In today’s job market, companies are becoming more strategic about recruiting and retention. They’re also looking for solutions to rising healthcare costs and responding to changing consumer habits and demands.
The need for a design-build approach to benefits is here, and it’s beginning to play out among employers large and small. These days, brokers must increasingly work to uncover their clients’ unique needs and pull together the resources to serve them.
“Employee benefits are getting deliciously complicated,” says Joe Ellis, senior vice president of CBIZ’s Employee Services Organization.
But it can be a challenge to determine the right package to offer, especially when brokers are fielding offers from hundreds of vendors. How do you figure out where the value is?
Ellis says the key is creating an overall benefits strategy. “You have to build out a plan that will meet the needs of as many people as possible,” he says. “But you have to do it in a way that isn’t just the company giving out more and more money.”
Jack Wilkinson, a senior vice president in the Benefits Advisory Group at J. Smith Lanier & Co., says the move beyond traditional benefits has changed the way he does business.
“I was recently with a prospective client and had an hour and a half scheduled to meet. We were 50 minutes in before we talked insurance,” Wilkinson says. “Before that, we talked about how we engage employees and if they have focused action to manage specialty pharmaceutical costs. The insurance wrapper is around everything else we are offering.”
Ellis says the design-build world hearkens back to the formerly popular cafeteria plans, in which employers offered a range of benefits and employees decided where to spend their money. The market is different today, and many cafeteria plans have gone by the wayside. But competition for a solid workforce demands that employers offer a wide range of benefits, some paid for by the employer and some by the employee.
Some cover a broad swath of employees like legal assistance, pet insurance, wellness programs and tuition reimbursement. Some look to pinpoint specific groups of needs like fertility insurance or adoption assistance.
A wide group of offerings allows for self-selection by employees. This is desired specifically by millennials who may not need long-term care insurance but might want to cover veterinary expenses for their 80-pound Labrador. It allows them to choose benefits that are tailored to their lifestyle over time. From a broker’s perspective, Ellis says, it’s good to have a “generationally balanced team” to tease out what the employer and employees want. He tries to ensure this happens at his organization. That way, when he comes in with employee feedback for one of his clients, he gets input on the results from millennials to baby boomers.
“One group can offer what they teased out of the results, and another generation can say, ‘This is what I’m hearing,’” Ellis says. “A good, broad benefit plan would have the ability to cover a wide population, and the only way to find out what they want is to ask.”
Still an Uphill Battle
IMA Financial Group has nearly 700 employees scattered across four states. Their needs and desires vary as widely as their individual personalities. But through dedicated data collection and benchmarking, IMA has been able to gain a clear understanding of what benefits they value and what will continue to make IMA a desirable place to work.
They have days allocated for biking to work, volunteering at a charity and even raising funds with an outdoor ping pong tournament. Another popular benefit is the firm’s internal dream coach. His job is to help employees accomplish whatever goals they may have, big or small, work-related or not.
“This is something they wanted and cared about,” says Jessi Ryan, IMA’s Total Rewards practice lead. “It’s very unique and could only have been known by using our data.”
The company’s Total Rewards Program employee benefits package was created using feedback from its employees. IMA is vigilant about benchmarking—to find trends in the employee benefits industry, understand what its competitors are doing and, most importantly, understand what is valuable to its employees.
IMA’s program demonstrates the expanse of options for employers who want a custom package, but Wilkinson says the industry is still far ahead of where many employers currently stand. Most, he says, still prefer to offer traditional benefits and nothing else. Paying up front for benefits that might lower their total spend (like reducing healthcare costs over time or improving retention to lower administrative spending on new hires) can be a tough sell for many employers. “Getting them to spend nickels to save dollars has been more of an uphill battle than we expected,” he says.
But that doesn’t mean brokers should give up on offering a wide array of options. In fact, good ones should be able to walk into a meeting and say, “Here are things you probably don’t know about but you should,” Ellis says. “Like identity theft protection—who would have thought that would be something employers would be thinking about? But whatever the consumer is purchasing—and employees are consumers—you can let them buy it at work.”
This approach also benefits brokers. Instead of just working with an employer for one or two products, brokers become consultants, advising clients on their entire benefit portfolio.
Brokers should also be motivated to stay abreast of benefit trends by the fear of missing out. The last thing a broker needs is clients knocking on the door asking why they hadn’t been told about a new benefit they heard about through another agency.
Sorting Through Options
Whether employers are asking for abundant benefit packages or brokers are (or should be) introducing them, options are nearly endless. So how does one wade through the possibilities? Very carefully.
Wilkinson has a small checklist of considerations when choosing which products to bring into the fold. He tries to determine if the program or service is new to the market or another iteration of what is already available.
“There is lots of duplication on the market,” he says. “You have to wade through vendors to figure out which products are truly disruptive. And our market is ripe for disruption.”
