One of the most challenging aspects of the COVID-19 crisis for the business community has been uncertainty—economic, sectoral, supply chain, ongoing growth. It took months into the pandemic for organizations to simply get a handle on their prospects for a full recovery, let alone renewed success. At the same time, some employers saw demand for their products or services skyrocket. Many began redeploying budgets to align with their new operational realities as revenue fluctuated. A sizeable cohort took the opportunity to recalibrate their group benefits offering as social distancing restrictions forced them to take their businesses fully virtual for the first time.
They also took renewed interest in building cost certainty into their group benefits plans—a long-time goal for organizations that require a competitive total compensation package, but often lament the apparent lack of expenditure control. For that reason, employers often have mixed emotions about their benefits programs.
On the one hand, they commit to developing robust benefit strategies out of a genuine desire to promote health and well-being across their workforce. A 2020 survey of healthcare attitudes in Canada by global pharmaceutical manufacturer Sanofi, found that employers offered benefits plans for a number of wellness-focused reasons, including to support employee health and productivity (60 percent), to bolster their peace of mind (56 percent) and to help improve their workers’ financial situation (55%).
At the same time, they’ll go to great lengths to build a robust benefits plan as a tool to position their organization as an employer of choice. According to the Sanofi survey, 55 percent of employers said that employee attraction and retention was the goal when offering health and wellness plans. In many cases, a well-constructed group benefits package will deliver a recruitment edge that enables organizations to outbid industry rivals for top performers. That’s of particular importance in highly-competitive sectors such as technology and professional services.
It’s an investment that typically pays off. The same study found that 86 percent of employees would take a company’s health benefit plan into consideration when deciding whether to work for an organization, while 71 percent say a well-designed plan is an incentive for them to remain with an employer.
The rising cost conundrum
The flip side is that just as they value these programs, they feel trapped by what can seem like an uncontrollable rise in premiums—increasingly expensive prescription drug costs are a particular sore point. It’s a double-edged sword: employee benefits as an indispensable recruitment and retention tool that can escalate wildly in price if those costs aren’t controlled. That impact is particularly hard-felt by small to medium-sized businesses that need premium certainty.
As one business owner told us: “I had two employees who maxed out their benefits package in the same calendar year. My premiums doubled and I was forced to cancel our program altogether.”
That needn’t be the case. Business leaders and HR professionals can build complete cost certainty into their group benefits plans. In fact, those programs can be engineered to never increase in cost—a point that often eludes HR professionals and business leaders, largely because it’s never clearly explained.
Understand your employee culture
Knowing your employees’ health and wellness goals, needs and preferences can go a long way to building an affordable, increase-proof group benefits strategy.
Start by surveying your staff—your group benefits broker can help manage the process, but even a simple and free online tool such as Survey Monkey can do the trick—and ask them what they’d like to see in a group benefits plan. Depending on the age demographics of your workforce, massage therapy and subsidized gym memberships might be a priority over virtual tutoring services for school-aged children or group retirement saving plans (or vice versa). A first step to containing costs is knowing what your employees value, then designing a plan that you can manage and that they’ll actually use. Bonus: It’s also an effective way to boost engagement, reduce staff turnover and maximize your program’s return on investment.
Develop a customized benefits strategy
You can’t control group benefits expenditures when you don’t have a big-picture view of the options available on the market. Employers are usually unaware of cost-containment opportunities because they’re often sold generic benefits packages ill-suited to their needs.
Your benefits broker should be working to understand your company culture and the solutions you need to achieve your talent-management and operational goals. That requires a willingness on their part to listen, analyze and customize a benefits strategy that makes sense for your business. A tailored approach is both relevant and available to organizations of all sizes. Remember: no business is too small to deserve bespoke service.
Conduct regular reviews
Work with your group benefits broker to conduct semi-annual or annual reviews of your plan’s usage and performance metrics, including potential areas for program optimization. Those discussions are an opportunity to review your organization’s evolving employee recruitment and engagement needs, industry trends, legislative changes and even shifts in your business that might necessitate changes to your group benefits program.
And if your carrier increases premiums based on usage, know that you have options. Much like a mortgage broker would help you find the best interest rate to finance a home purchase, your group benefits broker will be able to periodically deliver a market survey with quotes from multiple carriers to secure the best rates for your plan. Shopping your business around to a wide range of providers beyond Canada’s major carriers—potentially tapping specialty or niche providers—isn’t merely a best practice to minimize premium increases, but to also secure the right group benefits package for your workforce.
Use managed solutions
It’s important to consider a package of managed solutions that help contain costs. There are many specialty carriers in the marketplace that offer a range of options including health spending accounts. In contrast to traditional plans, HSAs provide employees a set amount of after-tax dollars to spend on their healthcare or lifestyle needs. Whether the annual allotment is $500, $1,500 or $15,000 per employee, the amount is fully capped. They’re also highly flexible—especially if yours is a multi-generational workforce—and can cover everything from personal care to mental health needs.
A 2020 SunLife survey found that small to medium-sized employers are increasingly embracing solutions such as defined dollar spending accounts, with fully 83 percent of organizations surveyed (with between 25 and 499 employees) saying they were moving towards managed solutions and away from traditional plans. Taxable wellness or lifestyle spending accounts offer a greater range of eligible coverage items, from gym memberships and daycare expenses to transportation costs.
Managed prescription drug plans are also becoming more popular, including mandatory generic drug substitutions and pharmacy dispensing fee limits. Managed formulary plans ensure that drug plans integrate well with alternative claims payers such as provincial drug plans or drug manufacturer’s programs.
Go virtual
One of the biggest shifts during the coronavirus pandemic has been the increased adoption of virtual healthcare and well-being tools, everything from telehealth consultations to employee wellness libraries that provide employees with healthy living information that can be accessed at their convenience. The 2020 Sanofi study found that 53 percent of those surveyed used ‘at least one digital device or mobile app to help achieve personal health or fitness goals in the past year, up from 32% in 2015,’ with those aged 18 to 34 leading the digital charge. And that was before the COVID-19 crisis prompted us to embrace virtual benefits solutions like never before.
Put simply, digital tools are an effective way to mitigate costs because they steer employees away from increasingly costly in-person medical or wellness consultations—except when a face-to-face visit is required. They also boost the convenience factor for employees and can help reduce absenteeism and improve productivity.
Taking the bottom-line risk out of group benefits plans
The important takeaway is that it is possible to build a group benefits program that never increases in cost.
It requires research, analysis and a broker willing to address your specific needs, but the effort is more than worthwhile. Being strategic in plan design can enable your organization to offer a meaningful group benefits program that delivers long-term HR and business benefits.
For more information, contact a member of our team today.
The Bridgewell Team
