Carrier partnerships and subsidies are a quickly-growing way to add value and convert clients shopping for new benefits packages. Leveraging a long-standing partnership between a carrier and a benefits administration platform allows brokers to solve technology challenges which are facing employers of all industries. It’s a winning proposition for all parties involved, and one every broker should be adding to their sales strategy.
What is a carrier partnership, how do carrier subsidies work, who benefits from them, and how they can become a part of a broker’s toolkit? With expert commentary from Steve Herman, CRO of Web Benefits Design Corp., this paper will give brokers the tools they need to begin looking for the right carrier subsidy opportunities for their clients.
Challenges Facing Brokers Today
As a broker, you’re probably well aware of the challenges posed by today’s market. From our uncertain financial outlook and volatile economic signals, to a constantly changing healthcare environment which is susceptible to market and government shifts, every day is a new day of challenges in the benefits field.
These shifts place increased expectation upon brokers when they enter into a business relationship. Employers are dealing with instability, cyber risks, rising costs, and a changing workforce. When they speak with a broker about benefits, they’re not just looking for the same-old solutions, packaged different for a new year. They’re looking for real change, and tangible shifts in the offerings you’re bringing to the table. Differentiating your service, and bringing employers a solution which truly addresses their rising and expanding pain points, will set you apart from your competitors.
So, what challenges are employers facing?
Challenges Facing Employers Today
Business as usual seems like a thing of the past. Even discounting the economic upheaval caused by the global pandemic, companies of every size were already feeling modern twists on old problems. Understanding how carrier partnerships can solve some of these new challenges starts with digging into the pressure employers of today are feeling.
Data Security and Risk Management
The mass implementation of online and cloud-based business operations have left businesses at serious risk from cyber attacks. Cybercrime costs the global economy as much as $600 billion every year (Deloitte). Risk management relating to cybercrime is high on many executives’ minds. Every department of a company is urged to mitigate the risk of cybercrime. When an employer makes a decision about who can access their records on a constant basis, they have to know they’re working with trustworthy, proven firms.
This poses a direct challenge to brokers, who are representing benefits providers requiring access to some of the most secure and sensitive of company records: employee data. Carrier feeds have to be secure to ensure the safety of records, and employers know it.
The Millennial Workforce
Employers understand by now that great benefits are key to talent acquisition, employee engagement, and long-term retention. At the same time, those benefits have to be presented to an increasingly tech-happy and nomadic audience. Millennials, our largest living generation, require online convenience, on-demand service and information, and mobile-friendly services. Helping employers meet these increased demands for user-friendly, intuitive tech and 24/7 support is a broker challenge which won’t go away.
Tech-forward solutions that streamline old inefficiencies are always popular with employers. Numerous benefits administration platforms enter the market every year, all promising to be the program that breaks the old model of shuffling papers, filing documents, working with multiple websites and sign-ins, and waiting days or weeks for authorizations and updates.
The right benefits administration platform can revolutionize a company’s approach to Human Resources, including everything from new hire onboarding to payroll and even post-employment services. It can build employee buy-in and engagement, increase enrollment and utilization of benefits, and give an employee a real feeling of satisfaction with their compensation. It can simplify everything and save employers money year after year — if it’s the right platform for the job.
Solving Employer Pain with Tech
Providing employers with a benefits administration platform which offers security and ease of use can be an incredible conversion tool. Carrier partnerships, and the technology subsidies they can offer, are an important tool for insurance brokers in this challenging year and going forward. Brokers can add value by solving these pain points for employers and saving them money on the installation of new tech at the same time with a carrier subsidy.
How Do Carrier Partnerships and Subsidies Work?
Separating out the big promises from the actual results is the real challenge facing a broker, but it’s one which can be solved by exploring carrier partnerships and seeking out the strongest links between the technology providers and the carriers. These partnerships form the basis of the subsidy proposition.
What is a carrier partnership?
Simply put, a carrier partnership is the relationship between a benefits administration provider and an insurance carrier. The benefits admin provider brings the platform, secure data-handling, and user access which employers need. The insurance carrier brings their catalog of benefits, both tried-and-true and innovative to meet the needs of a diverse workforce.
