Benefits brokers and consultants outline the numerous tactics they’re taking to overcome objections due to the state of the economy and the uncertainty over how the provisions of the Affordable Care Act will be implemented—including the possibility that some or all of the provisions of the law might not be implemented at all if the individual mandate is deemed unconstitutional by the U.S. Supreme Court.
Benefits professionals also explain how they combat standard roadblocks such as reticence to leave existing brokers or the “if it ain’t broke, don’t fix it” mentality. If prospects object to new services or existing clients want to cut services because their budgets are constrained in the tough economy, the most unethical thing a benefits professional can do is to give bad advice and try to convince them that more services would be better without first analyzing what actually might be best, says John Kelly, director of strategic partnerships for Ceridian’s human resource and payroll businesses.
“It is fundamental not to give bad advice just to generate revenue,” Kelly says. “We should help our clients prioritize their spending appropriately, for both today and for the future, because the lack of current investment can jeopardize future growth.”
Suggesting Cost Cutting
One way to overcome the objection of constrained budgets is to recommend services that can actually reduce costs—which the client can then reinvest into benefits services that ultimately help the bottom line by reducing absenteeism and increasing employee engagement, he says.
For example, Kelly recommends clients and prospects consider implementing dependent eligibility audits to determine if all of the people listed as dependents on employees’ health care plans are actually eligible. For the average employer, if 30 people are found to be ineligible, a company can save $90,000 a year in health care costs.
Kelly recommends giving half of that potential savings back to the company’s bottom line, and investing the other half into technology upgrades or new wellness initiatives, such as smoking cessation and weight control programs to combat obesity.
“Don’t cut back on things that are going to reduce absenteeism,” Kelly says. “What are the areas where you can tighten up and what are the areas that you cannot afford to? Although it may be trite, sometimes companies have to spend money to save money.”
Kelly also counters objections over budget constraints with the idea that prospects can save money by choosing a benefits consultant who offers a bundling of services. Consolidation of negotiating power with few vendors could be a very good way to reduce overall costs.
Julie Daly, an area senior vice president in San Francisco, says the first obstacle to getting new business these days is actually getting through to HR professionals who’re struggling with fewer staff and greater workloads.
“HR departments are so lean now,” Daly says. “They’ve been downsizing HR departments 30 percent to 40 percent, so where there might have been 10 people, there are now seven doing the work of 10, with 2,000 employees. So the first challenge is just getting through voicemail.”
To combat this, Daly calls during nonpeak hours—lunchtimes and on Fridays, when HR professionals are more relaxed. If she’s able to reach someone who still tells her they don’t have time to talk, Daly suggests a later meeting to discuss how their current benefits choices or the latest issues might be impacting their bottom line or whether they might have fallen out of compliance with ever-changing regulations.
“They have a ‘if it ain’t broke, don’t fix it’ mentality,” she says. “What I generally try to do is give them something— everybody is looking for guidance about what to do about escalating costs, retaining and attracting employees, and understanding latest compliance requirements around health care reform.”
Alternatively, many prospects tell Daly there’s no need to talk now because open enrollment time is nearly a year away. That’s when she tells them there are changes in compliance or legislative areas they should be aware of now, so they can be compliant by that time.
Most times, the actual wording of a prospect’s objection is not relevant, Daly says.
“The biggest objection overall is just not wanting any kind of review or discussion,” she says. “The solution to that is to give them a reason to want to meet with us, by providing information that might be helpful for planning and cost containment strategies.”
To overcome the objection that health insurance premiums are too high, the brokers at Benefit Services in Wellesley Hills, Mass., offer certain employers with 100 or more employee alternative funding arrangements for medical and dental. In particular, the firm specializes in arranging partially self-funded plans, which are comprised of a third-party administrator that adjudicates the claims; a stop-loss carrier who offers two levels of insurance that includes both a specific deductible (so the employer will not be responsible for any claims on any individual over a pre-determined maximum); an aggregate maximum that the employer’s claims cannot exceed during a plan year; and a network of providers.
“Massachusetts has the most expensive health care in part because we have the most state mandates built into our fully insured plans—the most expensive mandate is for unlimited infertility treatments,” says Maureen Baker, vice president of sales. “But a self-funded plan is an ERISA plan, which does not have to include the state mandates, so there’s a lot of cost savings.”
Partially self-funded plans offer the employer greater flexibility in plan design than traditional fully insured plans, says Benefit Services President Bruce Coughlin. The employer can switch re-insurers while keeping the same network of doctors and hospitals, thus gaining the most competitive stop-loss rates without disturbing the employees. The employees will not notice if the reinsurer is changed because the same third-party administrator will pay the claims and the employees will be using the same network. The transition is seamless, Coughlin says.
“We can look into doing this for a company, but it’s not right for everybody,” he says. “For some companies, partial self-funding can be less expensive and thus more palatable way to purchase group medical insurance.”
For companies that have much fewer employees, insurance rates tend to be the same. If a prospect says they already have a broker, Coughlin says his firm tries to distinguish itself by touting its industry experience, plan design and additional services.
