Evaluating the Potential Impact of Health Benefits Plan Changes: 6 Factors to Consider

BY BEN CONNER

Change is scary. When there’s an unknown that could significantly impact the health of your business and its employees, you have every right to feel nervous. But change is also necessary. In the ever-evolving business world, your company has a responsibility to read market trends and react accordingly. If your business must respond by reducing expenses, your health care benefits plan could be an untapped area within your business. However, making a drastic change out of necessity or in haste could place an enormous administrative burden on your company leaders, so the best way to prepare is to study beforehand. When you understand exactly how a specific plan could impact your entire company, you can make a confident, educated decision.

Preparing For Change

When we work with our clients to help them evaluate potential plans, we encourage having someone at the meeting who is knowledgeable of the company’s finances (like the CFO) and someone who is knowledgeable of the employees’ needs (like the HR manager). The questions we explore rely on both knowledge sets to craft a plan that meets the company’s financial and personnel needs.

The questions we ask include:
1. How does your workforce react to change? If your employees are uncomfortable with change, a dramatic plan overhaul may be poorly received and difficult to implement. Instead of pursuing dramatic change, you may benefit from smaller optimizations on behalf of your employees and company finances. However, if your employees are comfortable with changes, you may have an opportunity to explore a completely new plan.
2. How do your employees want to access health care? Knowing how your employees are comfortable accessing health care can help you shape a new plan that suits their needs. If your employees prefer telemedicine options, your plan should provide similar opportunities. If employees make two or three wellness visits to the doctor each year, you may want to identify a plan with a low co-pay so that employees can continue visiting the doctor as often as they like.
3. Can you cover everyone? Some plans may save your company hundreds of thousands of dollars, but switching could require some innovation on behalf of certain employees. If the majority of your spend is focused on one or two members, you and your advisor should explore alternative methods to access the medication at a lower cost for the employee.
4. What is the plan’s administrative burden? This is both a personnel question and a finance question. Being more creative inside of your benefits package can place some additional complexity onto your HR team. Education requires significant time from HR and the rest of your staff, so factor that time investment into the overall costs of switching from one plan to another.
5. How much can you save? Different strategies may unlock different savings, but those savings may not be immediately obvious. Many strategies can be preemptive risk reduction strategies, which can make it difficult to quantify the "avoided savings" total when deploying these methods. With reference-based pricing, for example, your company typically pays more for procedures and hospital stays, but the higher level of care your employees receive means you ultimately spend less because there are fewer complications, fewer medications, and less physical therapy. Knowing exactly how much you can save by switching to a certain plan may directly influence your final decision.
6. What can your company do with the money you save? As you consider this question, you may begin to see your benefits package as more than an expense to keep your employees healthy. Instead, your benefits plan can become a tool to unlock funds for the rest of your business. We’ve seen some of our clients use their savings to increase 401(k) contributions or invest in new facilities. When you and your team understand how the plan could benefit the entire company, your people may be more receptive to proposed changes.

Looking Ahead

Change is scary, but it is manageable when you collect the facts beforehand and build a plan based on the unique realities of your business. Work with your advisor to evaluate potential plans today. When you understand how a plan benefits your business and workforce, the transition becomes much less scary.