How Brokers Can Help Employers With Their Benefits Strategies

With healthcare costs continuing to rise and employers facing an increasingly complex benefits landscape, waiting until renewal to evaluate a benefits strategy can leave little time to make meaningful changes. Brokers can help clients get ahead of the process by identifying cost drivers, anticipating organizational changes and evaluating solutions that make the most sense for the employer and its workforce.

According to Wendy Ebner, vice president of strategic partnerships at RPS, benefits planning should be an ongoing conversation, not an annual exercise. Employers' workforces, business plans and financial priorities can change throughout the year, and their benefits strategies may need to change with them.

"The annual renewal sets the plan, but the strategy should be coming six months before that," Ebner says. "You should know the temperature of the group well before the renewal."

Benefits Strategies That Help Employers Manage Rising Costs

When an employer sees costs increase, the first step is determining exactly what's behind the increase. Higher premiums may be related to claims, but they can also reflect enrollment growth, changes in employee demographics or shifts in the number of employees participating in the plan.

"Premium alone doesn't tell the full story," Ebner says.

For example, an employer that has added employees or hired an older workforce may see costs increase even without a significant change in utilization. Understanding those factors gives the broker a better starting point for evaluating possible solutions.

From there, Ebner recommends starting with the bigger decisions, including the employer's funding arrangement and network access. Brokers can then evaluate employer contributions and product selection to determine whether there are opportunities to offset some of the increase.

Solutions should also target the problem. If prescription drug spending is a major driver, for example, an employer may want to examine its pharmacy benefit manager or consider a pharmacy carve-out. If workforce health trends are contributing to costs, a wellness initiative may be appropriate.

Data can help tell that story, although fully insured groups don't always have detailed claims information. In those situations, brokers may need to consider other indicators, including geographic and demographic trends that can provide greater insight into the population.

Pros and Cons of Single Carrier vs Specialized Providers

Another consideration is whether to integrate benefits with a single carrier or separate them among specialized providers. Bundling medical, dental, vision and ancillary benefits may provide discounts and simplify administration, but brokers should look beyond convenience to determine which combination best fits the employer.

"I wouldn't rush to integrate everything with one vendor for simplicity when it may not be the best combination of plans," Ebner says.

Instead, brokers should consider total fees, expected results, geographic requirements and employee needs. If separate solutions make more sense, technology such as consolidated billing and enrollment platforms can help create a more streamlined experience for both employers and employees.

Eliminating Duplication and Other Cost-Saving Considerations

Brokers should also watch for duplication. Stand-alone solutions are available for mental health, telehealth, employee assistance, women's health and other needs, but some of those services may already be included with existing carrier offerings. The goal is to understand what matters most to the employer's workforce, what it costs and whether each solution is adding meaningful value.

The conversation can also extend beyond insurance products. Tax-favored vehicles and other strategies may provide additional opportunities for savings and value. While brokers aren't necessarily tax or legal experts, Ebner emphasized the importance of having relationships with the right CPAs, legal counsel and other professionals who can help clients evaluate those options.

Ultimately, managing costs is about diagnosing the increase before prescribing a solution. As Ebner explains, the broker can then identify opportunities to "bend that curve through product, through network and through understanding their population" and the employer's risk tolerance.

How Often Should Employers Evaluate Their Benefits Strategy?

Employers should conduct a comprehensive benefits review at least annually, but Ebner recommends that brokers engage clients more frequently, ideally quarterly, to understand where the organization is headed.

These discussions should include more than claims and rates. Brokers should know whether the company is growing or contracting, whether its workforce demographics are changing and whether major business developments are on the horizon.

Mergers and acquisitions, expansion into another state or selling part of the business can all alter an employer's risk profile. They can also affect whether the current benefits structure and provider networks will continue to meet the organization's needs.

For experience-rated groups, reviewing claims well ahead of renewal can help establish expectations and give the employer time to consider changes rather than reacting once renewal terms arrive.

Compliance should be part of the conversation, too. Form 5500 filings, ACA filings, COBRA obligations, Medicare requirements and other plan requirements can create exposure if you don't address them properly.

"You could have the right price and the right plan design only to find out you're about to get fined because you didn't have an early conversation with your advisor on where you might have exposure," Ebner says.

For brokers, the takeaway is to stay close to the client throughout the year. The more they understand about where the organization is going, the more time they have to adjust the benefits strategy accordingly.

How to Help Employers Evaluate Traditional and Self-Funding Options

The choice between fully insured and self-funded benefits should begin with a fundamental question: How much risk is the employer comfortable assuming?

Larger groups may be better positioned to consider self-funding, especially when stop-loss coverage protects against claims above specified levels. But potential savings are only part of the equation. Employers must also be prepared for claims volatility and understand what a difficult year could mean for their finances.

An employer may see significant upfront savings by moving from fully insured to self-funded coverage, but, as Ebner notes, "you eventually will have a bad year." Brokers therefore need to discuss cash flow, reserves and the employer's worst-case scenario — not simply the potential savings.

The company's future trajectory matters, too. An employer expecting significant growth may have an unstable population and could decide to remain fully insured until its workforce stabilizes.

"There's no magic employee count or threshold that answers the question," Ebner says. "It really has to do with total risk tolerance and plan trajectory."

Brokers should also determine whether healthcare costs are actually the employer's biggest concern. A rapidly growing organization may be struggling more with benefits administration, payroll and HR responsibilities. In that situation, a Professional Employer Organization (PEO) could help by taking on those functions, even if the health plan itself does not generate savings.

The right recommendation comes from understanding where the employer's pain sits.

How AI and Technology Affect the Client Experience

Technology is becoming increasingly important as brokers and employers navigate a marketplace filled with carriers, PEOs and specialized benefits vendors.

AI can help brokers organize information, identify product gaps and support decisions. Rather than feeling compelled to quote every possible solution, brokers can use technology to help narrow the field based on an employer's risk tolerance, business outlook and specific pain points.

AI may also help identify combinations of products or approaches that a broker had not initially considered. But the quality of the result still depends on the information and expertise behind it.

"AI might help me see something I didn't see, but it certainly isn't the be-all and end-all," Ebner says.

Its influence also extends beyond benefits selection. AI is being used in areas such as healthcare documentation, coding and claims adjudication, creating opportunities to capture information more efficiently while also raising questions about how that technology affects utilization and costs.

For brokers and their clients, one of AI's most practical benefits may be its ability to lessen friction. It can help provide a road map through a complicated market more quickly, while the broker brings the experience and judgment needed to determine which direction makes sense.

Helping employers prepare for renewal ultimately comes down to knowing the client well before the numbers arrive. Regular conversations about costs, workforce changes, business plans, risk tolerance and administrative challenges create the opportunity to evaluate options deliberately rather than react to a renewal.

The result is a benefits strategy built around where the employer is going — not simply what it purchased the year before.