1. What are the most important trends in the small group market?
Brent Goode, Vice President of Broker Solutions and Public Sector Aflac:
Many small businesses are already aware of traditional supplemental insurance offerings. A growing trend for small-business owners and HR managers is more than benefits: It is the need to balance many responsibilities, from payroll to compliance to employee relations. They are looking for not only a benefits provider, but also benefits enrollment and administration support.
With Aflac, small businesses receive full-service enrollment support, including unique educational tools that help employees determine the benefits that best fit their needs and personalized communications strategies for each business partner based on location, worksite type and communications capabilities. From brochures, email templates and videos to in-person presentations, we offer customizable resources that help meet each business’ ideal communications strategy. Our digital platform streamlines the enrollment and administrative processes for employees and benefits managers alike at no extra cost.
Todd Mason, Territory manager, California South Coast, Colonial Life:
We still find that many small businesses are confused by health care regulations and are continuously besieged by rising health care costs. As a result, employers are transitioning to higher deductible plans and are shifting a greater share of the costs to employees. And many of the smallest groups, primarily those with under 50 employees, are not able to offer health benefits at all. In addition, small businesses rarely can afford a benefits consultant to assist in navigating their challenges and this makes offering supplemental so important.
Joseph Stefano, Divisional Vice President, Western U.S.,The Guardian Life Insurance Company of America:
One of the most important trends impacting the small group market (Guardian defines firms with fewer than 50 employees) is that more than seven in 10 workers in small firms rely on their employer as their household’s primary source of health, life insurance, disability insurance, and retirement savings.
A convergence of market forces are prompting small firms to rethink the role of benefits in their companies. Attracting and retaining talent (particularly Millennials), controlling costs and maintaining compliance are among their top benefits priorities. In response, many are addressing workforce health, leveraging technology, and outsourcing administrative rolls to improve the employee experience and increase efficiency.
All that said, small businesses are “cautiously optimistic” about their firm’s growth. The Guardian Life Insurance Company of America® (Guardian) found that more than 60% of firms anticipate revenue growth in the next five years and nearly half (47%) expect to create new jobs and launch new products and services.
As a result, staffing is a top business challenge according to Guardian’s “Small Business, Big Benefits” Workplace Benefits Study, with 37% of respondents saying it’s a top hurdle for small business owners/leaders (second highest after sales/revenue growth). The issue many small firms run into however, is that the gap between large and small employers in terms of benefits offered — and the level of employer contribution — making it difficult for small businesses to compete for talent.
How small businesses utilize their benefits is also shifting, with 45% of small firms increasing their spending on HR Technology since 2015.
Chris Patton, Senior Director of Strategic Business Development and Retention, Small Group, Kaiser:
Small groups are leveraging Employee Benefits more than ever to recruit and retain employees. The labor pool is extraordinarily tight as a result of a generally strong economy and the resulting historically low unemployment rate. Employers are rounding out incentive programs with benefits and are sensitive to not only price but value for the dollar. Younger employees place an emphasis on the entire compensation arrangement and looking at the entire offering inclusive of the richness non non monetary compensation
Jessica Moser, Senior vice president and segment head, Small & Specialty Business,
MetLife Group Benefits:
The most important trend in the small group market is expanding the availability of benefits, especially non-traditional, ancillary benefits that complement core benefits. Today’s workforce looks to their workplace as the center of their financial life, and so employees demand a more customized benefits experience. This means employees want what makes the most sense for them, so variability, such as tiered pricing, is key for important benefits such as dental, vision, life, and disability, but also in benefits that are considered voluntary or ancillary, such as legal plans, hospital indemnity, and even pet insurance. Research, including MetLife’s 17th annual Employee Benefit Trends Study, shows that a customized benefits plan increases employee loyalty, and that customization is highly valued. In fact, employees want a greater variety of benefits to be available, even if they have to pay for some of those benefits themselves.
Tim Rhatigan, Senior Vice President of Small Business UnitedHealthcare of California:
Employers are increasingly looking for ways to help provide their workforces with access to a more personalized, convenient, and simplified care experience. By using technology, pro-consumer benefit designs and more modern care models, health plans and care providers are collaborating to help achieve the triple aim of better care, better health and lower costs.
