Benefits Season is Here – Are you Ready?

Unique Benefits Challenges Facing Small Businesses

As if benefits season wasn’t daunting enough, it presents some unique hurdles. Small businesses may find it difficult to offer meaningful benefits packages at competitive prices – and that’s no fault of the business. Alexandra Larraga, Flex HR’s benefits manager, has seen this predicament firsthand. “One of the challenges small businesses face during a renewal are being big enough to want to offer benefits but too small to get good major medical pricing.” With fewer employees enrolled in the plan, the risk is spread across a much smaller group. In practice, this means that it takes just one employee with significant medical costs to drastically affect a group’s overall rate. As a result, small businesses often have far less leverage when negotiating with insurance providers, who view their risk as much higher.

Benefits Savings Considerations

When it comes time to renew, all is not lost. There are still opportunities to cut costs and make your plans appealing for employees. Some things to contemplate are:

• Shop around. Sometimes just “going to market” with your plan can present new options. This is where your HR partners play an important role. Flex HR Consultant Jeanne Corey remembers taking a client’s benefits to bid and saved the small business $100,000. “That was a huge cost savings for them,” she reflected, “and the employees were much happier with the new offering.” Alternatively, just exploring new carriers can motivate your existing carrier to reduce rates. After all, they still want your business!
• Consider self-funding. While commonly associated with larger businesses, self-funding your benefits plan can give employers more control over their costs. It places the financial responsibility for claims on the employer, offering potential savings, especially with the option of stop loss insurance which can help protect from catastrophic claims.
• Explore cost-sharing options. Cost-sharing, or the amount of cost the insured vs. the employer assumes, is a significant factor in pricing healthcare plans. For example, medical premiums can be reduced if a higher deductible is introduced to the plan. Consider options for adjusting your plan’s cost-sharing during your renewal period.

Learn more about cost saving opportunities for small businesses in Flex HR’s recent webinar, lead by benefits expert Alexandra Larraga.

Start Benefits Planning Early

The key to reducing stress during open enrollment is to plan – and plan early. Flex HR recommends planning for open enrollment about 4-6 months in advance of your renewal date. A sample timeline might look like this:

4-6 months ahead of renewal

• Consider conducting employee surveys to understand what benefits matter to your employees. Flex HR Consultant Jeanne Corey suggests surveying employees to understand their cost tolerance, what benefits are really important to them, and what tools and support matters. These differences can be particularly enlightening if you have a multi-generational workforce. Understanding the varying preferences across generations can help you make optimal decisions on behalf of your employees.
• Finalize your benefits communications, reviewing for clarity, ensuring accessibility, and identifying important deadlines and points of contact.

3-4 months ahead of renewal

• Conduct your open enrollment period. If your enrollment is “active,” your employees must re-elect all benefits coverages. This is typical if you’ve made major plans changes, such as moving to a new insurance carrier. If your enrollment is “passive,” this typically means most benefits (with notable exceptions, like flexible spending) will auto-renew unless the employee makes a change.
• Confirm all open enrollment elections and changes with your carriers.
• Check out Flex HR’s 5 tips to save time and reduce stress during open enrollment!

1 month ahead of renewal

• Finalize your set up with carriers ensuring all data has been received, ID cards are in process, and that any unexpected issues have been worked out.

Avoid These Compliance Mistakes

Benefits mistakes can quickly put your business at risk, as benefits are highly regulated with a number of compliance requirements. Take note of some of the most common mistakes facing small businesses:

• Not offering coverage. In the United States, employers with more than 50 employees are required to offer health insurance coverage. If your business has fewer than 50 employees you are not required to offer coverage, but it can be beneficial in attracting and retaining your employees.
• Communications failures. Many benefits programs at both the state and federal levels have required notices, disclosures, and documents that must be shared with employees. Failure to communicate by required deadlines may result in compliance issues.
• Discriminatory practices. Employers must be aware of applying benefits consistently across their population. Employers may be at risk of a discrimination claim if they fail to offer benefits to employees based on disabilities, age, or medical history.
• Failing to adhere to regulation changes. Benefits is an area within HR that is constantly evolving. Employers must remain aware of changing laws and regulations at the federal, state and even local levels.

Benefits season may never be simple, but it doesn’t have to feel overwhelming. With the right strategy – and the right partner – you can manage renewals, negotiations, and administration with confidence. Flex HR’s team of experts is here to help small businesses navigate the benefits landscape, ensuring your team feels supported while your business stays competitive. Contact Flex HR today to save time and reduce stress ahead of your upcoming benefits season.