Why benefit brokers should think like human capital managers do

By Chris Labrecque

Benefit brokers face some significant challenges in 2024. Employer health insurance costs are expected to jump 6.4%, KFF reports, after years of steady increases. This is a result of higher hospital labor costs trickling first to insurers and then to employers. Meanwhile, a recent Federal Reserve survey showed fewer Americans adults can afford a $400 emergency expense.

This means benefit brokers may find themselves with the difficult tasks of not only helping employers choose the right benefits for their employees but also helping them find tools and programs to ensure employees can access those benefits as needed. The ultimate goal is to help employees choose and access benefits to promote optimal health, engagement and productivity.

Given this reality, the most successful benefit brokers will be those who think like human capital managers do. Here’s a look at what that will mean.

What does human capital management involve?

In addition to handling the core benefits advisory work of juggling technology, compliance and logistics, human capital managers also think in terms of strategy. Which benefits will help employers attract and retain workers? How can brokers craft benefits packages that help employees optimize their physical and mental health and workplace performance?

And how do national, local and hyper-local (specific to your workplace) trends affect the answers to these questions?

This is more than benefit brokers are expected to know on their own. Employee feedback is essential to creating and adapting benefits packages that lead to the best possible outcomes. For example, a benefit broker might note national reports about rising health care costs and add a question about paying for care to an employee survey.

Employees might express frustration with rising pharmacy costs, too-high deductibles or the high cost of mental health care. From there, benefit brokers can decide how to ease those frustrations. New plan offerings? Better educational resources to help employees navigate existing offerings? Additional payment support benefits?

In addition to thinking about how they can support employees, however, benefit brokers embracing the human capital manager mindset must also think about how to empower employees.

Empowering employees: Benefits + Info + Access

What does empowering employees look like from a benefit broker/human capital manager lens? The simplest formula is making appropriate benefits available, equipping employees with the information they need to choose the right benefits, and ensuring that employees can access those benefits as needed.

None of this is necessarily new; what’s important to recognize for today’s benefits advisors is that accessibility is changing. For example, inflation continues to push prices upward, and health care is no exception. Meanwhile, the Federal Reserve reports wages aren’t expected to catch up with inflation until late next year.

This means that the same benefits options that worked for an employee population last year might be less accessible this year, simply for cost reasons.

Benefit brokers can help by making available benefits that empower employees to pay for care in more cost-effective ways. Health savings accounts and flexible spending accounts are excellent options to urge employers to offer. A newer entrant to the benefits space, a health payment account, is an employer-
funded tool that lets employees pay with a card at the point of care, then repay over time without any interest or fees.

One big reason HPAs may be a crucial addition to the payment product mix is that they make funds available to employees from their first day of employment, whereas FSAs and HSAs only allow employees to use the money that they have already set aside or that the employer contributes.

We’re seeing evidence that a growing proportion of employees find value in the HPA model: Our most recent usage data shows that the user group with the largest growth in the most recent quarter was those making $75,000 a year or more. Moreover, the average cost of care that employees used their HPA to finance dropped from $132 in Q1 of 2023 to $118 in Q2 2023.

Empowering employees to seek care as needed may be particularly impactful now. While some people have sought care they deferred during the early years of the pandemic, there is still some pent-up demand. For those who changed jobs or whose benefits changed in the interim, removing barriers to care is essential to facilitate re-engagement with their health and health care. That, in turn, is necessary for early prevention, detection, and treatment of chronic illnesses that might otherwise become serious and costly problems.

Looking ahead: The coming role of price transparency

I mentioned the importance of engaging with national trends for human capital managers. I confess that I’d hoped, by now, one of those trends would be the emergence of a variety of digital tools — built with publicly available price transparency data — that would let employees proactively shop for care by cost.

Although the publication of health care prices by payers in the past year has moved us closer to that reality, we’re not there yet. Why not? Because there’s now so much data available, we must first overcome the challenge of processing it all.

One industry leader noted that “most payer pricing files on their own are too big to open on personal computers.” That means anyone who wants to build a customer-facing price comparison tool on aggregated data likely must go through a third-party intermediary that can process and provide streamlined access to all this data, which is updated monthly.

But that process is underway. Benefit brokers thinking like human capital managers would pay close attention to developments in the price transparency space, as the tools built on price transparency data will provide an incredibly powerful way for employees to manage costs on the front end. This will be a hugely empowering development.

A final thought for benefit brokers ready to embrace the role of human capital manager: Whether or not employees feel comfortable sharing their financial difficulties, know that many are likely experiencing difficulties. Multiple data sources show that accessibility and affordability are pain points and will likely remain so as health care costs continue to rise.

Making it easier for employees to access the care they need for themselves and their families is one of the most powerful things that benefit brokers can do to improve retention, productivity and engagement.