Choosing a new health insurance broker to manage your employee benefits can be an overwhelming task. Health insurance and employee benefits are a large part of your payroll expenses, so picking your broker is a high-stakes affair. The quality of your new insurance broker can make the difference between having an engaged team of high-quality talent that fuels your growth or watching your best team members leave for employers who provide benefits which meet their needs.
In this article, we’ll take a comprehensive look at the process of choosing a new health insurance broker, including:
• Why your health insurance broker matters
• How to start the process to find a new health insurance broker
• What to look for in a new employee benefits broker
• How to tell if an insurance broker can really deliver value to your business
Why Your Health Insurance Broker Matters
Why is it so important to be strategic when it comes time to choose a new health insurance broker? Employee benefits, particularly healthcare, are enormously powerful tools in your arsenal to attract, retain, and engage the talent that you need to grow and sustain your business. Companies of all sizes are struggling to build and maintain effective teams as the job market encourages employees to switch jobs more frequently and Millennials make up a greater share of the workforce. And the challenge is greater for small-to-medium sized businesses (SMBs), who are at a disadvantage compared to their larger counterparts with deeper pockets.
It used to be that a good salary and solid benefits were enough to win an employee’s loyalty for years or even decades. That started changing in 2008 as the job market became less stable and accelerated as the economy recovered and more Millennials entered the workforce. Not only has it become a job seeker market, but what employees are seeking from their jobs has changed. Work and salary are no longer ends in themselves but need to be means to something greater for employees to stick around. Many, particularly younger employees want personal development and meaningful work. As a result, people are staying in their jobs for 2-3 year stints before moving onto the next position that offers them an opportunity for growth and fulfillment. They want workplaces where they feel supported and cared for, otherwise they will leave for somewhere that provides that for them.
And employee benefits are a vital part of any strategy to meet those needs to attract and retain talent. An Aflac survey found that most employees would change jobs for a lower salary but better employment benefits. Unsurprisingly, the same survey found that 80% of respondents believed that their employee benefits plan influences their engagement in their jobs. Competitive benefits are a necessary component for an effective strategy to build and engage your team so that you can grow your company. But how can small businesses who lack their competitors’ resources offer benefits that will make potential hires choose to work for them or stop current employees from jumping ship?
The answer is to develop a careful employee benefits strategy which minimizes costs while maximizing the impact on employees. And to craft and implement an effective strategy, small businesses need a dedicated benefits broker who understands their unique needs and is willing to be deeply involved in their business. Growing companies cannot afford to pay employee benefits broker commissions to major brokers in exchange for out-of-the-box solutions. They need customized solutions and a small-business approach.
So how do you find the insurance broker who will meet your unique needs? Well, let us outline the basic steps to finding a new health insurance broker and what to look for when choosing your new employee benefits partner.
How to Start the Process to Find a New Health Insurance Broker
What an Insurance Broker Is and What They Do
It’s time for a quick definition, in case this is the first time you are shopping around for a new benefits broker. What exactly is the difference between a health insurance broker and an insurance agent? Well, an insurance agent is employed by a specific insurance provider and is the point of contact between the insurance carrier and the plan purchaser. They might be able to offer discounts and assemble a specific group health insurance plan for employers, but they won’t be able to shop around between different providers to deliver the best results.
An insurance broker, on the other hand, is the representative of the employer rather than of the insurance carrier. They are empowered by the employer to negotiate on their behalf with any and all insurance providers. This means that they can get the best rates in the market rather than from a given carrier and can put together a specialized employee benefits package from multiple providers that meets both the employer’s and the employees’ needs. They can also serve as a benefits consultant to help their clients develop effective benefits strategies.
How to Tell if It’s Time to Find a New Insurance Broker
The first step in your journey to find a new employee benefits broker or insurance broker is to decide whether or not you need a new broker. We’ve covered this topic extensively in a previous article but here are some clear warning signs that it’s probably time to start your employee benefits broker search:
• Renewing the same employee benefits package year over year with little consideration for a long-term benefits strategy
• Receiving less guidance or a lower standard of customer service from your insurance broker
• Going several years without reexamining the benefits broker relationship
• Finding it difficult to determine ROI that justifies investment in your current health insurance broker
How to Start the Search for an Insurance Broker
Once you’ve decided to find a new employee benefits broker, you should define your goals for your benefits plan. This will help you find a partner who will work with you to meet those goals. Do you want to reduce costs for your existing healthcare benefits so that you can expand other benefits your employees value like dental or vision insurance? Or do you want to completely restructure your entire employee benefits plan?
Based on these goals, set the criteria to define promising health insurance brokers based on these goals and your knowledge of the market. What does your ideal employee benefits broker look like? What do you not want in your next insurance broker? These criteria will also tell you what questions to ask a new benefits broker.
If you want to be extremely thorough, you can input the criteria you identify into a benefits broker Request For Proposal. Think of the benefits broker RFP as a formalized job description for your next benefits broker. Your benefits broker RFP should include a statement of your benefits and health insurance needs but leave room for brokers to “wow” you with additional services. You can then share your broker RFP with brokers who seem promising during your research so that their representatives can tailor their proposals to your unique needs.
What is more important than the procedure for starting your search is knowing what to look for in a broker. You want to set the right goals for your business, identify accurate needs, and put together criteria which will be genuinely useful in choosing a new health insurance broker.
