you think this through. Good luck.


Zachary



David Block President at Insurance Specialties, Inc.

December 20th, 2017

That is truly a loaded question as it depends on the goal of the organization, what you mean by large employer, and what resources the "C" Suite is willing to provide their HR team as it relates to the health insurance. You see, health insurance is merely a mechanism for claims payment. What an organization must consider is that besides salaries (or manufacturing costs), health insurance is one of the largest major expenses an organization undertakes.


In order to truly determine a consultants role, the organization need not only listen to their client list (does a large impressive list determine quality) but the consultants philosophy and approach to your employees overall health. After all, it is the health of the group and how the employees will be helped by the overall capacity and efficacy of the consultants choice of provider(s). Remember, if you have sick employees that are non-compliant medically and/or pharmacuticaly, is that helpful? If you have individuals that are borderline diabetic or hypertensive but do not know about it, what can be done?


If your pharmacy spend is increasing faster than the cost of the health plan itself, do you need a new PBM or can you do something with your current administrator to lower costs? What alternatives is the consulting firm/consultant recommending for consideration?


Finally, will the consultant insist that with the changes being made that the executive suite participate in the buy-in? Because historically speaking, without both the CFO and CEO onboard with whatever plan or changes are made, the consultant and the HR team will most likely fail.


There is much more to this than listed here but suffice to say, most plans do not go about plan design and broker selection properly. Once again, it is more than just price.

Curt Sahakian Attorney

Last updated on December 21st, 2017

Basically, it's cost. And it keeps climbing each year faster than costs, sales or profits.

Dane Madsen Organizational and Operational Strategy Consultant

December 21st, 2017

Retention. Employees expect a company plan. That plan is a cost of doing business and makes up only 7.6% of operating costs. While that is significant, (at an average cost of $6800 average for single employees and $18,345 for family coverage) I reject that the issue is cost rising faster than sales or profits; if your healthcare is a significant factor in your operational structure - meaning that an increase of 10% makes the company unprofitable - then there is a bigger issue than healthcare costs. Further, these costs are calculated in the total employee costs. If they were not provided, then employers would need to increase compensation to provide for it. However, not having a plan, or nearly worse, having a bad plan, will negatively impact employee retention. The cost of 1) recruiting new employees, 2) training, and 3) cycle before they become profitable is always an issue. Employee churn cost is far higher than any insurance costs. If the difference between a good idea and a bad idea (or a happy, long term, productive employee) is $6800 per year, then it was a bad idea to start.

Curt Sahakian Attorney

Last updated on December 21st, 2017

They are just drawing me back in. LOL


Yes, Yes, Yes there are other considerations than cost but the weighting will always go to cost.


Prospective employees just don't seem to weight the details of their prospective health plan very heavily in choosing a new employer. And almost none of them are competent to compare health plans even if they were inclined to do so.


All this other talk is really BS talking points in marketing presentations for HR decision influencers. Decision makers (the ones who control the budget) are interested in cost of their one line item that continues to increase faster than all the others.


Oh one other thing, almost all large employers are self insured, despite health plan branding to the contrary. The employer is the risk bearer. The "insurance company" is more of an administrator.


PS: The question was about "Large Employers" so my answer assumes a Large Employer who is compelled to provide a reasonably full bodied health plan, at least as an option.