Emerging technologies, such as telemedicine and connected devices, can help remove barriers to care and make treatments more convenient, cost-effective and data-driven. Meanwhile, the growing use of wearables – combined with the strategic use of incentives – is proving effective in motivating people to take charge of their health.
Another key trend is the transition away from fee-for-service payment models to a value-based care approach. Value-based care models can foster increased accountability for quality and cost, such as shared savings programs and performance-based contracts, and reward health care providers for effectively managing people’s health. For instance, UnitedHealthcare has developed more than 1,000 accountable care organizations (ACOs). We have seen that the most effective ACOs perform better than non-ACOs on 87% of the most common quality measures, including reducing hospital admissions by up to 17% and costs by up to 12%.
Developing a health care system focused on quality – and using technology and incentives to help encourage healthier habits – can drive important improvements in how health plans and care providers collaborate to support people on their journeys toward health.
2. Are certain ancillary benefits more suited to small groups?
Brent Goode:
Many small businesses want to support their employees by offering a variety of benefits but are understandably concerned about widening their benefits packages without a plan to mitigate costs. With supplemental benefits, employers can decide how much to contribute to employee policies, if at all. Aflac’s brokers and agents counsel small groups, helping them navigate the nuances of health care changes in the U.S. and decide what benefits make sense to offer their workforce.
Popular benefits among small groups tend to be dental, vision, short-term disability and life insurance. These can be key contributors to employee happiness and retention. In addition, insurers like Aflac often include access to value-added services that complement supplemental coverage, such as financial and legal support, telemedicine, wellness programs, and health advocacy and bill negotiation services.* These provide value from the first day and can be a differentiator in hiring and retention efforts for small groups.
Todd Mason:
Many employees at small businesses, just like large businesses, are the sole breadwinners for their family. With growing numbers of America’s workers living paycheck-to-paycheck, they need the base coverage of life insurance, disability insurance and accident insurance to protect their income if they are unable to work. Another key benefit that employees expect to be offered, and a benefit that helps protect the entire family, is dental. Our launch of a new dental product and the value-adds we are able to offer has been tremendously successful for small employers.
Joseph Stefano:
Today’s HR technology and growth of voluntary benefits is making ancillary benefits more attainable and manageable for small groups than in the past. We see tremendous opportunity among small groups to offer supplemental health benefits, like accident insurance or critical insurance, to help increase their workforce’s financial security. The advantage of offering voluntary benefits is that the cost of these benefits is largely picked up by the employee, while at the same time, allows for small groups to offer robust employee benefits packages.
While some small businesses struggle to offer a fruitful supplemental benefits package, Guardian’s study found that as of 2018, 38% of small businesses offered accident insurance (up 15% points from 2015), 25% offered critical illness insurance (up 14% points from 2015) and 21% offered hospital indemnity insurance (up 24% points from 2015). Offering these supplemental benefits can help employees fill the gaps and attract potential employees for small firms.
Our research also supports the desire employees have in mental health/substance abuse rehab benefits, which employers may have via their Employee Assistance Program. Our data shows 22% of workers want benefits to support mental health/substance abuse, which we anticipate will continue to be of interest in the years to come. Finally, in the past five years more small businesses have established flexible work schedules, remote work policies, paid leave and wellness programs to improve workforce health and help employees balance their work demands and personal responsibilities. Our study confirmed that nearly 1 in 4 small firms offer wellness programs (mainly health risk assessments, weight loss programs, gym membership discounts); and 1 in 3 allow for flexible schedules and telecommuting.
Chris Patton:
More and more the benefits “package” is considered as whole for smaller employers in the enrollment season. Dental, Chiropractic, acupuncture ad even pet insurance are seeing greater emphasis in today’s market. Small employers are often looking to bundled offerings for administrative ease which makes medical offered with dental attractive.
