Brokers step up to help address rising health care costs

As the pandemic is replaced by inflation, changing workforce priorities, and new and revised regulations, employers are once again turning to their broker partners. But where cost-control efforts once focused on reassessing clients’ benefit offerings and identifying alternate products and services, brokers and employers alike have begun to understand that there are other tools at their disposal.

In fact, in their 2023 broker report, “The 2023 Benefits Broker: Rising Healthcare Costs and Increasing Competition Set the Tone,” Optavise found increasing demand for help with year-round communications and education for their workforce, balancing employee demand for richer benefits with budgetary constraints, and identifying administrative partners to improve efficiency.

Managing rising health care costs

According to the U.S. Bureau of Labor Statistics, at their peak, health insurance prices in 2022 were up by 28% from the previous year — more than three times the overall inflation rate of 8.2% for that period. It’s not surprising, then, that 83% of brokers responding to Optavise’s survey reported that clients rely on them to contain health care costs. These inflationary pressures are forcing companies to make important decisions about their benefits offerings, balancing their budgets with the need to offer competitive benefits. And employees must choose affordable coverage that provides care but doesn’t put them at financial risk.

One way brokers are helping their clients address both needs is by identifying meaningful voluntary benefit programs. Sixty-four percent of brokers reported an increase in clients adding voluntary benefits, up from 58% in 2021, with accident insurance (71%), critical illness (68%) and hospital indemnity (39%) as the most-added benefits. Interestingly, there was a dramatic increase in disability programs — nearly doubling from 18% to 34% — and life insurance — tripling to 30% combined for group and whole life, up from 10%, reflecting a renewed focus on income protection and financial security.

Many consumers are changing their shopping habits in response to rising costs. These decisions are beginning to affect their health care spending (with many individuals skipping care or prescriptions) as well as their short- and long-term health. Employers increasingly understand that they need to enlist their employees in the battle to control health care costs, which requires year-round education efforts.

Providing employee support with benefits communication

Another Optavise survey showed that employees want to understand how benefits affect their finances and how to manage their health care costs as a part of financial wellness. Twenty-nine percent of employees want to know how to research health care costs and why it matters, 39% want to understand how to avoid surprise medical bills, and 33% want to know how their deductible, copay/coinsurance and out-of-pocket maximum work and what those mean for their wallet, according to the report.

Once again, brokers are stepping up. Ninety-three percent of brokers reported a moderate to high demand for help with benefits communications materials, and 66% of brokers agree that offering communication services brings a lot of value to their business.

Most brokers already provide support to their clients in this area, with 61% offering the full gamut of help with materials, virtual presentations, in-person support and vendor recommendations, with most support (74%) provided around open enrollment.

Even though broker engagement increases leading up to and during open enrollment, employers still need to work with brokers year-round to best communicate benefits offerings to their employees. For brokers, this means always being prepared to provide top-notch employee education, communications and compliance services as well as product and service recommendations that meet clients’ changing needs so employees can become smarter, more informed health care consumers.

Identifying administrative partners

For many employers, a smooth-running, user-friendly benefits administration system is key to an efficient and cost-effective benefits program. In fact, the brokers surveyed reported that their clients prioritized ease of use (75%), application programming interface/third-party integration (47%) and single sign-on capabilities (41%) in choosing a benefits administration system.

Yet finding the right partner remains a challenge, as brokers reported the following barriers to the right fit: proposed implementation timelines (70%), the availability of ongoing support (65%) and administrative training (59%, nearly double last year’s response), and complex file feeds (58%). It’s not surprising, then, that 56% of respondents (up from 48%) reported that they recommend benefits administration partners to clients on an annual basis (up from 48%), with another 19% making such recommendations every three years (presumably at the end of an existing contract).

In the ever-changing benefits landscape, brokers continue to play a vital role for employers when it comes to finding cost-effective programs, partners and benefits programs. With today’s decisions likely affecting costs and usage for years and not just months, planning, execution and engagement require year-round involvement from employers, brokers and employees alike.

Kim Buckey is vice president of client services with Optavise. Kim may be contacted at [email protected].