Brokers need to understand if the programs and services put in place are actually working to attract and retain employees. Given the nature of many products, this can be yeoman’s work. IMA relies heavily on employee surveys for this task and, while the staff specifically asked for a dream coach, IMA often finds that the core benefits are still highly relevant for its employees.
“In our data set, we find that medical benefits and options for retirement, savings and rich, paid time off are still popular,” Ryan says. “These are all things we are continuing to see rise to the top in terms of value.”
Some of the initiatives offered at larger companies, such as “napping pauses” and buses to transport employees to work, may not have value at other organizations. At IMA, for example, employees value paid time off more than pet insurance.
Ryan stresses the importance of understanding what employees want and how those products may fit into the workforce culture. Then, use employee feedback to make sure they are having the desired effects on retention, recruitment or employee health.
“Brokers can use tools to do the heavy lifting and compile data, but they need in-house expertise to make sense of it and come back to the client and say, ‘Here are our recommendations based on employee feedback,’” Ryan says.
Vetting the Vendors
Joe Miller, president of Shortlister, in Park Ridge, Illinois, says his organization was created out of necessity. Coming from a background in wellness, he understood that brokers and employers couldn’t manage the ever-increasing number of vendors knocking on the door trying to get face time.
So he began compiling lists for brokers. Soon after, others were knocking on his door for more information. His lists now cover more than 40 different categories of vendors. And doing this for a living has made him sympathize with brokers attempting to do it on their own.
“We are the experts behind the experts, and we have a hard time,” he says. “Employers expect brokers and consultants to have a good understanding of the selection out there, and that’s not even possible right now.”
Shortlister is aptly named because it provides lists to self-insured employers and brokers seeking to find vendors for different aspects of their benefits program. An employer group takes a quick survey discussing its goals, philosophies, demographics and other pertinent information. Shortlister compiles this and returns with a list of prequalified vendors that might fit the employer’s needs. The brokers analyze that and narrow it to a handful of options. Then, Miller gets quotes, meets with the vendors and has them answer questionnaires. That information is then returned to the client, enabling the client to choose its best option.
Dave Kerrigan, founder and managing director of Sante Nasc, in Woburn, Massachusetts, is also working to help brokers wade through the vendor sea. He has designs to build a searchable database, primarily of early-stage vendors, for brokers to peruse. He hopes to make the market easier to navigate by centralizing intake and standardizing the evaluation of vendors and then compiling that information in one place.
“Some of these vendors are better than others, and brokers and consultants may not be equipped to evaluate these companies,” says Kerrigan, a former broker. “Brokers out there are going to be able to go into the database and search for companies based upon key criteria.” For example, a broker could search for a category of company such as property and casualty or student loan services. Then within that, they’ll be able to dig down deeper into specifics, such as mental health services within the health and wellness sector. “They will be able to find new things, differentiated offerings or new vendors in the spaces where the usual players aren’t cutting it,” he says.
If brokers want to keep the process in-house, Ryan says, research is a must. She uses a site called Owler.com. On Owler, brokers type in the name of a vendor, such as Gradify, which helps repay student loans. Owler provides some company information, news on the organization and a list of competitors in that space.
One good marker to use during the vetting process is inquiring about a vendor’s dedication to employee engagement. Benefits can be added to a program, but if employees don’t know about them, they’ll go unused. Both vendors and brokers need to understand new, interactive ways to talk to employees.
“A blue-collar employee might not use the internet” on the job, Wilkinson says, “but they do have a smart phone, so they need to have built-out apps to engage them. Engagement should be year-round, not just at open enrollment.”
In fact, Kerrigan says a vendor’s fees could be based on engagement, whereby employers pay only for the employees who use a program instead of an across-the-board fee.
Brokers can also ask if vendors will return fees if they fail to bring people into the fold. No employer wants to spend a lot of money on a program only to find no one is using it. And there are ample resources to get employees on board—chatbots, mobile apps, texting and artificial intelligence can all be employed to get the workforce engaged.
Voluntary Benefit Snapshot
Some manage speeding tickets. Some pay for adoption services. The following are just a handful of benefit options and how they work.
Purpose: Six years ago, Peerfit was created to redefine the way employers were engaging in wellness. Emma Maurer, vice president of enterprise health, says the company sought an answer for employers subsidizing unused big-box gym memberships.
Peerfit built a network of fitness studios offering yoga, Pilates and boot camps. Employees have access to any of the available classes via credits an employer purchases. Employees can go online, check out their options and book the classes.
“This is important in the age of personalization because they can customize it for each employee,” Maurer says. “People can do things they are interested in and can physically do.”
Cost: Employers pay only when people go to classes. They typically make one class each week available to an employee. The cost varies depending upon the location and the number of credits purchased, but Maurer says a 500-employee company in New York might expect to spend $10,000 per year for coverage.
