As a manufacturer in the Large Group Market (500+ employees) you have leverage and scale that is not available to many of your competitors. Unfortunately, you’re also faced with a difficult paradigm when choosing a broker or consultant. The well funded firms you’re considering all look and sound the part but after 6-12 months you end up re-evaluating a top three expense that continues to increase, even if it outperforms your consultants “trend.” Continue reading for an overview of common mistakes, an overview of your options, and how DCW Group can help your manufacturing firm.
It’s several months before your upcoming health insurance renewal and you’re thinking about dusting off the request for proposal packet you used three years ago to see if any of the regional or national broker consultants you’ve met can help you reign in a top three expense that continues to increase year over year.
Your team works diligently to obtain all of the relevant information as additional request filter in and the clock ticks down to your renewal date. Shortly thereafter you endure hours and hours of finalist presentations with crisply printed bound booklets, impressive benchmarking, and an array of the services available from the firms vying for your business.
If that’s not enough to force a change they will send in their “Closing Team” made up of credentialed subject matter experts who you will rarely see, if ever, should you select their firm. You may make a change and the first year may seem like things are improving but soon after you’ll be back to the drawing board.
What broker consultants don’t want employers to know is that if you provide 5 firms with the same data and send them to obtain proposals from the market, all 5 will return with the exact same proposals. There’s no difference between the multinational, publicly traded brokerage and your neighbor's cousin who works out of his house.
Enrollment kits, subject matter experts, on staff legal counsel, wellness program, data analytics, and all of the other magic bullets you’ve been presented have led to two things, increased share prices for the consulting firms and increased premiums for you and your employees.
The business model for the majority of health insurance companies and their third party administrators directly benefit when insurance premiums increase. You may think that by changing the financing mechanism, or going self-funded, that you can solve the problem. This allows you limited transparency into your loss ratio but doesn’t change the ecosystem designed to drive the cost of claims up year over year.
Have you secured your pharmacy rebates? Great! Now your Pharmacy Benefit Manager is reclassifying their kickback compensation as marketing or distribution fees. You may or may not be able to carve out your Pharmacy Benefit Manager with your current administrator, but it will come with a hefty setup fee and ongoing “integration costs.”
Insurance is a commodity. The plans and pricing are the same regardless of who represents your organization. Brokers and consultants should be interviewed outside of your annual renewal and you should ask them the following questions:
Once you’ve conducted these interviews that have centered solely on strategy, select one firm to represent your organization. Any broker who offers to quote your benefits without having you as a client should be dismissed from the process immediately. If you choose them this year, next year they’ll be out there offering to work for free for even more non-clients which takes away from time spent working on behalf of your company.
Many insurance brokers would prefer that Employers see health insurance and their employee benefits as an enigma only manageable with their expert guidance. If that were the case the barrier to become an insurance broker would be far higher than a one-week course that you can take online.
As an employer you should demand a baseline understanding of the pro’s and con’s of the various markets available to your organization for purchasing health insurance. Since all of the markets are the same regardless of the consulting firm, you should be focusing on finding a firm who can take you from the market you are currently in to the market that you want to access.
You would be shocked how many new clients are able to generate significant savings simply by looking at a market they’ve been able to access for years that their previous broker overlooked or refused to evaluate based on their bonus or override structure with your current administrator.
Healthcare and health insurance are notoriously opaque in their pricing. You deserve to know who is being paid, how much they are being paid, and what services are being rendered. We apply transparency to everything that we do and you will know exactly what our firm is being compensated.
You may think you know today but there are numerous bonuses, overrides, and contingency programs that are not reportable on the Form 5500.
As a business leader you rarely make a change for more of the same or slightly better. Health insurance is fundamentally broken and the only way to bring predictability and stability to this top three business expense is to work with a partner who understands the business models of all parties to your health insurance.
By developing a risk profile for your organization we can leverage existing and emerging markets to build a benefit program that eliminates the profit margin and waste currently being retained by insurance carriers, pharmacy benefit managers, third party administrators, and other parties to your current health insurance program. Click here to watch a quick 10 minute video that explains the business models leading to your increased premiums and some common sense solutions.
You wouldn’t be reading this if you weren’t frustrated with part of all of your employee benefits program. We wouldn’t be here if we weren’t equally frustrated with an industry that consistently claims victory by outpacing a “trend” that our industry itself developed! By taking 30 minutes and providing 5 data points we can tell you more about your benefits expense than all of the perfectly bound 50 page benchmarking reports consultants have slid across your desk.
Want this Guide as an all-in-one PDF to read at your leisure?