Businesses that offer common employee benefits, such as health insurance, will encounter regular renewal periods. Renewals enable employees to change their health plans based on their current needs. They can also switch plans to accommodate major life changes, such as adding a new dependent. If no changes need to be made, an employee can choose to simply renew the existing plan.
Health insurance companies may also make changes during an employee benefits renewable period. Prices and offerings may be adjusted based on factors such as claim history or the group’s risk factor. All parties involved in a business are included in the renewable process, such as insurance carriers, employees, employers and benefits consultants.
Employee benefits renewal periods typically occur once per year during open enrollment. The open enrollment period generally begins in October and the new plans renew on November 1st. Many companies will set up employee benefits renewal plans to auto-renew unless an employee steps forward to make changes. The employee benefits renewal period allows employers the opportunity to become up-to-date with new rules and regulations, as well as adjust company contribution levels, switch carriers or plans, change eligibility rules or even opt out of a particular benefit.
What Is Employee Benefits Renewal?
Along with compensation, employee benefits packages are one of a business’s largest expenses. According to the most recent data from the U.S. Bureau of Labor Statistics, the average cost of employee benefits for employers was $35.87 an hour per employee. Compensation accounted for an average of $24.49 while other benefits accounted for the remaining $11.38.
Benefit plans are typically an annual contract which means that companies must decide each year whether to renew the current plan or move to a new plan or provider. Reviewing employee benefits plans each year is crucial for employers as insurance costs tend to rise each year and over time the plan may not provide enough value for the cost. Employers then have the option to switch to a new plan or insurance provider that will provide better value for their money.
Working with an experienced benefits consultant can help streamline the renewal process and prevent any costly surprises. A benefits consultant will perform a detailed analysis based on employee demographics and claims usage to ensure that the terms being presented by the insurance company are fair. If there is room for negotiation, a counter-proposal may be submitted before renewing the policy.
Preparing For Employee Benefits Renewal
The employee benefits renewal process entails several important steps, starting with the reassessment stage. During this stage, the insurance company will reassess the terms and pricing of the plan and if deemed necessary, will modify costs and services based on inflation, advances in healthcare technology, new drugs or increases in physician fees.
Employers can make the renewal process easier on their team by communicating with their employees and educating them about the process prior to open enrollment. It can be helpful to survey employees about their preferred benefits to determine which type of benefits they would like to see most and which can be cut to save money.
Employee Considerations In Employee Benefits Renewal
There are many aspects of employee benefits renewal that employers should consider when determining whether or not a particular plan is working well for the company and its employees. Businesses want their employee’s needs to be covered while also maximizing their investment into employees’ healthcare coverage.
When reviewing different plan options, it is important to look at aspects of cost, quality, payment and delivery reform strategies, and benefits and network design strategies. Companies that choose to work with an experienced benefits consultant will ensure that their renewal is based primarily on current market data and key research.
Price & Quality
Before settling on a health plan for the coming year, take the time to fully discuss what options are available and the benefits of each selection. Ideally, employers should meet with employees to discuss their priorities and what they typically look for in a health plan. Two of the most important elements to consider when comparing group health plans are price and quality.
The plan chosen should be affordable without sacrificing quality. This requires a stringent balancing act in which priorities are met without including other benefits that may not be as important. Consider the use of a price and quality transparency tool and confirm that the providers chosen agree to publish this information.
Payment & Delivery Reform Strategies
Another important aspect of employee benefits renewal involves the use of payment and delivery reform strategies. During the renewal period, consider if the health plan is negotiating more value-focused contacts with providers from which employees are seeking care. Also determine if employees are seeking care from high-value providers as designated by the health care plan.
Benefit & Network Design Strategies
Before deciding on a health plan for employees, consider benefit and network design strategies. Take note of which value-based insurance design strategies the health plan recommends for employees within the company. Also, consider if there is a specific tiered or narrow network product that may be an acceptable fit for the business.
Consider Benefits Consulting With Business Benefits Group
Any employer that offers an employer sponsored health plan will experience regular employee benefits renewal periods. If the renewal is not handled properly, it could result in unexpected fees or expenses for the business. Employee benefits renewal can be a complex topic as the rules and regulations of employer sponsored health plans often change from year to year. Employers must have a strong understanding of the market, know their budget and should consider what is in the best interest of the company and its employees.
Working with an experienced employee benefits consultant can help ensure that the company chooses the right plan based on cost, employee needs and coverage terms. To learn more about employee benefits renewal or to speak with a qualified employee benefits consultant, reach out to the experts at Business Benefits Group today.