As students are back-to-school shopping for return to school, HR professionals everywhere are (or should be) benefits “shopping” in preparation for the 2025 open enrollment process. Having spent over 20 years in HR, I have experienced seamless and nightmare open enrollment seasons. One major factor that plays a significant role in determining the difference is the broker! I hope every organization has a great relationship with its broker, as that relationship can help you prepare and navigate for both the best and worst-case scenarios regarding employee benefits.
I’ve seen firsthand how crucial employee benefits are to an organization’s most important asset. I have 23 years of stories I could share; however, to remain HIPPA compliant, I will skip those stories in this post. Instead, I want to share how and what employers can do to ensure employees feel cared for and supported when facing health challenges that require them to use their health coverage. The critical thing to remember here is that employee benefits are not just perks but a vital component of your overall business strategy.
The Importance of Employee Benefits
According to Gallup’s “State of the Global Workplace: 2023 Report,” 61% of employees consider an organization’s benefits package to be “very important” when evaluating a job offer. Furthermore, the report found that employees who are satisfied with their benefits are 1.5 times more likely to be engaged at work and 2 times more likely to recommend their organization as a great place to work. These numbers underscore the importance of regularly evaluating and updating your benefits strategy.
Understanding the Broker Role
Today, I want to discuss the kick-off or the start of the process that can significantly impact your benefits program: the broker Request for Proposal (RFP). A medical broker, also known as an employee benefits broker, insurance broker, or benefits consultant, plays a crucial role in helping employers design, implement, and manage their employee health insurance and benefits programs. This relationship should be owned and maintained by the most senior HR person. Still, it is also imperative that the relationship extends to the CEO and CFO (because, well…$$$).
Key Responsibilities of a Benefits Broker
1. Market analysis: They research and analyze available insurance plans and providers in the market. They also have a good pulse on renewals and industry trends.
2. Plan selection: They guide employers through choosing suitable health insurance and benefits plans based on the company’s strategy, needs, and budget.
3. Negotiation: They negotiate with insurance carriers on behalf of the employer to secure the best offering, rates, and terms.
4. Compliance: They ensure benefit plans comply with relevant laws and regulations.
5. Employee education: They assist in the communication materials for employees and often help during open enrollment meetings.
6. Ongoing support: They provide year-round support, helping to resolve questions, challenges, or issues between the employer, employees, and insurance carriers.
7. Strategic planning: They advise on long-term benefits strategies to align with the company’s goals and employee needs.
8. Cost management: They help educate employers on controlling and managing their healthcare costs over time.
Why Consider a Broker RFP?
In essence, a medical broker serves as an expert intermediary between employers and insurance providers, aiming to optimize the benefits package while managing costs and ensuring compliance. Brokers not only have more market data than the typical executive or HR Professional because they see so many renewals yearly and (should) have resources in their firm that most organizations don’t have in-house (like medical review officers, pharmacy experts, compliance, etc.). If those items don’t help you to understand the importance of your broker, let me throw one more data point your way…. employee benefits are commonly the #2 highest budget line item behind payroll and is not unusual to be 20+% of the overall payroll expense.
Why Consider a Broker RFP?
Here are my top two reasons you should consider a broker RFP:
Ensure Market Competitiveness: A broker RFP allows you to assess whether your current benefits package and costs are competitive in the current market. The insurance and benefits landscape constantly evolves, with new products, technologies, and strategies emerging regularly. By going through an RFP process, you can:
Compare your current broker’s offerings and performance against others in the market.
Discover innovative solutions or cost-saving strategies you might be missing.
Ensure you’re getting the best value for your investment in employee benefits.
Align Benefits Strategy with Organizational Goals: As your organization grows and evolves, your benefits needs change, too. Outline your 1, 3, and 5-year goals.
Identify solutions that can help with vital organizational challenges like talent attraction and retention.
Improve Service Quality and Expertise: Even if you’re satisfied with your current broker, an RFP can help ensure you receive the highest level of service and expertise. It allows you to:
Evaluate the depth and breadth of services offered by various brokers.
Assess the technological capabilities of different brokers, which can impact everything from enrollment processes to data analytics.
Gauge the level of proactive support and strategic guidance you can expect.
If you stay with them, negotiate better terms or expanded services with your current broker.
Remember, conducting an RFP doesn’t necessarily mean you’ll switch brokers. Sometimes, the process reaffirms that your current broker is the best fit but can also lead to improved services and terms. The RFP process isn’t just about finding a new broker; it’s an opportunity to reassess your entire benefits strategy. A well-executed RFP can help you align your benefits with your company’s short-term and long-term goals.
The Request for Proposal (RFP) Process
Now, let’s talk about the RFP process itself. Here are some tips to ensure it runs smoothly:
Clearly define your objectives: What do you want from a broker relationship? What are the current company goals and needs?
Be transparent about your challenges: The more information you provide, the better solutions brokers can offer. If you have challenges, the broker will learn them when they take your benefits to market or as they work with you, so providing them details upfront helps to build a healthy relationship from the start.
Start the process early at least 4-6 months before your renewal date. The more time you have, the better, so that if you make a change, there is plenty of time for the new broker to manage your renewals. Always allow your current broker to participate in the process. Even if you are 100% certain you are making a move, excluding your current broker might mean service levels suffer until the change occurs.
Form a committee: Include senior HR, finance, and operations. Each member will have a different perspective and experience, but keep in mind the HR team is likely who owns the relationship since they are who will work most closely with them on an ongoing basis (this is assuming there is a senior HR professional)
Ask for case studies or references: Look for brokers with experience in your industry and company size. The RFP process is an interview process, so asking to speak with current and previous clients can give you great insights.
Consider cultural fit: Your broker should align with your company values and communication style. Remember, the goal isn’t just to find the lowest-cost option. You’re looking for a strategic partner to help you navigate the complex world of employee benefits and contribute to your overall business success.
The RFP process has the potential to improve your open enrollment strategy. A great broker brings perspective on communication methods, decision support tools, and technology platforms that can make open enrollment smoother and more engaging for employees. A 2023 Willis Towers Watson survey found that companies with highly effective benefits communication strategies reported 80% higher rates of employee appreciation for their benefits programs. The data tells us that a well-executed broker RFP is more than a procurement exercise. It’s an opportunity to reassess your benefits strategy, improve employee satisfaction, and align your benefits program with your long-term business objectives. By taking a strategic approach to this process, you can turn your benefits program into a powerful tool for attracting and retaining top talent.