With their trusted-partner relationship, the insurance carrier and the benefits admin provider bring a combined money-saving, time-saving, and employee-pleasing enhancement to an employer’s benefits offerings.
Carriers have been pursuing partnerships with technology providers as a way to improve efficiency and gain higher plan participation from employees. These partnerships are an important piece of the current and future benefits landscape.
Herman explains that stakes are rising in the partnership game: “Most ancillary carriers either actively have list of technology partners they’re establishing, or they’ve purchased a platform and are pushing that as their solution.”
The reason for the tech push from ancillary carriers is simple, Herman says. “The carriers are looking at [benefit admin platforms] and saying: if we have a technology platform in place, that’s going to be a more streamlined way to enroll people — as opposed to the historical paper-driven process — and you’re going to get high participation when you make it easier for the employees,” by allowing them to make their election online, rather than turning in paperwork.
The carriers then bring the technology partnership as an added benefit to employers, who are looking not just to offer desirable benefits to their employees, but ease those challenges of data security, efficiencies, and the modern platform their growing Millennial workforce demands.
From a broker perspective, the main component of a carrier partnership to consider is the subsidies they can yield.
What is a carrier subsidy?
Carrier subsidies are a discount on premiums, which are utilized to install the carrier partnership’s benefits administration platform for the client.
These subsidies are meant to offset, partially or in-full, the costs of implementing the benefits admin platform. With the goal of establishing a platform which improves employee and employer experience, streamlining billing and other services, and smoothing the data transfer between carrier and employer, a carrier subsidy is truly a win-win-win situation — for the carrier, the employer, and the broker.
Carrier subsidies are typically offered in one of two ways: either a flat dollar amount in the form of credits, or taking off a percentage of the premium, typically 2-5%, which will be allocated towards the tech platform. Often at least some of this subsidy is built into the premiums charged to the client, but sometimes at much lower rates — so a 4% subsidy might add only 1% to the premium, a true deal for the client.
Carrier subsidies can cover, partially or even in full, the cost of implementing new technology, and this is no small opportunity for sweetening the deal and creating a long-term, happy client out of an employer. Every technology upgrade is an investment, combinations of installation, service fees, and both initial and ongoing training of staff — and employers are already paying heavily for tech across the board.
In 2019, Gartner forecast an outlay of $4 trillion from companies investing in IT, with a full $125 billion directed solely at cybersecurity. Any savings you can offer an employer on a tech upgrade is sure to sweeten the deal.
Certainly, there are free options for tech on the market, there is always a cost for free when it comes to apps and webs which access personal data. Asking employers to trust a platform with their employee data is not a proposition to be made solely on a price tag of zero. Employers who take data integrity and security seriously are looking for the best solution at the best price, and a carrier subsidy can offer them the value they’re looking for, without compromising on information security.
Brokers can play a big role in helping clients obtain and recognize the value in these subsidies. From this angle, working with a benefits provider which has a known carrier partnership can yield excellent results for a client and broker, thanks to the prior experience on the tech provider’s sales team.
How Does a Carrier Subsidy Benefit Employers?
Offsetting the cost of a benefits administration platform can propel a business forward in multiple ways. Attracting, satisfying, and retaining the tech-forward millennials of today’s workforce with a modernized benefits solution is just the beginning. We’ll take a look at the benefits, and how they can be presented to employers, further down.
How Does a Carrier Subsidy Benefit Brokers?
For brokers, carrier subsidies offer a variety of benefits. One of the main conversion tools in any broker’s pocket is the most simple sales proposition of all: offering a reduction in costs without a reduction in service. In this case, it’s even better: carrier subsidies allow a broker to offer their client a reduction in costs along with an enhancement of service.
Carrier subsidies offset the cost of technology, allowing employers to upgrade their benefits admin platform at a fraction of the cost they’d pay outright.
The carrier and tech provider are ready and willing to help create a sales proposition the broker can use to land the deal. Herman says: “The other valuable component to a partnership from a broker-specific view is the sales coordination.”
