Total Rewards

What should HR professionals and Benefit Managers be doing to get a handle on benefit costs to their organization?

/ March 19, 2018

Total Rewards (Compensation & Benefits) are often the largest line item expense for an organization. Benefits typically represents 30%-40% of that line item. How can HR professionals take active measures to retain and recruit talent while containing and managing benefits costs. What strategies can be used to actively manage and affect the dollars being spent?

All HR professionals that handle benefit plan management have most likely had the familiar feeling of drowning in double digit increases year over year. In fact, a recent survey released by Employee Benefits New shows some disturbing findings. 337 benefits professionals from organizations with 50 – 1000 employees responded to the survey in 2017. The survey results show:

  • “HR executives still aren’t embracing multi-year benefits planning”
    •  66% of respondents have a short-term planning cycle when it comes to making major changes to benefits, funding and contribution strategies.
  • Costs and employee guidance remain top priorities:
    • 66% of respondents selected managing costs as one of their three primary benefits priorities;
    • 40% list helping workers make better benefits decisions.
  •  Cost management is a priority, but isn’t reflected in many HR executives’ short-term plans:
    • While two-thirds of companies say one of their goals is to better manage health benefits costs,
      •  49% do not plan to implement any new cost management programs in the next 12 to 18 months.
      • What’s more, 54% say they’ve done all they can reasonably do to control rising medical costs.

What this tells me is that HR and Benefits Professionals do not fully understand what a multi-year benefits strategy is or what it could achieve. As an Exude Consultant, I work closely with all of my clients to understand where they have been, where they are now and where they want to be. With this knowledge we partner to build a multi-year benefit strategy to achieve those goals often with Cost Reduction being the top priority. There are many tools available to help control costs but it often takes a long term view and several years of incremental change to achieve the goal.

Examples of just a few that can have a significant impact on cost:

  • Alternate funding arrangements such as Level-funded, Captives, Consortiums, Self-Funding
  • HRA’s, HAS’s and plan design changes
  • Prescription Carve outs
  • Ongoing Medical claim management through claim audits

Developing a long term benefit strategy that can be adjusted on a short-term basis is the first step in actively managing your benefit plans and budget. I would encourage all benefits and HR professionals to push harder in this area and seek the right partner to help build the road map to achieve a more sustainable and rewarding benefits strategy that Human Resources and the C-suite can relate to and appreciate.

 

Source: HUB International Employee Benefits Barometer 2018 Study, SourceMedia Research/Employee Benefit News, December 2017

 

Comments