Cost is the major consideration when employers are making decisions on group risk benefits, but there are key ways to keep their spend under control.
If you read nothing else, read this:
- Cut the cost of group risk provision by taking a holistic view of benefits.
- Consider using a master trust or multinational pooling.
- Be aware of added benefits to ensure there is no overlap in benefits provision.
Cost was cited as the main influence on the decision to buy, or continue to offer, healthcare and group risk benefits, according to the Employee Benefits Healthcare research 2013, published in June. In light of these findings, Employee Benefits has compiled a list of top tips to help employers minimise their group risk benefits spend.
Take a holistic view of benefits
To generate cost savings, employers should look at their wider benefits package, rather than at specific sections.
Marco Forato, chief marketing offi cer at Unum, says: “Group risk is about 20% of what an organisation will spend on benefits. Even if they get big savings from group risk, the effect on the overall budget will not be significant. Employers should look at their entire package and make sure it is aligned with their needs.”
Review benefits suitability
Employers should also ensure the group risk benefits they offer fit their organisation’s profile. Richard Colver, executive director and client advocate at Willis Employee Benefits, says: “Take, say, a high-tech company with a fairly transient workforce. Why would it buy long-term disability to normal retirement age? It is about matching benefits to staff behaviour.”
Use a voluntary benefits scheme
Organisations can cut costs by offering a basic level of group risk cover to all employees with the option for them to buy additional levels or add-ons via a voluntary benefits scheme. Laura Brown, senior consultant for risk and healthcare at Helm Godfrey, says: “This can be done by cost sharing with the employee or offering a scheme the employee buys into.”
Group risk benefits can also be offered via a salary sacrifice arrangement.
Larger employers that use multiple insurers for group risk are adding complexity and management overheads, says Tom Gaynor, employee benefits sales director at MetLife UK.
“They do that so they can get higher event limits [limited cover for specific events],” he adds. “We have written cases with high event limits, enabling the employer to deal with fewer insurers. This helps keep management overheads down.”
Consider master trusts or multinational pooling
Employers can also be more cost-effective by using a master trust or multinational pooling arrangement for their group risk benefits.
MetLife UK’s Gaynor says: “A master trust helps employers control spend, and it means they can afford to introduce a benefit or continue to cover their staff.”
Multinational pooling might be the best option for geographically diverse organisations. Colver says: “If an employer has a manufacturing company in eastern Europe and provides benefits, should it look at pooling?”
Use claims and absence management information
One of the best ways to control the cost of group risk benefi ts is to ensure absent staff return to work. Forato says: “Let the insurer know early that there is someone off sick. The earlier we start working on it, the likelier that person is to return to work.”
Keep abreast of value-added benefits
Group risk benefits often include free products and services, such as employee assistance programmes (EAPs) and rehabilitation, which employers should be aware of.
Helm Godfrey’s Brown says: “Even if the EAP they get free isn’t as comprehensive as they would like, employers can enhance it.”