Citing Web Benefits Design’s ongoing relationships with several large carriers, he explains, “If an opportunity pops up, I can call my liaison [at the carrier]. It gives both parties the chance to work a deal together — educating the broker on why it’s important for us to be involved together.” By helping the broker gather the tools they need to understand why this partnership is in everyone’s best interest, the carrier partnership signals they’re ready to step up and assist in the sales process.
Selling The Value of Enhanced Benefits Administration
The added value you bring to a proposal when you can offer an employer the key to a new benefits admin enhancement spans multiple business areas.
The efficiencies offered to both carriers and employers are myriad, but one of the most significant, and easiest to quantify, is the streamlining of processes. Benefits processing is time-consuming and can involve mountains of paperwork, mail, faxes, and waiting on turn-arounds from the plan providers.
With a benefit admin platform that brings online enrollment and documentation, the enrollment form process can be eliminated or utilized only in special cases. The billing issues which plague many legacy carriers, who are often utilizing multiple platforms due to acquisitions over the years, can be corrected with streamlined, single-platform billing.
“A technology platform should be a source of truth as it relates to eligibility and billing,” Herman says. The streamlining of eligibility and correct billing is at the heart of the benefits solution. With a benefit admin program to take potential errors in eligibility, enrollment, and claims out of the picture, claim management becomes a well-oiled tech machine.
Apart from administrative efficiencies, the added value of increasing participation in benefits plans is good for the employer, the carrier, and the employees — helping ease the constant pressure of needing to provide the most up-to-date benefits and 24/7 access online to tech-savvy employees.
Why are established tech-carrier partnerships important?
Long-term partnerships lead to long-term solutions. And when employers are trusting their data, eligibility, and billing to one source, they need to know everything is firing on all cylinders. That’s why it’s important to ask a carrier who their preferred tech partners are.
A benefits administration platform works by connecting to a carrier’s system, sending them the employer’s data and making sure that it conforms to the specs outlined by the carrier. This data transfer is called Electronic Data Interchange (EDI), and the specs for EDI differ for every carrier.
Herman says: “Every carrier has their own unique rules and ways that they write how benefits are set up, what their product is going to provide, and it’s expected that the tech accommodates those.” It’s the tech provider’s job to write to the carrier’s specifications.
It’s essential to get EDI correct, or data won’t flow correctly, feeds will fail, and the real-time information which employers and their employees are depending upon for accurate eligibility could begin to erode, allowing erroneous claims to make it up the chain. Benefits admin platforms which aren’t prepared for potential error scenarios could place carriers, employers, and enrollees into costly situations.
Herman explains that inexperienced benefits admin platform providers lack the advantage of long-term carrier relationships, and the scenario-testing which goes along with it. And that, he shares, could pose big risks: “If the platform provider doesn’t handle the benefit correctly, they could potentially be on the hook if an employee makes the election they shouldn’t have.”
Typically, he says, the financial cost lands on the carrier because they have the deepest pockets, but in reality it’s the benefits admin system which failed, and the blame will fall on the broker who recommended the system.
Simply put, the longer the relationship between the platform and the carrier, the more testing has been done to ensure a trustworthy EDI. “When you have a partnership, this vetting has taken place already, so there’s a greater level of comfort with the carrier has scenario-tested all of these different components,” Herman says. “There isn’t that unknown factor weighing in.
“A significant amount of diligence is done on the front end to vet the carrier and the ben-admin system,” Herman says, “to ensure that the platform can accommodate the contracted benefit offerings.”
And that makes a huge difference to the product brokers are offering when they choose a benefits admin system to champion. “Just because you like the platform, or have a free reseller model, doesn’t mean that it’s going to check all of these boxes. So there is some liability and exposure if it’s not set up properly,” Herman explains.
Established carrier partnerships, Herman points out, provide a greater level of comfort for the carrier, the employer, and the broker’s long-term relationship with clients. That’s because the carrier and the benefit admin provider have already tested data scenarios again and again, and have a solid understanding of how their programs work together.
There’s another side to the long-term partnership story, and that’s the rapidity of the platform’s set-up. It doesn’t just come from the simple fact that testing EDI and data integrity has already been done with this carrier’s system. There’s also the matter of a relationship.
