With renewal season nearly upon us, brokers are beginning to build out plan options for their clients. This time of year usually results in frustration for agency staff and customers, as the traditional renewal process does not focus on customer experience or operational efficiency. Historically, the broker used a static spreadsheet to show the client several plan options with different benefits, including the total cost of each plan. Once the employer decides on a plan, the broker may help them decide on a contribution strategy to make the plan fit in their budget; other times, the employer has to figure out how to pay for the plan themselves.
The problem with this way of handling benefits renewals is that it doesn't focus on what really matters to employers. Total plan cost isn't the number that employers really care about. They are concerned with the amount that they actually pay; however, the typical plan renewal process doesn't integrate premium share into the initial plan discussion. First, the employer chooses a plan, then premium share is discussed. If the cost is higher than the employer was hoping to pay, the employer is forced to either pass off those extra costs to employees or eat the extra costs themselves. Alternatively, it opens up another round of discussions with the broker to look at additional options to lower costs, leading to more meetings, more revisions to the already confusing spreadsheet of benefit plan options, and a long, drawn-out process.
This facet of benefits planning is a major reason employers find the process so cumbersome and frustrating. It is the one area where they can't budget ahead of time, which is detrimental for employers of all sizes. But there is a different way of approaching the renewal conversation, one preferred by employers. It begins with the employer's budget in mind, then focuses on various plan options that fit within that predetermined number. And it is supported by technology that simplifies the conversations and eliminates wasted hours back and forth.
Start with the budget
The renewal conversation should start with the employer's budget. What do they want to spend this year? Do they want to keep costs flat, are they trying to save money where possible, or are they comfortable with 3 percent increase? Understand that not every budget will necessarily be feasible, but you can present plans that fit within that initial budget and give the employer an idea whether that number is reasonable or not.
When you start having these conversations with clients, they may need some explanation to understand the new approach. You may get clients who say, "Just negotiate it as low as possible." Explain that you will of course negotiate on their behalf, but that isn't the intention of asking a budget. By establishing a number up front, you can present only plans that fit their budget. For example, if the client has a 15 percent increase coming on their existing plan, tell them that, and ask how much they can afford or want to spend. Maybe it's 6 percent. That gives you a starting point for the next step.
Now, take into account premium share and contribution strategies. Using the 15 percent renewal example, in order to hit the 6 percent budget, you would need to make that plan fit a 6 percent increase — or not present that plan at all.
Think outside the box a little. Though there are only so many insurers, there are essentially unlimited plan options you can present when you take into account different ways to apply premium share, add HRAs or HSAs, change deductibles, and other elements.
Use digital technology to model quickly and simplify conversations
Technology can help you execute this renewal strategy without having to manage the manual and time-consuming practices that come along with the traditional spreadsheet approach. Using real-time benefits modeling technology, you can easily build and present plans that start with the employer's budget and take into account premium share and other important factors.
Modeling technology enables you to create several plans within the budget, presenting them side by side on a projection screen in a visual format. This real-time benefits modeling solution incorporates medical, Rx and ancillary coverage options, fostering strategic, comprehensive benefits discussions. If a client has questions about any of the plans, you can dig deeper into the details to examine employer and employee impact.
Transform your business and your renewal process
Traditional benefits planning focuses on total plan cost, but employers want to know what their bottom line is. Budget-based benefits planning differentiates your business and delights your clients. Renewals take more than just shopping insurance policies each year; they require a consultative approach and digital technology to enable on-the-spot conversations. When you use a strategic planning model that keeps the client's bottom line in mind and the right technology to facilitate the process, it leads to a less frustrating experience for staff and employers. Your clients will feel the difference, and reward you with sales and retention.
Andy Nunemaker is vice president of Product Management, Benefit Solutions at Applied Systems.
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