Core Benefits - In the past Employers generally worked with Brokers(s) to design a Plan that was selected and paid for by the Employer, ie. Health Insurance, Term Insurance, Dental and Vision Plans, LTD, ADandD, Term Insurance. Employees, and their Families, are now being asked to select among a variety of Plans and to contribute a substantial portion of the premium. Employees are often provided an opportunity to "opt-out" of the plan.
Voluntary/Worksite Plans (once referred to as "Payroll Deducted Plans" - Employers generally worked with Brokers and Agents of specific Insurance Companies to select a "Menu" of Plans to be offered to the Employees on a Voluntary, Payroll Deducted Basis. The Plans included: Short Term Disability(STD); Accident; Critical Illness, Cancer, Hospital Income(HI), Life, Dental, Vision, Limited Benefit Health Plans, Pet, Legal, Discount Plans and other Insurance and Non-Insurance based "Choices". Generally, a limited number of plans were offered the 1st year with additional plans in the following "Enrollment Periods".
Over the past several years, the distinction between Core and Voluntary/Worksite Plans has been disappearing. Employers are offering their Employees a "Menu" of choices including both the traditional Core and the Voluntary/Worksite Plans during a specific "Enrollment Period" when they are offered both their Core and Voluntary/Worksite Choices. In most if not all cases the Employees must contribute to the Premium/Cost of the Plans, Programs, and/or Services. The Employees contribution may include:
- Paying a portion or percentage of the Cost
- Paying the full Cost of the Pans, Programs, and/or Services offered
- Utilizing Benefit Dollars/Credits provided by the Employer after which the Employee must pay the remaining cost off the Plans, Programs, and/or Services they select from the "Menu" of Benefit "Choices" - A Defined Contribution (Def Con) Plan.
- Section 125 (POP) Plans (pre-taxing the Employees contribution to "Qualified" Plans.
- Medical Reimbursement Accounts (pre-taxing anticipated "Qualified" out-of-pocket expenses.
- Dependent Care Reimbursement Accounts (pre-taxing the cost of "Qualified " dependent child and adult care.
- Transportation Reimbursement Accounts (pre-taxing the cost of "Qualified" transportation and parking expeenses.
- 401(k) and other "Qualified" retirement plans.
The Employers and their Broker(s) either handle the Education, Communication, Enrollment, and Data Management processes internally or work with a Professional Enrollment Company. Some of the traditional Voluntary/Worksite Insurers may proviode these services with some limitations. It is extremely important that the enrollment process is handled on an unbiased basis!
Many Employers and their traditional "Core" benefit Brokers(s) have been slow to Understand and Embrace these changes. The reasons are fairly simple:
- Comfort Levels - Many traditional "Core" Benefit Brokers are not comfortable with, and do not know, how to evaluate and compare "Voluntary/Worksite " Plans
- The Process - The "Enrollment Process" for traditional "Core" Benefits did not require as great a focus on the Education, Communication, and Enrollment process as when introducing "Choice".
- Choices - The "Choices" of Plans, Programs, and Services - as well as the number of Carrier/Providers off the traditional Voluntary/Worksite Plans - have increased dramatically. Many "Branded" Core Benefit Insurers have entered into this lucrative market. The Employers and their Brokers find it difficult to evaluate what differentiates the Carriers/Providers and their Plans, Programs, and Services. Old "Spread Sheeting" methodologies often do not apply.
- Fallacy -Many "Core" Benefit Brokers thought that the introduction of Voluuntary/Worksite Plan "Choices" would diminish their sphere of Influence and Commissions.
- Fear - Employers and Brokers feared that the Employees did not have the capacity or desire to make educated "Choices" to protect their Individual and Family's well being and "Piece-of-Mind.
- Misunderstanding - A lack of understanding about the role of TPAs and Enrollment Companies and how they are compensated confused the Employers and Brokers.
- Have little experience with "Core" Benefit Plans.
- Have little or no contact with the "Core" Benefit Broker community.
- Prefer separate one-on-one enrollments for their specific Plans.
- Generally represent one specific Insurer/Provider for the Voluntary Worksite Plans.
