In today’s economic environment, how do companies maintain a valuable benefit program while controlling the rising cost?

Robert E. Olson
B.A.

During challenging economic conditions, companies look to improving on their “return on investments”, and this also includes greater value from the monies they spend on their “employee benefit programs”.   Greater focus has been to provide the right plan, at the right price.

Many companies look to market surveys to seek lower costs for their existing benefit programs. This option is often the easiest, but usually for a temporary period of time, approximately 12 – 24 months.      What some companies may not know is there are hidden costs when changing providers. And while market surveys may be a temporary solution, companies should also look towards plan design changes, which typically provide longer term solutions to rising costs.

Changing the plan design is a form of “cost shifting” or “cost sharing” with employees.  It’s a challenge for companies to persuade employees of the financial necessity to share in the cost of providing their benefit plans; however premium sharing or a user pay plan design change will maintain a plans integrity.

In order for a user pay design to be successful, it will depend on the company’s ability to effectively communicate the facts that employee mutual participation is fundamental to the survival of the employer’s benefit programs.

Since advice is only as good as the people you ask, companies should be partnering with independent advisors who have the experience, personnel and expertise to work with them to achieve their corporate goals.