Controlling benefits-related costs will be critical for most companies over the next five years, according to a new report from the Prudential Insurance Company of America. Plan sponsors need help from benefits brokers and consultants to maintain a competitive benefits program while identifying opportunities for greater efficiency and cost saving.
"Expertise is Essential," a companion report to the "Study of Employee Benefits: 2009 & Beyond" shows that more than eight in 10 plan sponsors say they use a broker and/or consultant for assistance with their employee benefits programs. Of the 17 percent that don't, 11 percent expect to begin working with an intermediary in the next five years.
"The importance of a sound employee benefits strategy that aligns with a company's broader business strategy and financial goals has been underscored by recent market developments," said Lori High, president of Prudential's Group Insurance business, in a released statement. "Plan sponsors' need for expert advice and guidance from a broker has never been greater."
Currently, nine in 10 plan sponsors report being satisfied overall with the support they receive from their broker/consultant.
Over the next half-decade, plan sponsors and brokers/consultants expect plan design changes and cost-sharing to be the most common approaches to controlling benefits costs. "Nonetheless, further gains are still expected from wellness and absence management/productivity initiatives, especially among companies with at least 1,000 employees," the report states.
Only about one in four brokers/consultants (26 percent) say their clients have relied on their expertise, service, and support more heavily in the past year, but many more expect that trend to continue, according to the study. In fact, nearly twice as many (48 percent) expect their clients to use their services to a greater extent over the next five years.
Plan sponsors also anticipate increasing their use of brokers/consultants by 2014, but to a lesser extent. Only 17 percent expect to rely more heavily on their brokers/consultants over the next five years while nearly two-thirds expect their usage to remain about the same as it is today.
"Maintaining a close working relationship enables a broker to be in synch with the plan sponsor's priorities and help design a benefits program that address the needs of an increasingly diverse workforce," High said. "The use of brokers and consultants will likely increase over the next five years as plan sponsors seek help managing costs and maintain the competitiveness of their benefits package."
Employers' Top 5 Cost Management Strategies in 2014 (as perceived by plan sponsors and brokers/consultants):
| Plan Sponsors (%) | Brokers/Consultants (%) | Difference | |
| Make plan design changes to control benefits costs | 54 | 69 | +15 |
| Implement consumer-directed health plans | 37 | 61 | +24 |
| Share more of the cost of contributory benefits with employees | 38 | 55 | +17 |
| Coordinate/integrate parts of your medical, pharmacy, disability, and workers' compensation plans | 35 | 53 | +18 |
| Use fewer carriers and/or consolidating carriers to reduce costs and/or improve efficiencies | 44 | 52 | +8 |
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