For human resource and benefits professionals, it’s that time of the year that many people dread. Benefit carriers are sharing what the ‘new’ rates will be for companies as they finalize and prepare for the 2021 calendar year. According the U.S. Bureau of Labor Statistics, benefits costs across the United States accounts for 30% of compensation costs for private industry employers1. The impact on compensation can range from 28.3% to 31.5% depending on your geographic region.
This is not a new phenomenon. Benefits costs have been on the rise for years. Company owners and CFOs, especially of small to mid-sized businesses, cringe each year at the new costs as they work to negotiate rates and determine how much of the updated costs (if any) they can help cover for their employees, versus how much will go directly to the employees for their benefit rates for the upcoming year. Unfortunately, companies are at the mercy of waiting to hear what the rates will look like from the carriers until seemingly the last possible moment, and then have to scramble to decide if they are going to stick with those providers/rates or quickly look at alternative options with their benefits broker. A general rule of thumb for smaller sized companies is that rates will not be available until approximately 90 days from your effective date. For traditional calendar plan years, that means you should be hoping to hear these details around October 1st of each year.
With that in mind, here are a couple of strategic recommendations for your Annual Enrollment planning process to consider:
1. Strategize with Your Benefits Broker.
Have a strategy or plan in place with your benefits broker to understand timelines, deliverables, and to make sure you are getting your updated rates and details as quickly as possible so you can react accordingly. Your broker specializes in helping you here, so lean into their expertise.
2. Avoid Changing Providers Annually.
When possible, try to avoid changing providers annually to keep some stability with your network, providers, plan offerings, etc. Instead, consider evaluating benefit plans every 1-2 years to maintain some consistency if possible.
3. Execute Your Plan.
Work with your benefits broker throughout the year to plan for your annual enrollment in advance. Make sure you have open dialogue about your plans, open enrollment timeframes, communication efforts, materials, etc. Are there different types of plans you could be exploring (for example – a high deductible plan with a Health Spending Account) to help lower costs?
4. Communicate with Your Employees.
Communication with your employees is critical. Make sure you have presentations, plan details and rates, open enrollment meetings with employees, vendor presentations, etc. planned in advance to give employees a chance to review and digest the information prior to Open Enrollment. This is especially critical if you are still working with a heavy concentration of remote employees, because everyone cannot jump into a big conference room now.
5. Prepare for Questions.
Be present and available for your employees who have questions. In the COVID-19 state of operations, this may mean you are scheduling multiple virtual sessions with employees to answer any questions they may have.
6. Use technology to your advantage.
These days, many employers are using online enrollment processes to help conduct enrollment, update beneficiaries, share critical plan documents, and feed the data directly into payroll. Leverage your payroll provider to see if they offer direct assistance with open enrollment support and guidance.
7. Evaluate Open Enrollment with Your Benefits Broker.
Evaluate how things went with your Open Enrollment shortly after the plan year begins. What challenges did you run into? Did your vendors get the details they needed timely? Did your employees run into any concerns with the process or with questions you could not handle? Plan to regroup with your benefits broker early in the year to strategize for next year.
Annual Enrollment can be stressful and uncomfortable, but applying the tips mentioned here can help you proactively address some of the areas that may cause stress for you and your organization. You want to make sure your employees have a good experience and have what they need to help them make educated decisions when it comes to benefit offerings for their families. All organizations wish that benefit rates and coverages would remain flat or even go down, but that is not realistic in the business climate today. A good plan and strategy can help lessen the stress involved with this critical area for your organization.