Even when we’re talking impersonal-sounding fields like tech and data, we know relationships are the backbone of any business. When a benefits platform provider and a carrier have been working together for years, they know each other’s teams. An already speedy implementation process goes that much faster when the tech team can call up the carrier team, know exactly who to speak with, and get a problem solved before it becomes a lengthy delay for the client.
Integrations and Constant Improvements
One of the biggest buzzwords in tech is “integrations.” It’s the not-so-simple process of marrying two platforms to streamline a process. Plan carriers have traditionally been left behind in tech, meaning a lot of paper has to be shuffled around between the company and the carrier when a claim has to go through an underwriting process or some other qualifier.
Now, some carriers are able to integrate these qualifying processes with the benefit admin platforms they work with the most. This means days or weeks-long procedures can now be done online in minutes. “A lot of our carriers are doing this now,” Herman says of API integrations, “And we are continuing to add those integrations to our portfolio. That’s a big differentiator for partnerships.”
The evidence is clear: long-term partnerships between carriers and benefit admin providers offer clients and brokers a clear leg-up on newcomers in the field.
What about cheaper tech platforms?
Price-point alone is the wrong way to sell a benefits admin platform, even if a broker is working with a particularly price-conscious client. In some cases, going with cheaper, unlicensed platforms can actually cost a broker in lost commissions or prevent the client from receiving the carrier’s tech subsidy credits. “In order to take a commission,” Herman explains, “you need a licensure established and appointed with a carrier. A lot of payroll platforms aren’t set up for that.”
A subsidy credit, in that case, would go to the broker, and then be paid out of the tech provider. “A CFO is going to see this as a pass-through and not correlate that the commission is going back to the company,” Herman says. “In some states, rebating is an issue, money needs to go right to the tech provider. So, not all tech providers can actually receive tech credits from the carrier,” in these particular cases.
Web Benefits Design’s benefit administration platforms are purpose-built for the employer, with a high level of back-and-forth communication to be sure the client experience is exceptional. There are no plug-and-play, DIY packages for HR professionals to unwrap and try to understand here, because that’s not how different carrier systems work. Instead, everything is highly customized. Just taking on a new client requires a thorough understanding of their unique needs, and seamlessly meshing them with the technical specs of the carrier.
A broker considering a carrier subsidy for a client must be wary of promises which sound too good to be true, the misleading simplicity of flat rates, or the possibility of the provider only paying the client part of the subsidy. Unfortunately, there are tech providers which will pocket the subsidy for implementing their platform, cutting out the client. More commonly, tech providers will keep a portion of the subsidy and give the client a minor price break.
“What a lot of competition will do is take 1% of a 3% tech credit, and pass that along to the customer,” Herman says. WBD passes the entire subsidy to the client. “We explain that to the customer and the broker: ‘You’re going to get everything we receive.’” It’s a WBD difference which saves customers money, often in the range of tens of thousands of dollars in subsidies they might otherwise have lost.
Carrier Subsidies Benefit Every Party
Brokers in today’s benefits market are facing unprecedented challenges as they seek to bring together benefits providers and employers. In addition to the uncertain financial outlook which is expected to continue into coming fiscal years, employers already had several significant concerns facing them which brokers needed to address in their proposals. Issues such as data security, talent acquisition, and employee retention are already top of many employers’ minds as they search for the right benefits assortment.
As brokers look for ways to ease these concerns and offer solutions to employers, it’s important to understand the value of carrier partnerships and subsidies. While brokers may not be tech specialists, they can bring powerful technology into an organization which gives employers increased peace of mind about secure and accurate data, employee satisfaction, and in-house efficiencies. Brokers who harness the power of an established carrier partnership have added an increasingly relevant and beneficial tool to their sales kit.
Carrier Subsidies Convert
The right carrier subsidy can make all the difference in landing and keeping a client. Working with established carrier-tech partnerships can provide your clients with game-changing benefits administration and employee-pleasing perks, without a massive outlay of cash for a technology upgrade. By understanding the ways in which carrier partnerships and subsidies can successfully help them address clients’ ongoing concerns about keeping up with tech-savvy worker demands, protecting data, and creating an efficient, streamlined administrative process, brokers can find a benefits solution which works for everyone.