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Despite the well-known costs and challenges of providing employee benefits — typically the second largest line-item expense for large firms — few companies have any ongoing strategy for monitoring those plans.
"This is a complex process with lots of little boxes to check. If companies are not well disciplined with a strategy, it sneaks up on them pretty quickly," said Sozon Vatikiotis, CEO of Alltrust Insurance. “Then there is a mad rush at the end. It gets sloppy and no one ends up happy."
Vatikiotis said that companies should have a benefits renewal strategy in place and running consistently through the year. But this is not common in the industry.
Alltrust has developed an ongoing monitoring method that starts with circling back 30 days after the new plan becomes effective to create regular review periods, monitor industry trends, review new products that may fit a company's needs, ensure ongoing compliance, and so on. There is a continual search to identify any benefit changes a company needs to make based on financial goals.
"We are proactive. This cannot be done well in a reactive mindset," Vatikiotis said. "We force pro-activeness with a timeline and roles and responsibilities so that nothing slips through the cracks."
When the renewal date gets near, Alltrust already has a wealth of information and data prepared. There are few surprises.
This is important, Vatikiotis said, because insurance carriers may be increasing premiums or changing coverage and companies need to be ready to understand their choices and the implications.
According to a survey by the National Business Group, U.S. employers are expecting health care costs to increase 6.5% this year. Those costs go to the bottom line. And a study by Arthur J. Gallagher & Co. found that only about one-third of organizations have quantified the cost of healthcare reform.
Because of Alltrust's ongoing monitoring process of a benefits package, the company stays up to speed on these issues and more and can conduct an in-depth financial analysis to understand the bottom-line impact of any benefit changes. Transparency is important in this process so company leaders fully grasp their choices and costs.
With this deep-dive data in hand, Alltrust searches the various carriers to create the most competitive plan for the benefits that the company wants to provide.
There are several timing benchmarks leading up to the renewal to ensure that not only is the process on time, but that company executives are fully educated on each aspect. Alltrust then goes through enrollment, technology and screening of employees.
"The way we do it, it's really like running a logistics firm," Vatikiotis said.
This is not common in the industry yet, but it eventually will have to be because of the ongoing changes and costs involved with employee benefits.
"For good firms, this ongoing, proactive approach will become the norm," Vatikiotis said.
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