“We tell smaller groups that we’re more than just a broker—we’re a partner who will work with them,” Coughlin says. “We tell them that we want them to be in touch with us on an ongoing basis. We’ll send them newsletters and informational emails.”
Benefit Services is currently letting both prospects and clients know about a current initiative by Massachusetts carriers of implementing tiered networks to encourage participants to select the least expensive hospital for surgery, Baker says. For example, participants can choose a Tier 1 hospital and not pay a deductible; or a Tier 2 hospital and pay a $1,000 deductible; or a Tier 3 hospital and pay a $2,000 deductible plus co-pay.
“Groups are going to need more assistance in determining what is the best plan design for them,” Baker says. “The key is listening to the client and fitting the benefit program to the company.”
M. Dennis Guappone, a principal at United Benefit Services in Newton, Mass., a unit of Brown & Brown Co., says the most common objective from a prospect is loyalty to their existing advisers.
“We suggest they put out an RFP—start fresh, line brokers up side by side, and find out who provides the most value to the company and bottom line, to their employees.”
To ensure United is among the top candidates for such an RFP process, Guappone says his team focuses on recommending ways to achieve indirect savings, such as streamlining operations of the HR department, or implementing Web-based services into a prospect’s organization to eliminate redundancy of tasks.
“HR technology is coming downstream in the marketplace,” Guappone says. “It used to be affordable for 10,000 and above companies, but now 100 employee companies can afford it, but many don’t know they can.”
United also belongs to a national purchasing group that enables the firm to obtain these types of services for less, he says.
Objecting Voluntary Benefits
J.J. Summerell, the managing director of Worksite Insight, in Greensboro, N.C., is a wholesale broker of voluntary benefits, and hence, has to overcome objections from three different constituencies—a client’s primary broker, that client’s HR professional and the client’s employees.
Brokers often object by saying they are not interested in these types of benefits, but Summerell counters that by telling them receiving a commission from the sale of voluntary benefits might offset diminishing commissions from health care plan sales due to the advent of minimum medical loss ratios in the new health care law. Insurance companies are now required to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement, leaving just 15 to 20 percent for overhead—including broker commissions.
“Commissions are getting squeezed, but selling my types of benefits directly to employees could offset that squeeze for those agents,” Summerell says.
If brokers tell him they already use the services of one of his competitors, Summerall shows them spreadsheets of products competitors offer, commission levels and how the broker is contracted, to determine who actually owns the business they are selling.
“Most important is owner renewals, stream of income,” Summerall says. “If the agent ever wants to sell their agency to someone else, those renewals go with it. A lot of insurance companies actually own that business, and they just pick another agent to put in there.”
Once Summerall is able to accompany a broker to a client’s office, Summerall often overcomes a current client objection that employees would likely not buy any voluntary benefits because they’ve just had a pay cut or they haven’t had a pay increase in years.
Summerall counters that by showing spreadsheets of recent enrollment ratios of voluntary benefits by other local companies. Not only do clients see that employees are, indeed, selecting benefits such as gap health insurance or life insurance, they also realize they may need to offer these things to remain competitive in the labor market.
‘I Don’t Have Money’
Once Summerall can get access to employees, the most common objection he gets is that they don’t have any money.
“I tell them, if you don’t think you have any money now, what do you think would happen if you become disabled or died and then your family would be really suffering financially?”
“Generally you can avoid objections by first describing the problem, getting the broker or the company or the employee to agree that there is a problem, and then you propose the solution,” he says. “If you don’t describe and get them to agree that there’s a problem, it’s much easier for them to come up with objections.”
Elizabeth Halkos, chief marketing officer of Purchasing Power, an Atlanta firm that offers employee purchasing programs through payroll deductions, says brokers should take more of a consultative approach, strategizing with their clients about benefits, helping clients understand their employee base and how to segment that base.
“Instead of hard-selling benefits and getting an immediate push that gets the objection, ‘I’ve got other priorities in this economy and there’s a lot ofpressure on me for cost cutting,’ brokers should have more of a consultative approach, working with employers to identify types of benefits different segments of the employee base may need, based on the identity of the segment,” Halkos says.
Brokers must get their clients’ to focus on long-term goals for their program, because impacts to cuts in services on employee engagement and retention may not be seen in the short term, she says.
Michael Lovas, who authors books on professional credibility and the psychology of marketing and selling in the financial industry, says benefits professionals should not initiate their conversations with prospects by asking open-ended questions, because HR professionals don’t have the time—and often the comfort level—to delve into long-winded discussions with someone they’ve just met.
Moreover, asking relevant follow-up questions will be the key to demonstrating that the benefits professional is actually listening and responding in ways that could meet their specific needs, Lovas says.
If prospects still say no or ‘not at this time,’ Lovas suggests leaving them with ideas to ponder about opportunities they might not be seeing.
“You might not get their business right away, but you never walk away without having some kind of forward movement—you might just get another meeting,” he says.