When it comes to our personal health, when the stakes are high – e.g., we’re diagnosed with a serious chronic condition or we’re told we need surgery – many of us conduct our own research to become more informed, and even seek a second opinion. We generally take these steps for any of four reasons: (1) We want to increase our ability to evaluate the treatment options recommended by our health care practitioner. (2) We want to see if there are any other treatment options we might consider. (3) We want to be sure the diagnosis is right. (4) We want to improve the chances of a positive outcome.
Yet when it comes to the health of the employee benefits strategy, most organizations don’t seek a second opinion. Instead, they rely solely on the “diagnosis” and “treatment recommendations” proposed by only one practitioner – their benefits broker or consultant. Nowadays people seek a second opinion for everything from a major car repair to their financial plan. And to increase innovation, there are even organizations that hire multiple firms to simultaneously generate ideas upfront before they decide which to pursue.
With employee benefits representing a significant cost to most employers, does your strategy deserve a second opinion, even if it’s just to give you peace of mind?
When I’ve been asked to review the strategies developed by an organization’s benefits broker or consultant and even to double-check various calculations by insurance carriers and brokers/consultants, more often than not, there have been opportunities for improvement. Here are the most common opportunities:
- Compliance issues that put the organization at risk of litigation, penalties or disqualification
- Excessive fees and premiums that can be reduced
- Hidden fees or bonus payments that should be eliminated
- Contracts that are not in keeping with the negotiated terms
- Eligibility provisions that do not accurately reflect the group intended to be covered
- Calculation errors that affect the accuracy of budgets and forecasting
- Plan designs and strategies that are not aligned with the organization’s workforce goals
- Potentially applicable strategies that have not been considered
Organizations have enjoyed several benefits by addressing these opportunities, including:
- Increased legal and regulatory compliance
- A reduction in the cost of plan administration
- Fewer surprises when they see the actual cost of claims
- The generation of fresh ideas
- Better alignment between the benefits strategy and the organization’s financial and human capital goals
As benefit costs continue to rise and more members of the C-suite engage in benefit decisions, now might be the time to consider getting a second opinion on your strategy.