Jessica Moser:
As employers struggle with increasing healthcare costs, employees are squeezed to pay higher deductibles and co-pays. With more and more small businesses instituting high deductible health plans to combat those rising costs, their employees may find themselves responsible for thousands of dollars in medical costs before their health insurance kicks in. For this reason, supplemental health policies are no longer just for larger employers. Small employers can differentiate and provide value to their employees by offering ancillary benefits as well. For a relatively low cost per paycheck, employees can have more peace of mind that they won’t be overly financially burdened if they face a significant covered event. Policies that are considered supplemental health, like Accident, Critical Illness and Hospital insurance are designed to be easy to use, and we foresee significant growth in these types of benefits.
Tim Rhatigan:
Dental and vision are the two most popular ancillary – also known as specialty – benefits. In fact, 77% of people said having vision and dental coverage options is important to them during open enrollment, according to a recent UnitedHealthcare survey.
Many people select these two benefits because they expect that they, or their family members, will use them regularly. There is also growing evidence of a link between dental and eye health to overall health, as well as to an array of chronic medical conditions. Having these benefits can help prevent disease before it starts and, if necessary, improve the prevention or management of certain chronic conditions.
Some employers are rounding out their benefits options by adding other specialty plans, including accident, critical illness, disability and hearing. Offering these plans as part of an employee’s menu of benefit options maximizes the effectiveness of a company’s health care dollars, while helping build a culture of health and providing families with additional coverage.
3. What are the keys to being a successful broker to small groups?
Brent Goode:
The first key to being successful in reaching the small-group market is to know its vastness: small businesses make up 99.9% of all U.S. companies, according to the Small Business Administration. It is both humbling and encouraging to know that there is no shortage of opportunity available today.
Keeping benefits simple and easy are key. Small-business owners have many responsibilities, so a complicated benefits process with multiple carriers is likely unattractive. More favorable to them are brokers who can bundle an array of offerings and provide white-glove service. However, that does not mean sacrificing customization. Brokers can create more value by making it easy to offer flexible benefits options as well as scheduling personalized consultations to ensure the needs of their diverse workforce are met. For instance, many of Aflac’s insurance policies can be customized to include benefit riders, helping employers determine the level of protection and coverage options for specific conditions.
Todd Mason:
A broker should consider choosing a voluntary benefit company that offers its own enrollers to support major medical enrollment while educating employees on voluntary benefits. Some brokers are losing income opportunities with changes to major medical offerings. But they have a chance for significant supplemental income just by making the introduction to the employer.
At many small businesses, one or two people often fill the roles of business owner, day-to-day manager, HR director, and benefit specialist. There is often a need to overcome an objection for something that sounds time-consuming or complicated. For example, some decision-makers are concerned that it takes a lot of effort to add a payroll slot for voluntary benefit deductions. But the small effort that goes into creating the slot can more than pay for itself when the decision-maker realizes the pre-tax savings that can be experienced through voluntary benefits and the variety of value-added services a benefit company can offer.
Brokers can create value by offering no-cost or low-cost digital enrollment for all benefits. They can combine that with voluntary benefits to create benefit customization, which employees are looking for. This customization is especially important now with the most-diverse workforce we’ve ever seen, including five generations.
Joseph Stefano:
Successful brokers understand the dynamics of running and growing a small business. They take on the role of an advisor to help navigate employers through the employee benefits landscape. This includes the ability to talk to employers about their employee population and employee needs that may not be covered by employer-paid benefits, and then educate them about the range of new benefits available on a voluntary basis. While small employers might not be able to offer the benefits a large firm does, it’s important to offer employees the best benefits that fit within a company’s financial means. Personalization is key, there’s no “one size fits all.
In addition, encouraging small group clients to switch to digital can also lead to success. Employees live in a digital world where they have access to everything they want in the palm of their hands. Bringing that same concept into the workplace with the digitalization of benefits can go a long way with employees, particularly because they want their benefits to be easier to access and understand. One thing that is helping small firms, especially start-ups, to deliver an enhanced employee experience, is the increased use of cloud-based software and digitalizing various aspects of the HR and benefits functions. In fact, our study found 52% of small businesses have digitalized most of their benefits processes.
