Health insurance is the most desirable employee benefit, according to a study conducted by Harvard Business Review. It is also the most expensive, with an average cost of $6,435 per employee for individual coverage or $18,142 per employee for family coverage.
When businesses choose to offer health insurance as part of a comprehensive benefits package, they also agree to the annual benefits renewal process. When the renewal and open enrollment process occurs each year, companies have the option to renew their current plans, make changes to those plan designs or shop alternative carriers.
How Do Benefits Renewals Work?
Each year, companies renew their health insurance plans from the previous year or sign up for new health insurance plans. Each year insurers adjust their offerings and rates; therefore, businesses must decide to continue with a particular carrier at the offered plans/rates, make adjustments to the plan to control cost or to switch carriers if a more cost-effective option presents itself.
The benefits renewal process involves insurance companies, employers & employees and the brokers/consultants who help advise. The benefits renewal process includes the following important stages:
- Reassessment Stage — The insurance company reassesses terms and pricing for the upcoming year.
- Presentation Stage — The insurance provider presents available plans to the broker/consultant
- Marketing Stage — If desired, the broker/consultant markets the employers plans with other insurers.
- Selection Stage — The business selects a plan and chooses a contribution amount with the advice and guidance of their broker.
- Employee Enrollment Stage — Open enrollment begins for employees.
- Completion Stage — Coverage is effective on the date that the insurance provider stipulates.
- Post-Renewal Audits — The broker & employer should review applicable invoices and member listings to ensure proper elections and enrollments were processed from open enrollment.
Why are Benefits Renewals Important?
The importance of health insurance benefits renewals should not be dismissed or overlooked. Businesses are tasked with aligning employee benefits with the needs of employees. The benefits renewal process presents a unique opportunity to assess employee demographics and the company’s financial status to determine which plan would best meet employee needs, in addition to the business’s budget.
It is not uncommon for health insurance renewals to be in excess of 10% increases or more, further creating the need to place a high degree of focus on both short and long-term strategies to controlling the year-over-year increases.
Companies sometimes make the mistake of allowing employee benefits to run on autopilot. Unfortunately, insurance costs tend to rise each year and unless a business takes the time to reevaluate their plan options, they could be losing both value and money. Reviewing employee benefits renewals annually helps ensure that businesses maintain an attractive benefits plan while controlling costs.
You Need To Review Your Plan Information
Benefits renewals provide companies with an opportunity to carefully review their existing health insurance plan, its terms and cost. This information can then be compared to the updated plan that the insurance company delivers during the presentation stage.
If the updated terms on the existing plan are not acceptable, businesses then have the chance to look for a new provider or plan that better aligns with their preferences and budget requirements. When reviewing plan information, look at all relevant data including monthly premiums, deductibles, copays, coinsurance, out-of-pocket maximums and the list of doctors, clinics and pharmacies in the network.
You May Have Benefits You Are Not Utilizing
Health insurance plans can vary considerably and not every plan is right for every business. Some companies may discover that they are paying for benefits that they are not utilizing or missing benefits that could give the business an upper hand.
According to a survey published by America’s Health Insurance Plans (ACHIP), 56 percent of adult employees in the U.S. reported that satisfaction with their health care coverage was a critical factor in deciding to remain at their current job. The benefits renewal process encourages businesses to analyze their existing plan and find a better plan that only offers the benefits they want.
You Should Decide On A Plan for Next Year
Approximately two to four months prior to the renewal date, health insurance companies will usually provide specific updates and renewal information, including updated premium rates, plan changes and any other data relevant to the renewal. Once this information has been delivered, businesses and benefits consultants can work together to determine what plan is best suited for the company and its employees.
Renewal surveys can be useful when comparing plan options. Several months before the renewal date, a benefits consultant may send out a renewal survey to collect feedback from the business. Based on the company’s feedback, the benefits consultant will prepare a recommendation.
You Have To Enroll Before The Deadline
Open enrollment is the time period in which employees can join or make changes to their health care coverage. For most employer and individual coverages, the open enrollment period begins on November 1st and closes on December 15th. Coverage will usually begin in the next year on January 1st.
During open enrollment, all eligible employees should be encouraged to enroll in a plan, change their plan, add or remove dependents or waive their coverage altogether. It is essential for businesses and employees to renew or enroll in a health insurance plan before the enrollment period ends to avoid gaps in coverage.
How Can I Make The Right Decision On My Benefits?
Health care plans are among the most employee-valued benefits. Due to the importance of choosing the right health insurance plan, many businesses find it challenging to make a decision during the benefits renewal process.
Ensure that the right plan is chosen by carefully reviewing current benefits and the business’s budget to determine how much money to allot to benefits. Prioritize benefits based on importance and eliminate benefits that are not being utilized. Finally, speak with an experienced benefits consultant about what options are available and how to choose the best plan based on the company’s needs and finances.
Speak With A Benefits Consultant At Business Benefits Group
One of the most important decisions that an employer will make is what health insurance plan is best for the business and its employees. Although the benefits renewal period comes just once a year, businesses should begin planning months ahead of time.
Navigating health care options can be a complicated process, especially when insurance companies continue to change their terms and pricing. Hiring a qualified benefits consultant to assist the business in the decision-making can help ensure that the company makes the best possible decision. For more information about the importance of benefits renewals or to speak with a benefits consultant, reach out to the experts at Business Benefits Group today.