Around the country CEOs are looking to hire top talent, CFOs are looking to bring certainty and predictability to the budget, and HR professionals are looking to provide an all-star benefits package to the workforce. All difficult tasks in today’s economy and all significantly impacted by rising healthcare costs. If leveraged effectively, the healthcare budget can serve as the centerpiece to acquiring the best “free agents”, stabilizing expenses, and granting employees access to world-class healthcare. However, this hasn’t been the story for most organizations. Year after year, employers face a healthcare budget that is striking out in its efforts to provide a successful financial outcome. Why is that?
In part II of Why Is My Healthcare Budget Striking Out you will uncover the 2nd fundamental challenge you face in controlling your health insurance costs. If you can identify the spin on the curveballs thrown at your health plan, you can implement the right solutions to prevent you from striking out. Let’s go to work on challenge #2:
Your Broker’s Compensation Could Be Misaligned With Your Financial Goals
How does your health insurance broker paid?
How much does your health insurance broker get paid?
These are two questions far too many organizations are unable to answer today and a big reason why controlling the healthcare budget continues to be an uphill battle.
Historically, health insurance brokers have been compensated by insurance companies via commissions that were calculated based on a percentage of collected premium from a specific employer group. Unfortunately, this model still exists and the problem with this mode of compensation is clear. The more your health insurance premiums increase, the more your broker gets paid. I hope you understand why this is a concern. You broker wins when your health insurance premiums increase. Could this be happening to you?
Consulting Fees Don’t Guarantee Transparency
In more recent years, organizations have fought to create transparency in broker compensation by demanding a move to consulting fees, which has been a much-needed transition. In the move to a fee-based structure, you have eliminated commissions and are now paying the broker directly, which seems like a win for your organization, right? However, misaligned incentives can still exist even when commissions are no longer present.
If you’re currently paying your broker a consulting fee, make sure you’re asking the following questions:
- Are you (broker) receiving a production bonus from the insurance carrier?
- Are you (broker) receiving override commissions from the insurance carrier?
If the answer to either question is “yes”, your broker’s compensation is still misaligned with your goals, and to make matters worse, they are not legally obligated to disclose these extra payments to you. At a minimum, make sure your broker is disclosing any bonus or override commission they may be receiving.
Create Unhittable Results
When increased healthcare costs lead to increased paychecks for your broker, it becomes very difficult for you to create predictable and measurable results. MVP-caliber outcomes require that all teams play on an even playing field and play by the same rules. Transparency in compensation is essential to put yourself in a position to win. When your broker’s pay is properly aligned with your financial goals, you will take a huge step forward in creating unhittable results.
In Part III of Why Is My Healthcare Budget Striking Out, you will learn about the biggest challenge you face in your attempts to reign in healthcare costs. Until then, bear down, focus on the target, and strike out the status quo!