- Employers - The cost off benefits has become prohibitive as well as the time required to make specific Plan, Program, and Service "Choices" for the Employees! Shifting the decision-making processes, as well as the cost, to the Employees is becoming more and more attractive. Many Employers are beginning to recognize that it is cost-effective and efficient to "Empower" Employees to become "Consumers".
- Brokers - With time they are changing! The lines separating "Core" Benefit and "Voluntary/Worksite" Brokers are breaking down. As Brokers become more familiar with the alternative Plans and Employers demand the integration of the Plans - combined with the opportunity for Brokers to generate more commissions - the Brokers are embracing the new opportunities to expand their markets and revenues.
- Employers and Brokers - The functions of the TPAs and the Enrollment Companies are becoming better understood and appreciated. Advancements in technology have brought the costs down while the marketing efforts by these sectors of the market have increased.
- Employees - Due to advertising, the internet, and experience the Employees appreciate, want, and at times demand "Choice". The individuals and their Families embrace the opportunity to select the Plans, Programs, and Services they need and can afford to protect themselves against "Risk" and to enhance their lives.
Employers, working with Broker(s) comfortable with both "Core" and "Voluntary/Worksite" Plans, Programs, and Services, should focus on building a Strategic Benefit Plan that includes:
- Meeting Needs - Evaluating the Employees needs and financial capacities.
- Benefits - Determining the "Best-of-Class" of Plans, Programs, and Services "Choices" - as well as the Carrier/Providers - is imperative. Note: No matter what they claim - No one Carrier/Provider is the best and most cost-effective for everything!
- TPA - Depending on the Number of Employees, Industry, Number of Locations and Requirements specific to the Plan Design, a TPA should be selected.
- Enrollment - Selecting the Enrollment Company - if outsourced - and the type of Enrollment that is best suited for the Employer's and Employee's convenience and needs: One-on-One, Group Meetings, Internet Based, Call Center Based, or a combination of these methods should be selected
- Employer's Contribution - Determining the Employer's total benefit contribution and how it will be allocated by "Class" of Employees and among the "Plan Choices" is important for "Budgeting".
- Payroll - The Payroll Staff or Payroll Company selected must understand how the Employer's and Employee's Contributions are structured as well as the process for differentiating the Pre-Tax Deductions.
- Enrollment - Scheduling a time for the Education, Communication, and Enrollment process is critical. This should be at a time when the Employer, the Employees, and their Families have adequate time to focus on the Benefit Choices. Holiday Seasons are not the best time!
- Spheres of Influence - Having the Management, Department Leaders, Unions, etc. "Buy-In" to the Benefit Plan is extremely important. Their support and participation is critical for gaining the confidence and participation of the Employees!
When all of the above steps are followed by the Employer and the Broker(s), the Education, Communication, and Enrollment Process should be relatively smooth. Points to keep in mind:
- Information - Materials should be distributed to the Employees explaining the "Plan Design" and differentiating each of the Plans, Programs and/or Services. An explanation of how various Plans integrate is important and should be provided by the Broker(s).
- Time - Employees need and deserve time to make decisions.
- Beyond the Employee - Families should be included in the decision-making process.
- Changes - Time should be permitted for making changes.
- Documentation - The time between the end of the "Enrollment Period" and the "Effective Date" should be adequate to complete paper work, for data management, and to meet the needs of the Providers.
- Problem Solving -"Pulse" meetings should be scheduled with the Employer, Broker(s), TPA, Enrollment Company, and other "involved parties" to monitor the progress and solve minor problems before they become major.
- New Eligibility - Enrollment periods for New Hires and anyone with a "Change in Status" should be scheduled.
- The Pay Day - When the first Pay Check goes out reflecting the Employee's "Benefit Choices", the Broker(s), Enrollment Company, TPA, Payroll, and Insurers should be available to answer the Employee's and their Family's questions and concerns.
- Feed Back - Encourage "Feed Back" from all parties to improve the Plan Design and to gain a "Greater Return on the Employer's and Employee's Invested Benefit Dollars"!