ROI: Wellness programs can be difficult to measure, Maurer contends, because it’s hard to measure when something like cardiovascular disease is prevented through exercise. But Peerfit can show employers exactly how money is being spent, who takes part and the percentage of overall engagement.
Extras: Part of the engagement process is enabling people to invite others to attend classes. An employee can send invitations to others, and with the click of a button, the class is reserved for them as well. Maurer says this encourages the social aspect of the classes, like a healthy happy hour.
Purpose: The company introduced its first legal plan to the market 46 years ago. The goal was to provide assistance to people “in the middle,” says Emily Rose, LegalShield’s senior vice president of broker and partnership sales.
“People with lower incomes can get legal aid, and those on the high end probably have a private attorney on retainer,” she says. “Plans were brought to the marketplace to ensure the general public had reasonably priced access to attorneys.”
The program has evolved into a package of services covering common legal matters like speeding tickets, estate planning, adoption and bankruptcy.
Cost: Everything is covered in one plan from initial consultation to legal representation, if needed, for a $200 annual payroll deduction. This covers the employees, spouses and dependents.
ROI: Money in versus money out is the best way to figure ROI, Rose says. On average, someone would be charged $300 per hour for an attorney (as opposed to $200 annually for their services). Uptake is typically 12% to 15% of employees in the first year and grows in subsequent years.
Extras: The organization takes a white-glove approach to customer service, according to Rose. Attorneys in the network respond to calls within eight hours; the industry standard with legal plans is 48 hours, she says. They also have a mobile app that allows clients to take a picture of a speeding ticket and send it to their attorney “before the police officer is back in his cruiser,” she says.
Healthy Paws Pet Insurance
Purpose: Pays for unexpected accidents and illnesses for cats and dogs. Healthy Paws helps pet owners save up to 90% on veterinary bills. Employees take their pets to the veterinarian of their choice, pay up front and get reimbursed for the expense.
Rob Jackson, Healthy Paws CEO and co-founder, says the insurer doesn’t cover preexisting conditions, wellness and preventive services. The company aims to cover accidents and long-term, chronic conditions which can easily add up to thousands of dollars.
Cost: Rates start around $15 a month for cats and $30 a month for dogs.
ROI: Pet insurance is an increasingly requested voluntary benefit, with a more than $2.5 billion market in 2016, according to Research Nester. The organization says much of this growth is because more than 65% of Americans have pets in their homes. Spending on the health of household pets has increased 11% in the past decade.
Extras: Employees can upload a photo of the vet bill through the phone and get reimbursed for the care within days. There are also no maximum limits or caps on payouts.
Purpose: The new kid on the benefits block, Sum180 offers a dizzying array of financial wellness options, from budgeting apps to student loan repayment. Sorting through this can be confusing for many employers.
“It is the Wild West, and we are still in the early days of figuring it out,” says Carla Dearing, CEO of Sum180. “Companies want to know what is offered in the marketplace and what they can hope to provide.”
Because of this, Sum180’s program aims to cover all of the most common financial issues in one stop—from beginning budgeting to paying off debt and saving for retirement. Participants in the program enter information, including what they make, spend, own and owe, and are given “next steps” for their finances. The program also provides tips, advice and support.
Cost: The fee is $1 per employee paid monthly or $12 per employee paid annually.
ROI: Engagement in this kind of behavioral-change program is often low, Dearing concedes. The information is confidential and participants aren’t outwardly ranked, but there are internal categories through which an employee moves up as his financial situation improves by paying down debt or fully participating in a 401(k) program.
“Over time, as people come back in, you monitor their situation,” Dearing says. “Ideally, you can report that people have moved up in their financial health.”
Sum180 uses a “gamified” approach to financial assistance. This essentially means it’s easily understandable. Users can access information simply by swiping their phones or can dip their toes in by watching short videos or getting tips, then move up to budgeting and saving.
“It’s about small steps and positive reinforcement, which are powerful features for change across all kinds of behaviors,” Dearing says.
On the employer’s side, decision support tools are an increasingly important resource, even using artificial intelligence to help employees sort through benefit options.
Businesssolver’s Sophia and Jellyvision Lab’s ALEX are both AI systems that walk employees through the enrollment process virtually. These are intuitive programs that ask employees questions, such as their family history of cancer or how many dependents they have, and use that information to determine what kind of benefits are best for them.
“Benefits are confusing, especially to the younger generations,” says Jamie Hawkins, president and CEO of Benefit Technology Resources in Tampa. “They didn’t grow up with union benefits like their parents. And they aren’t going to read a book about their options. This dynamic education is what they need.”
And on the healthcare side alone, there are copious applications and programs to help employees take better care of themselves.