Chris Patton:
The Broker role is ever changing but there are certain fundamental elements that remained relatively stable. Brokers are a fundamental element of distribution in many markets and particularly in California,. They play a critical role in the relationship between the insurer and the customer. Successful Brokers understand that relationships are both sides of their role are critical. The customer is obviously and important one but the relationship between the Broker and the insurer is also critical. When it really counts having a relationship with the carrier at various levels works well for both the Broker and the insured as issues that arise can be handled using a common language based a partnership that has the customers best interest and the center.
If I could offer any advice to you Brokers getting started.: Look to the insurer as your business partner. Getting to know the people that can help when things are working exactly right will help to expedite getting a member what they need. Developing your business relationships on both sides of the transaction will pay off in loyal customers and a team in your corner when you are called on to help fix a problem
Jessica Moser:
Especially for small businesses, brokers are more than a conduit to insurance carriers. Brokers are trusted partners that can guide smaller businesses, and often save business owners time and money – not just in navigating the healthcare maze, but in putting together a comprehensive benefits program that can help make them an employer of choice. Additionally, brokers can provide a great service in most effectively communicating those benefits to employees.
Brokers specialize in helping businesses to manage risk, and the brokers that work with and understand small businesses know that also includes the risk of losing key employees to larger competitors who may have bigger recruiting and benefits budgets. So brokers who present well-designed benefits plans, starting with healthcare, and building onto that with ancillary benefits, can address those business problems around retention and become the relied-upon benefits counselor that small employers need.
Another key that the best small business brokers recognize is how critical communication is. If a small business owner – who may not have an HR department and therefore does much of their own benefits work – can look to their broker for advice in communicating the benefits, that broker will, in all likelihood, be successful. There is a wide gap between what employers think about the effectiveness of benefits communication, and what employees believe, as shown in the MetLife Employee Benefit Trends Study. The risk in this is that even the most well thought out benefits plan may be purchased, funded and implemented by an employer, but then not embraced by employees because they don’t understand what they’re being offered. Working with their carriers, successful brokers provide communications tools for their clients.
Tim Rhatigan:
Successful brokers are mindful to what’s coming next and are able to adapt to a fast-changing and fluid marketplace.
The continued creation of clinically integrated networks have prompted the need for brokers to articulate to clients the benefits of these new collaborations between health plans, care providers and pharmacies. Helping employers better understand and take advantage of these new models of health care provides a more personalized experience, improved outcomes, and lower costs for their employees.
4. Are there certain sales techniques that are most effective with small groups?
Brent Goode:
Some of the best sales advice out there is foundational but profound: Listen to the customer. If a broker goes in only to make a sale, they may not find as much success as in providing benefits solutions tailored to the client’s needs. There is no one-size-fits-all approach because every business is unique with its own needs.
The success of any business often depends on its ability to provide a service-oriented experience. With more than 60 years in the business, Aflac arms its producers with an array of marketing and educational materials designed to help build awareness, greater understanding and increased participation in benefits programs. We also offer the technology tools that simplify benefits administration and meet the expectations of today’s digital-savvy workers. For example, Aflac’s innovative One Day Pay℠ initiative and MyAflac app help ensure that employees can submit and receive payment for eligible claims fast.
Many small businesses like to support local businesses and participate as a member of their community. To help them create a local brand, we encourage our brokers and agents to get involved in their community. Aflac’s CSR-in-a-Box toolkit provides brokers and agents with a number of resources that make it easier to get involved in their community and share their stories of doing good beyond their core business. This not only allows them to make an impact, but also to increase their network and build trust and a positive reputation within their community.
Todd Mason:
We find brokers can use the following four opportunities to engage small employers around benefits:
- Enrollment digitization
- Benefit customization
- Cost and time saving approaches (like increased pre-tax participation)
- Offering a program incentive to enhance the benefits plan and participation.
- Robust product offerings to meet the needs of all employees.
We find that education is the biggest hurdle to overcome with small groups. Many small business owners don’t realize that voluntary benefits can be available at a workplace with just three employees. There is a misconception that employees don’t want, don’t need, or can’t afford voluntary benefits. But when our counselors are able to sit down with employees, who are feeling the added pressure of healthcare costs on their wallets, we find that many are willing to spend a few dollars to protect their incomes, their lifestyles, and their families with financial protection products.
