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A broker should understand your needs well enough to find creative solutions to specific issues
Choosing the right broker to handle employee benefits plans has always been important. HR professionals must ensure that companies are managing plan costs while meeting employees’ needs. In the era of health care reform and other compliance priorities, a strong broker relationship takes on even greater importance.
As the key elements of U.S. health care reform take hold over the next several years, employers can expect a good broker to help guide them through the changes and plan ahead to deal with new responsibilities. A broker that is content to offer only transactional support to employers when they sign up for specific employee benefits plans, during open enrollment and when the plan comes up for renewal might not be the right choice.
Meeting Client Needs
Beyond that, the definition of a good broker will depend on the organization's needs and what the broker can do to meet them. Brokers that take a consultative approach that focuses on finding solutions to client challenges rather than on selling products can provide employers with the knowledge and tools to manage their benefits plans, costs, communication strategies and compliance obligations more effectively.
Brokers should be able to help employers with other key decisions, such as whether self-funding health coverage is a viable option and whether certain high-deductible health plans might be appropriate for the organization and its workforce. When the health care reform mandates requiring coverage for adult children up to age 26 took effect, a good broker should have been available to help deal with those requirements, including gathering and disseminating necessary information and managing the enrollment process, said Rebecca Mazin, an HR consultant and author of The Employee Benefits Answer Book (Pfeiffer, 2010) and The HR Answer Book (AMACOM, 2011).
“Brokers are providing more information and more service about benefits as opposed to simply giving a quote once a year,” Mazin said. She notes that brokers should be able to provide scenarios showing how current employee health benefits would fare under the key elements of health care reform, including minimum coverage and contribution levels and the tax on so-called Cadillac plans. From there, the broker can identify what changes a company will need to make over the next few years to comply.
In addition, a consultative approach requires the broker to understand an organization's needs well enough to find creative solutions to issues.
Webimax, a search engine optimization firm based in Mount Laurel, N.J., benefited significantly by switching to a new broker. The company’s health insurance premiums were escalating rapidly despite a relatively young and healthy workforce. The driver of those increases was the presence of one 68-year-old employee in the health insurance plan. Moreover, as the company expanded its operations nationally, management realized that it needed a new approach to its health benefits.
Webimax opted to change brokers to address these issues. The new broker suggested that Webimax find a separate health insurance plan to cover the 68-year-old employee and identified a new health insurance plan for the remaining employees that could accommodate the company’s national workforce more cost-effectively.
“These solutions reduced our premiums by more than 50 percent,” said Kenneth C. Wisnefski, the company’s founder and CEO. “This experience showed how important it is to find a broker who will take the time to understand all of your needs and will be creative enough to find the right plan.”
Wisnefski will work with the broker to ensure that employee benefits keep pace with the company’s expansion plans as it gears up to add employees over the next six to 12 months. “It is important to find a broker who asks the right questions,” he said.
Looking for value
A broker’s willingness and ability to provide this type of value-added service should be a key consideration for employers. That means looking for a broker that can provide advice to support client decision-making as issues arise throughout the year and not just at renewal or open enrollment. For example, a multi-unit restaurant company that is having trouble getting the attention of a low-paid employee population might look for a broker that can provide strong benefits communication support, Mazin said.
Broker size is not necessarily indicative of the level of service and support a company can expect. Although small brokers can provide personalized service, these brokers might not have the specific expertise a company requires. However, working with a large broker is not necessarily a panacea. Small companies might find it difficult to get the attention they need from a large brokerage firm. Moreover, even when a large broker has the expertise a company needs, there is no guarantee that it will make that expertise available.
Mazin recalls working with a large broker on behalf of a company that wanted to make major changes to its benefits plan for its 2,500 employees in 18 U.S. locations. However, when the company was unable to get the attention of the broker, the relationship took a turn for the worse. The final straw came when the broker failed to provide benefit plan projections until October for plans with a Jan. 1 renewal date. “We wanted them in August, and when we received them in October and they were different than expected, we were not in a good position to ‘go to market’ for the plan,” Mazin said.
Companies that want to avoid having too many eggs in one basket can split up benefits programs among several brokers to get the best broker for a specific piece of business. Some brokers specialize in long-term-care insurance and other voluntary benefits programs, while others focus on health, dental, vision or disability coverage. In addition, organizations might need to develop relationships with brokers in specific locations.
Joanne Sammer is a New Jersey-based business and financial writer.
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