“Brokers are overwhelmed because the sky is dark with the number of tools and applications and capabilities” in this space, says Michael Turpin, executive vice president and managing consultant for USI Insurance Services. “It’s the decade of bright and shiny objects, and brokers need to be able to figure out what is pyrite and what is gold.”
There is technology that targets people with high body-mass indices, women with high-risk pregnancies and people taking costly specialty prescription drugs. Offerings range from telemedicine office visits to smart phone apps that help diabetics regulate blood glucose levels by being more compliant with their healthcare plans.
“There is a whole side of consumer engagement communication tools to speak to a person who doesn’t have more than two minutes to listen to a message and understand what to do to be a better healthcare consumer,” Turpin says.
The many options on the market are only working to make benefits procurement more complicated as brokers try to administer custom plans for every client. It used to be common among larger organizations, Hawkins says, but even smaller companies are seeking this flexibility.
This change has left brokers analyzing internal processes like benefit procurement, onboarding customers, enrollment meetings, communication and renewal. And they are increasingly looking at technology to make the process smoother for themselves and their clients.
Hawkins, for instance, worked with an agency in New Orleans that was sending a staff member to enrollment meetings in five different locations. During his entire day presenting in various conference rooms to employee groups, he mostly saw people staring at their phones while he was talking. “It clicked for them that today’s workforce learns and wants to access information differently,” Hawkins says.
The firm implemented a benefits administration system where employees could upload videos on various benefits. This allowed employees to decide which programs they want to explore and then watch at their leisure. Not only is this a time saver for the brokerage, but the employer doesn’t have to pull people away from work for tedious enrollment meetings.
This newer technology can help improve processes, engagement and benefit reporting and analysis. But there is so much on the market that brokers definitely need to determine what will work with their organization’s culture and use it to its full potential.
“The technology is there,” Turpin says. “But, like anything, theoretically it enhances or makes processes better. But it can also fall flat on its face if not used correctly.”
Programs like TechCanary’s agency management system can customize operations for an array of uses. Reid Holzworth, founder and CEO of the Milwaukee-based company, says the system was built inside Salesforce, so it enables brokers to streamline the process of working with various vendors by adding them into one system. Then, on the back end, brokers can build out analytics that show whether each product is truly helping to attract and retain employees.
One important note for any technology that is adopted, Turpin says: it has to be used systemwide. Historically, brokerages with a national presence have tended to work in silos. Consolidations have resulted in firms with offices in various states banded under one umbrella but operating under completely different systems. A firm in Atlanta might find a great new product for its clients while its sister organization in California has no idea the program exists. Some of the newer technologies can help link those offices and share institutional knowledge.
“We need to eliminate the 100-year-old practice of each producer having their own way of doing things, with their own team and a million redundancies,” Turpin says.
There are probably few brokers who got into the employee benefits industry because they were lovers of math and technology. It’s inherently an occupation guided by Excel spreadsheets, handshakes and customer relations. But technology is changing the way business is done.
“Lots of large brokers like Marsh & McLennan, Lockton and Gallagher have entire tech divisions,” Hawkins says. “It has definitely changed the structure of brokerage firms.”
These newer divisions both implement the technology brokers use, such as Employee Navigator, and vet new technologies on the market. Smaller brokerages may not be able to afford entire technology divisions, but they do have options, Hawkins says. Often, they can partner with consultants or choose one technology and focus on learning it well.
“Honestly, it is hard for smaller brokerages without some help,” Hawkins says. “The HR/tech landscape is changing so fast even the large brokerages are struggling to keep up.”
The industry has reached a tipping point at which productivity is going to have to come from somewhere other than “the backs of people,” Turpin says. For the most part, there is already a high level of productivity, and there’s not a lot of spare time or energy on the part of brokers to do more.
So the industry will need to change for the sake of its survival, Turpin says. Customers no longer want to meet over a long lunch to discuss their plans. These days, they want to talk by text.
When it comes to technology, a lot of brokers are “fast followers.” No one wants to be first in line, but they aren’t going to be fifth either, Turpin says. His organization has chosen to be decisive about its adoption. “You can’t blink when people push back,” he says.
CEOs will need to be “bilingual” in technology instead of delegating the issue to someone else. This is, in part, because the marketplace is crowded with tools; some of them work well, and others are over-engineered and hard to adopt. It’s going to be crucial to know the difference.
Organizations will have to understand how to move into the digital age, and part of that change may be cutting some jobs considered of lower value.
But Turpin tempers that outlook with caution about making too many changes at once. At least, in the near future, technology will require the use of people to understand, interpret and relay it to clients.
“At a certain point, people are saturated with change, and you have to decide when to put a stake in the ground and when to be patient with adoption,” he says. “The best firms can improve their productivity if they can automate their business, but sales will always be where they are looking someone in the eye. Trust is currency when someone is hiring eyes and ears in the marketplace.”