Joseph Stefano:
A broker’s role as an advisor/consultant now requires that they be knowledgeable in benefits technology, benefits communications, and absence management due to the increase in paid leave laws. This is a result of the evolving benefits landscape, which is requiring brokers to blend traditional sales techniques and become more well-versed in an array of products and services than ever before.
For example, Guardian’s Benefits Technology study showed 2 in 5 employers have not spoken to their benefits broker about their benefits technology needs. With benefits technology becoming an integral component of a benefits strategy, a strong understanding of the platforms available to small groups is essential in today’s market. Platforms fueled by application programming interface are helping HR teams save hours of manual work, improve the accuracy of a plan set-up and provide small employers with a user-friendly enrollment experience.
Meanwhile, with benefits communications, research continues to show that very few employees and employers understand the basics/importance of employee benefits, particularly supplemental health benefits. Benefits communications that break down the basics of the product, uses real life examples, avoids industry jargon, and includes decision support tools can go a long way with potential clients, especially with small businesses.
Finally, paid leave laws are continuing to gain traction across the country. In California, we see tremendous interest in absence management services and products that can help a small group employer navigate the laws and remain compliant. The broker doesn’t have to be the expert or own the solution, but they have to raise the issues to protect their clients from potential liability – otherwise, another broker can more easily displace them (e.g., “you mean your broker hasn’t talked to you about the new changes to California’s paid family leave law?”).
While this may sound like a lot, these are great opportunities for brokers to better serve the needs of their small business clients and show they are a trusted partner.
Chris Patton:
The cost of health insurance is second only to payroll in the world of the small business owner. Selling the lowest cost offering in a market is a dated strategy. Employers are looking for value and that value is evidenced by employee satisfaction. Lowest cost may seem like a sound fiscal strategy on the surface but disgruntled employees are extremely costly particularly in a tight labor market. Low cost in an ACA environment is primarily achieved by cost sharing with the employee in the form of premium, out of pocket cost and access.. There is no magic plan in today’s environment that is high quality, low out of pocket cost and robust access for sale at a shockingly discounted rate. The broker’s role is to help navigate through the market offerings to find the right balance of the elements. associated with a plan to accommodate the diverse needs of the small business owner and their employees.
The sales strategy that works s the one that communicates the reality of benefits market to the employer and helps them tailor a plan that meets the needs of their company ongoing.
Jessica Moser:
Essentially, people want to buy from someone they believe understands the issues they face, and what they are trying to accomplish. Right now, small business owners are facing incredibly challenging competition for workers in this era of low unemployment. Often their salary packages don’t compare to larger employers. And, in many cases, as they are living on razor thin margins; cost is the first, second and third consideration in benefits decisions. On top of that, the owner is generally doing much of the work in choosing and implementing the benefits package himself or herself.
So, savvy brokers work with their clients to offer the programs that meet those challenges. It is critical that brokers make it easy for small business owners to access benefits, and to ensure that those simple benefits are competitive and compelling for their employees. Offering bundled, tiered benefits packages provides them with a variety of options, but as they are curated packages, the choices are not overwhelming. And, adding voluntary benefits to those packages can allow small businesses to compete with the richer packages of larger employers, at little or no cost to them.
This need to combine cost, ease and choice is why MetLife is developing a digitized quote to claim solution: it significantly simplifies the experience, enabling brokers to easily quote, sell and administer ancillary benefits for their small business clients in the way that they want, integrating to the systems already in use if they so choose. If the broker keeps the client’s needs in focus as the driving force to define and communicate a solution, they will be well positioned for success.
Tim Rhatigan:
The goal is to make the health insurance buying process as simple as possible, and listening remains the most effective sales technique. By becoming better listeners and understanding the needs of a particular employer and its employees, we can better align those needs with available technologies and new care models.
Understanding and balancing the needs of an employer with the needs of the employees is the key. Brokers can increasingly add value by recommending the right products that provide the appropriate type of access to care. By listening and understanding the needs of each employer, brokers can help promote a personalized health care experience and help maximize the value of the medical and ancillary benefits.