Make strategic benefit planning a priority

After a busy hiatus, it's time to relaunch my employee benefits blog. Stay tuned for weekly updates and feel free to give me feedback on this and other topics you might like to see.

Strategic Benefit Planning Is The Way to Go!

Whether you are a large group or small one, rates for benefit plans never cease to rise. This is exceptionally true in northern California where there is limited competition in the major metropolitan areas like Sacramento where Sutter, Mercy, UC Davis and Kaiser dominate the landscape.

Ten years ago, when the cost of health and welfare benefits represented about 2% of payroll, most C-suite executives left all the decisions up to the HR staff. They developed a comfortable relationship with a local broker and over the years managed the renewal process trying to minimize disruption. The rules have now changed.

Now, the cost of health and welfare benefits represents 15-25% of the cost of payroll and the existing process to evaluate renewals has not yet changed to meet the new realities. If the broker delivers a low increase, everyone breathes a sigh of relief and moves forward with open enrollment. On the other hand, if the broker delivers a 20% increase, the wheels fall off the wagon and everyone begins the annual firewalk to decide what gets changed: insurance carrier, broker, employer contribution, plan design, etc.

If you have a $350 composite single health insurance rate today, it will grow to over $800 in 5 years if you continue with 20% increases. No matter your scenario, health insurance will continue to cost more, so how will you bend the curve in your favor?

Perhaps the best approach is to consider a strategic benefits planning process that allows for scenario analysis so that no matter what happens, you have a plan. In future posts, I'll be discussing:

- Choice of medical carrier and carrier mix

- Managing employee well being

- Changing your employer contribution

- Making benefit planning a year round activity

- Developing an employee communications plan

- Making sure your broker is compensated fairly

and other great topics.

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