John & Rusty Report Editor’s Note: We found the results of this survey of high interest, but caution our readers that of the 150 total respondents, only 8% were small business owners.
Technology continues to reshape the landscape of the benefits business. As employers increasingly rely on technology for everything from enrollment to administration and compliance, they look to their brokers for sound advice.
This was one of the key findings of the 2019 BenefitsPRO employer survey of a cross-section of management and human resource positions (see box).
Fully 95 percent of employers consider technology a “must-have” or “very important” in their day-to-day job functions, up slightly from the previous year. No respondent considered it unimportant.
And for the most part, brokers are doing a good job of providing clients the technology information they need, when they need it. Seventy-eight percent of employers said they’re satisfied with the frequency of communication about technology from their broker. Half of the respondents communicate with their benefits advisor about technology either once a year or multiple times a year.
A key opportunity for brokers lies with the 19 percent of employers who desire more communication and the 24 percent who never talk with their broker about this topic. This opportunity is especially timely, because 29 percent of employers have changed tech vendors or added new services in the past year, and another 18 percent are considering doing so.
Eighty-four percent of respondents are satisfied with the overall amount of communication with their broker, although the frequency of communication varies, with multiple times per week (29 percent) or multiple times per month (28 percent) being the most common. Communication likely peaks during enrollment. Nearly 6 in 10 employers said their broker helps with enrollment, while another 20 percent said they conduct it for them. Still, that leaves an opportunity with a significant group of employers (22 percent) who conduct enrollment on their own.
Most employers understand the value of working with a broker. Eighty-four percent use a broker/consultant or agent, and more than 90 percent would not consider dropping their broker and going it alone. However, several factors could cause them to switch brokers: Cost (51 percent), better product offerings (46 percent), a more consultative approach (24 percent) and better communication (22 percent).
The fact that nearly half of employers would consider switching brokers to save money creates opportunities to present cost-savings options. Broker compensation is divided fairly evenly between commission (55 percent) and fee-based (45 percent). Employers said their brokers have discussed multiple savings strategies with them: reference-based pricing (56 percent); direct primary care (35 percent); direct contracting (34 percent); and bundled payments (29 percent).
Successful brokers understand which benefits are most popular with employees and then build on that foundation.
Consumer-driven plans may provide an opportunity for brokers to expand their portfolio. Sixty-five percent of employers are considering implementing or expanding these types of plans. There is also an opportunity to increase employee engagement with health savings accounts. Although 58 percent of employers surveyed currently offer HSAs, three-fourths of these employers said less than half of their workforce takes advantage of them.
And while employers remain interested in cost-saving options, most are not passing increased benefits costs onto employees:
- * Fifty-four percent said they do not expect employees to pick up more of the tab for their own benefits in the coming year.
- * Eighty-one percent have not dropped spousal coverage.
In fact, many employers are expanding benefits options or considering doing so to attract and retain employees.
This year’s survey results clearly highlight opportunities for brokers to strengthen client relationships and offer new products and services. However, several factors outside their control could also have a significant impact on their success in 2020.
The economy, as always, is a wild card. Sixty-three percent of employers said the economy influences their benefits spending. Seven in 10 employers experienced increased health care costs this year, while 20 percent saw costs remain the same, and only 10 percent enjoyed a slight decline.
Meanwhile, the changing nature of the workforce is not yet having a significant impact on employers surveyed. Seventy-three percent said their use of external workers has stayed the same, and more than 82 percent are not concerned about the potential impact of the gig economy on their business.
The other big uncertainty in 2020 is the November elections, with the White House, one-third of the Senate and all House seats up for grabs. Employers are evenly divided on the Trump administration’s impact on their business outlook. Thirty-six percent rate Trump policies as positive; 31 percent as negative; and 34 percent as having no impact.
Health care reform also remains up in the air, with candidates promising everything from repealing the Affordable Care Act to enacting a single-player plan. Forty-one percent of employers said this uncertainty has caused them to rethink their employee benefit offerings, while 35 percent said new health reimbursement account legislation will affect their health care planning to some degree.
Finally, the survey offered a few insights into the decision-making process. Brokers may consider broadening their target audience beyond just the human resources department. More than 90 percent of respondents said their C-suite is involved in the benefits process to some degree.
Insurance magazines remain highly influential in providing health care reform information. Employers report getting information from their newsletters (49 percent); websites (47 percent) and print magazines (30 percent). Brokers may want to follow these sources as well to better understand what topics interest their clients. BenefitsPRO.com continues to be the most popular source of work-related information, visited by 80 percent of respondents.
The 2019 employer survey provides valuable clues as brokers plan ahead for 2020 and beyond. While survey results provide a good road map, each client has specific needs and expectations. Reading between the lines, however, brokers who are able to combine tech savviness with old-fashioned personal service likely will find their business on the right track in the coming year.