Employee benefits are not inexpensive, in fact, they can be quite the opposite. Even if you have the best plan design for your company, there are still many factors that contribute to driving up the cost of your plan. Some of these factors can be mitigated however by an experienced advisor who can negotiate with insurers on behalf of their clients.
We were referred to speak to a business owner by a current client of ours. We sat down and discussed some of the likes and dislikes of their current plan, which was a fairly standard plan for the industry that they were in, as well as what their monthly costs were. Upon reviewing the plan usage as well as the billing statements, we knew that they were being overcharged and that it would be valuable to do a full marketing to see how insurers would quote their plan based on their member demographics and usage.
For the marketing, we were able to get quotes back from 6 carriers and after a little bit of further negotiation the rates ended up as follows:
Immediately, we knew that this company was being severely overcharged for their benefits. It is important to note that often times when we complete a marketing report, there will always be 1-2 companies that we feel are offering "acquisition pricing" and will be much less than the rest of the competitors (Insurance Company A For Example). Our goal is not to pick the most inexpensive carrier, but rather to pick the carrier who is offering a fair value for premium dollar in order to ensure a healthy plan. If the most inexpensive carrier was chosen in this case, there is a high likelihood that they would simply increase their rates in the following years to make back the discount that they offered.
With all that being said, we ended up going with Insurance Company D. This insurer has a very good track record of fair renewal pricing, and has good support for members and plan administrators. This saved this company of 23 employees more than $2500.00 per month compared to what they were previously paying - a nearly 40% reduction in costs. As this plan was funded by the employer 50% and the employee 50%, the cost savings were enjoyed all around.
It is important that your Benefits Consultant is constantly making sure you are getting good value for your premium dollar in your benefit plan. Every few years we send our current clients plans out to market to ensure that this is still the case and it is not uncommon to switch carriers that are offering a better value for dollar.
When was the last time you had a second opinion on your company benefit plan? When was the last time your current advisor took your plan out to market? Have they explained the differences in plan design for your company? If you are a larger company - maybe an ASO (administrative services only) plan is better for your company.
We offer complimentary consultations to any business that is looking to see if there are cost saving measures that can be put in place for their benefit plan. Give us a call at 604-996-7464 or email us at info@bogressfinancialgroup.ca if you have any questions.