Navigating Health and Benefits Insurance Renewals: 5 Tips
This article was updated on June 18, 2018.
As a small business owner, you're not obliged to offer health and benefits insurance to your employees. But doing so could make it easier for you to attract and retain skilled personnel.
As Aaron Booth, sales executive at Automatic Data Processing Insurance Agency, Inc. (ADPIA), a licensed affiliate of ADP, states, "Health and benefits insurance is second only to payroll in terms of cost for most businesses. It is important to think it through carefully." Here are Booth's five tips to help you make sure you have the best coverage for your business:
1. Don't Rush the Decision
"It is essential to realize how important the decision is and to come to terms with how much you are going to be spending," says Booth. "Come to terms with that first." Many businesses leave their decisions to the last minute when renewing insurance. "That is unlikely to get you the right deal," cautions Booth.
2. Think About What Your Employees Need
Booth's second tip is to identify the demographics of your business: Is your company made up of mostly millennials, more experienced workers or a mix of the two? While it's not necessary to know the specific health issues of your individual employees, it's important to remember that some employees may need more coverage than others. Though the specific rules vary by state, it's possible to offer your team a choice of different health and benefits insurance plans. "Employees will appreciate this as their plan can be tailored to their needs," stresses Booth.
3. Remember That Things Have Changed
"If you are choosing [your plan] based on the criteria you set some years ago, before the Affordable Care Act came out, something needs to change," explains Booth. The sales executive cautions that premiums have increased dramatically and that there are now many more options available, including health savings accounts (HSAs), wellness plans and self-funded plans. "Consider your options carefully to find out what suits your business best," advises Booth.
4. Get Multiple Options
It's also important to understand that you're able to change plans or providers at your annual renewal. The key takeaway that Booth offers here is that "people tend to stay with the same [plan or provider] as they've always had, but that is not always best." The sales executive encourages you to "get options from multiple brokers every year. Make the brokers do the work for you."
5. Think Outside the Box
Finally, Booth urges you to "think outside the box. Consider options that promote a healthier lifestyle that your employees might appreciate." For example, there are plans that are tied to wearables such as Fitbit bracelets that can offer options like gym memberships through exercise tracking. And there are wellness programs in which an employee's premium is reduced if he or she has regular checkups. "That option can be cost-effective for everyone," concludes Booth.
However, the sales executive does offer some caveats. It's important to note that your options may be somewhat limited if you are a very small company or only a small percentage of your employees want to enroll in the program. In such cases, it may be difficult for you to offer multiple plans.