For Employers, Poor Advice Costs More Than Health Insurance

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

For Employers, Poor Advice Costs More Than Health Insurance

Mention “employee benefits” to most C-level managers and there is a collective wince as most recall images of the last budget meeting where two extra hours were spent trying to mastermind a way to stop the runaway train that has become health insurance costs.

When executed properly, a benefit strategy exists to complement other operational objectives such as improving your competitive advantage, reducing staff turnover, improving employee morale, increasing productivity, redefining/improving company culture, and the list goes on.  The reasons behind why companies offer benefits is virtually the same throughout the industrialized world and the intent is always that the return on investment (ROI) be greater than the hard costs of the benefits themselves.

However, the concept of cost-effective benefit strategy and ROI has become lost in recent years in the face of rapidly rising healthcare costs and the introduction of the Affordable Care Act (ACA).  Unfortunately a lot of employers have become so fixated on managing the hard costs at ALL costs, they sometimes inflict larger wounds more challenging to heal.

The culprit?  Poor advice.

A good example of this was employers who slashed their workforce to part-time in anticipation of astronomical health insurance costs as a result of the ACA’s employer mandate requirement.  Most of the employees they were worried about were never a threat in the first place.  A large majority are not in the market for buying health insurance – period.  Most business owners will agree that the more stable the workforce, the better the business operates.  The better the business operates, so begins the domino effect of all actions and reactions that positively impact the bottom line.

When you look at your company, who are your most solid employees?  In most companies they tend to be the mature, responsible set often with mouths of their own to feed.  This is the group most likely to value what you are able to do for them in the benefits arena and done right, they will make your business better in return.  However, when solving any problem, both sides of the equation need to be presented, otherwise you may be creating bigger operational problems in the process.

If You Can’t Measure It You Can’t Manage It

Quality advice and information plays a huge role in allowing your company the opportunity to “execute properly” a sound savings strategy, but more importantly in reducing business costs beyond just health insurance such as training, turnover, and lost productivity just to name a few.  If you can’t quantify these costs in relation to what you are spending on benefits then you are missing the bigger picture.  Big business is no stranger to this approach.  They routinely hire expert consultants to help measure and manage the costs associated with what is often one of their biggest budget items.

What Does Good Advice Look Like?

I wish all employers held similar standards for their health insurance advisers.  Never before have there been as many creative innovations in managing and reducing employer health insurance costs particularly for large employers and yet a large number of them are missing out because they haven’t evolved their benefit strategy.  It’s not entirely their fault.

Good advice plays a significant role in navigating the complex areas of the business.  Good advice can be the difference between owing income tax and not.  For some, good advice can be the difference between going to jail or not.  In extreme cases, it may be the difference between life and death.

A good benefit strategy is multi-dimensional and should reach far beyond just saving on health insurance costs.  If this is news to you then there’s a good chance your strategy is in need of an upgrade.  If you’re strategy is limited to shopping for the least expensive plan with the most competitive carrier each year then you are snorkeling in waters that demand scuba diving equipment.  In a sea of complex and creative tactics designed to save you money you are only as good as the advice you are receiving and it is possible to outgrow an adviser.

Below is a chart that outlines the evolution of strategy.  The further you move along the continuum the more efficient you become in areas such as benefits administration, employee communication, compliance and ultimately risk management. A reactive, proactive or predictive approach to problem solving can be applied to almost any profession whether it be physicians, accountants, attorneys, or insurance professionals.

However, in every scenario the key to success lies in finding that one special brand of advice that helps us become more efficient in structuring our lives and/or our business in a manner that bests positions us for both short and long term success.

What is Your Position?