Benefit program assessments are sometimes avoided or deferred because of perceptions that any cost reductions for the company will automatically translate to reduced coverage for their employees. Those holding such perceptions can miss out on opportunities to simultaneously lower company costs and increase employee coverage options.
Here’s how vcfo recently helped an oilfield services and equipment (OFS) company to not only dramatically lower its benefit programs costs, but also lower the expense to employees and increase overall benefit options provided.
An oil & gas market decline left this OFS company in serious need of reducing its overall cost structure. Its owner and executive team knew that doing so would require tough decisions across key cost drivers including labor, fleet, payroll, and debt obligations. While nothing was technically off the table, evaluating benefits programs were not an immediate consideration, as the hope was to leave them undiminished. The company also tried a self-insurance approach, which was unsuccessful.
A fractional CFO from vcfo was brought on to identify potential cost center reductions. The CFO provided and helped carry out recommendations across the spectrum of cost drivers, but also surfaced potentially significant savings opportunities in the company’s benefit programs that would not weaken what employees were already receiving or raise their premiums.
Ahead of the company’s benefits renewal period, a specialized vcfo HR / People Ops Consultant led an effort to find a new broker of record that could apply creative solutions to meet company and employee needs. Because brokers are paid by insurers and not by an end client, it’s imperative that company, employee, and broker interests are aligned. It can be easy to fall into a traditional insurance broker mindset, but persistent dialogue with the right parties brings new options forward. Specific solution steps included:
- Interviewing numerous brokers to identify the most client-centric mindset
- Soliciting multiple insurance company quotes based on employee census data
- Identifying employee coverage alternatives outside of traditional insurance (e.g., high deductible policies with HSA accounts, medical cost sharing plans, self-insurance indemnity riders, GAP and Supplemental insurance, low/no cost options – telehealth/concierge plans, etc.)
- Collecting information and presenting cost benefit comparisons to prior year
- Identifying risks and constructing scenarios (what could go wrong, how much it would cost)
- Surfacing employee challenges in switching from traditional insurance policies
- Identifying specific considerations for employees electing for new coverage alternatives
- Developing clear communications to employees detailing new benefit renewal cycle options
With the insights and new options produced by the solution steps, the company was able to present a more attractive traditional insurance offer that was creatively bundled with other options such as Medical Cost Sharing plans. Collectively, these options and upgrades resulted in a 38% increase in benefits provided, an 80% reduction in company costs, and a 69% decrease in expense to employees.
IN YOUR CORNER
A proven expert from vcfo’s HR / People Ops Team can help you find out. We’ve partnered with more than 5,000 businesses in our 27 years and are ready to put our knowledge and experience to work for you. Reach out and we’ll schedule a call to learn more about your company and see how we can help.