What to Look for In a New Health Insurance Broker
Size and Customer Service Approach
Generally speaking, you want to work with a boutique broker that specializes in SMBs. This is relevant because large brokers will often prioritize their big accounts over your business. Smaller insurance brokers will treat you as a priority no matter how big your business is because every account is an important account for them. An SMB health insurance broker will be much more willing to offer more customized solutions which are tailored to your specific needs. And they won’t have had a chance to develop the bureaucracy which makes working with the largest benefits brokers so frustrating
In addition to overall size, another thing to look for is the benefits broker’s approach to customer service. You should work with an insurance broker who will provide you with a dedicated account manager, access to key players in their organization, and continued support after setting up the initial insurance plan.
Minimizing Expenses While Maximizing Value for Employees
Your new health insurance broker should do everything in their power to minimize your expenses while maximizing value for your employees. Far too many insurance brokers focus on the former and neglect the latter, but both are vital for a successful benefits strategy.
The best employee benefits brokers are proactive in their approach to insurance challenges. First, they identify demonstrated employee needs by conducting health-risk assessments (or HRAs) and other employee surveys to find out what benefits your employees really need. Then they create an employee insurance package which meets those needs while cutting costs from lower priority benefits. These steps are absolutely necessary to effectively minimize costs and maximize impact.
What should the resulting insurance package look like? An effective health insurance broker will put together a flexible and creative company benefits plan. Often, the package will include a tiered insurance structure which allows low-risk employees to choose cheaper plans and other employees to take on more expensive plans in exchange for more comprehensive coverage.
The foundation of the tiered approach for small businesses will be high-deductible health plans (HDHP) paired with health savings accounts. These plans allow employees to take on more responsibility for and control over their healthcare expenses. They provide a much higher standard of care than the ‘catastrophe insurance’ which is becoming popular but at a low cost to both employer and employee. And thanks to a brand new IRS rule, HDHPs can now offer more preventive care at low-deductibles to reduce your business’ healthcare expenses in the long-term.
Ask potential insurance brokers what they can do for your business. If they answer in terms of both what they will do to help your bottom line and what their plans will do to help your employees stay happy and healthy, odds are that they will be a great partner for your growing business. If not, they’re almost certainly not the right choice for you.
Creative Employee Benefits: Wellness Benefits and More
A great health insurance broker won’t stop at the conventional. They will be at the forefront of the benefits conversation, offering uncommon benefits which will help you stand out in the competitive employer marketplace. And one of the biggest areas which your new employee benefits broker should cover is wellness benefits. These benefits include smoking-cessation and weight-loss programs, gym memberships and nutritional programs, and other ‘lifestyle’ benefits.
Your insurance broker should not just want to put out fires after they’ve started, but rather should head off expenses at the pass. Wellness benefits can prevent healthcare expenses from lifestyle-related illnesses, which represent a full 70% of all healthcare costs. That’s one reason why wellness benefits have an average ROI of 3:1. Plus, they do a great job of making employees feel valued, taken care of, and engaged in their work at the same time as they are saving your money.
Employee Benefits Technology
Another important factor to consider when choosing an employee benefits broker is what employee benefits technology they offer. Generally, brokers will offer two different kinds of technology: benefits enrollment technology and telemedicine.
Benefits enrollment technology is software which can be used to facilitate the benefits experience for your HR team and your employees. The best employee benefits brokers will offer top-of-the-line enrollment software to streamline open enrollment and record the necessary compliance information. They may also offer a company benefits portal which allows employees to review and manage their benefits, request time off, and learn about their healthcare options.
On another note, telemedicine is transforming the way that employees access healthcare. Allowing employees to consult doctors digitally keeps them healthier, reduces costs for everyone involved, and reduces absenteeism. Other software solutions can offer pharmacy discounts, notify employees of nearby providers, and otherwise streamline the healthcare experience for your employees.
How to Tell that a Boutique Health Insurance Broker Can Deliver the Goods
Proven Track Record of Success
Actions and results speak much louder than words and results are the best way to measure the worthiness of a potential health insurance broker. A benefits broker worth their salt will be able to provide you with evidence of past success with clients who are like you. You should look at their website to see if they have published any client case studies. If they do, that’s a great sign in-and-of-itself because it shows that their clients are happy with their results. But you should also take the time to read through the case studies to see if the insurance broker provided their client with the kind of services that you are looking for at your business.
The greatest test of a broker, though, is whether they will let you talk to any current clients to get a truly unfiltered perspective on what working with them will look like. Giving access to their clients is a real sign of trustworthiness and a testament to the kind of relationship that a broker has with their clients. As an employer, you ask for a list of references from any potential hires. You created a job listing with your benefits broker RFP, why shouldn’t you ask for references as well?
Key Takeaways for Finding an Insurance Broker
The decision of how to choose a new health insurance broker is a pretty big deal. The right broker can help you cut costs, provide more value for your employees, and win the war for talent by attracting, retaining, and engaging the talent your business needs to succeed. This can sometimes seem like an overwhelming task. Hopefully, this article has given you a good idea to start. Just remember:
• Decide what you want to accomplish with your health insurance plan and employee benefits package so that you know what to look for in an insurance broker
• Put together a benefits broker RFP to help define what you’re looking for and solicit proposals
• Boutique brokers will make growing businesses a top-priority and provide more customized, hands-on service
• Questions to ask a new benefits broker include whether they provide wellness benefits, tiered benefits, and benefits technology
• Pick a broker who takes an approach that both minimizes expenses and maximizes impact for employees; focusing on just one isn’t enough
• Brokers with a proven track record of success and provide case studies or even direct access to clients are a much safer bet than unknowns
Are you interested in working with a more proactive broker who helps you maximize the human potential of your business? Learn more about Launchways today.