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Small Business Owners: Employee Benefit Plans and ACA Legislation Limbo
Posted by Lowdermilk & Associates on
by John Lowdermilk
No matter what side of the Affordable Care Act (ACA) legislative debate you fall on, we can all agree it causes major frustration for businesses of every size. For small businesses with less than 100 employees, the impact on employee benefit plans is even more profound.
If you’re like many small business owners, you feel stuck with the limited control you can exert over employee benefit costs. And for most businesses, it’s the second largest expense bucket on financial statements.
More salt is added to the wound when you get the annual call from your Broker and find out your rates are going up…again. With the white-hot labor market here in Colorado, you also know that to compete you must offer excellent employee benefits
3 Actions You Can Take to Create a More Favorable Employee Benefit Position for Your Small Business
Running a successful business is challenging without the distraction of the ACA debate. The ongoing national and emotional conversation may add to that burden of feeling like you have little control over the situation. But in spite of the legislative limbo, there are actions you can take to stabilize your employee benefits environment. If you take these steps now, your company will be ready to navigate the twists and turns ahead successfully.
Step 1. Understand the Cost Drivers of Your Employee Benefit Environment
This is the first step in our proprietary Lowdermilk CARES Employee Benefits Design Methodology. We work with our clients to assess the following areas:
Understand Your Company Culture and Associated Impact on Benefits
Identify and/or Evaluate the Assumed Risk of Your Employees Health Claims
Evaluate the Plans You Offer and Terms of Your Current Carrier Contract(s)
Step 2. Change Your Contract Terms to Work for Your Business and…
Not the Carrier
The information gathered in Step One, informs the strategic approach to changing your contract. Employers we serve and talk with say they feel the most stuck and handcuffed because of their carrier contracts.
I always say “It’s easy to get into a contract, but how do you get out of one?”
Many Brokers have only worked in the fully insured space, so often they are not as familiar with the partial self-funded contract terms and conditions. Because Brokers are paid, either way, some just don’t want to take the time and effort to go through this process.
Find Out if Your Insurance Contract Works for the Carrier or Your Business with
These Two Questions
It’s as simple as asking these two questions. Your answers provide a quick snapshot of the opportunity you have to take back control of this significant expense.
When you have a claim surplus reserve at the end of the year, what percent of that do you keep?
Do you have to renew with the Carrier to get your surplus reserve paid out?
Getting the contracts set up to favor the employer in the first year is a critical step to success.
Step 3. Design and Align Plans that Meet Your Business Goals, Employee Needs, and Culture
For many years the idea of benchmarking and being the same as your competitors has been accepted as status quo. At Lowdermilk, we ask “Why do you want to be benchmarked and be like everyone else?”
We believe you should make your benefits program better, an asset that makes your employees happy and improves your bottom line. With the terms of the Carrier contract adjusted to work for YOU, your company is now positioned to do just that.
You can now take back control of this significant expense. You’re able to design a plan that improves ROI because it maps to your business goals and culture.
The Impact of Shifting Employee Benefit Plans from Cookie Cutter to Custom Fit
Connect More Deeply to Your Company Culture
For some companies, this means offering benefits that appeal to wellness instead of sickness. In addition to traditional medical insurance, our clients have been able to build plans that include services like Chiropractic, Acupuncture, Health Coaching, Work Life Balance, Emotional Intelligence, and Financial Wellness; to name a few. The point being that depending on what your company does, you can now build employee benefit plans that fit your culture like a glove.
Attract and Retain Talent
Colorado’s white-hot labor market has made the recruiting and retention of employees critical for many companies. Reverse discrimination can be applied to your program design to offer more plans with different deductibles and employee contributions. For companies struggling to attract and retain both top talent and, rank and file employees, this provides a powerful differentiator and reason to stay.
Lower Costs in Spite of Skyrocketing Premium Increases
Quite often another result of this process is the lowering of your employee benefit costs. We have consistently seen that when you build plans where employees can in essence “underwrite themselves,” that encourages active participation in improving their health and managing their benefit plan usage. The net result can produce lower claims and payout.
Turn Your Employee Benefits Program into an Asset
It’s easy to feel that you are backed into a corner when it comes to Employee Benefits Plan Design. I hope this article has provided you with some new ideas and inspiration. You can take back control of this significant expense and build a Plan that is truly an Asset.
We typically work with our clients over a three year period to fully implement their unique benefit plan. Our Lowdermilk CARES methodology provides the framework to simplify a very complex process and deliver consistent results.
Our relentless focus to provide the best path forward regardless of how much time and effort it takes is what drives me and my team. Because of this, Lowdermilk & Associates has become known for our ability to deconstruct a contract and then rewrite it to work for our Client instead of the Carrier. Our expertise ensures that the contract is ACA compliant.
To learn more please call (303) 691-9888.