Providing Additional Value
Employee benefits brokers can play an important role in helping their clients understand and fulfill their fiduciary responsibilities.
Signed into law nearly three years ago, the Consolidated Appropriations Act, 2021 (CAA) introduced new regulations intended to protect consumers from surprise billing and to increase transparency in the healthcare space.
These regulations came with additional responsibilities to ensure plan sponsors act in the best interest of their employees.
“It’s only taken a couple of years for the class action lawsuits to start to happen,” says Kirk Benson, vice president of health & benefits operations at PCF Insurance Services. “It’ll happen with the bigger companies first, and then it will trickle down to the smaller companies—so the biggest job for us [as benefits consultants] is making sure that our clients understand their fiduciary responsibility.” For Benson, situations like this are where an employee benefits broker can truly provide added value to their clients.
Becoming the Knowledge Resource Your Client Needs
Doing that job can be summed up in a single sentence—“It’s just a matter of understanding what the client’s responsibilities are and helping educate them, where we can, on those responsibilities,” explains Benson—but getting to that understanding can be much more complicated. “It means we, as benefits consultants, have to become a knowledge resource,” Benson says. “Clients rely on their brokers for this kind of thing, and it can really strengthen and add value to your client relationships.”
Plan sponsors have many responsibilities under the CAA. Employers must ensure that all fees and costs associated with their health plan are transparent to employees; they must track their healthcare expenses through claims data; and they must ensure their service providers (e.g., brokers or consultants) receive “reasonable compensation.” On top of all that, plan sponsors and insurers are required to submit yearly reports to the government with information on prescription drug costs including claims, overall expenditures, and drug manufacturer rebates.
Cultivating a deep understanding on CAA fiduciary responsibilities is crucial for employee benefits brokers, Benson thinks—but it’s also challenging, especially given the current war for talent in the insurance industry. If your brokerage does not have in-house resources, you can look to find it in third-party risk management consultants.
Understanding the data made available under the Transparency in Coverage rules is also essential. “The data is absolutely key to understanding how best to serve your clients,” Benson says. A broker could use it to compare what different carriers are paying for different claims to guide a client to the best option. In addition, the data can be used to create a robust picture of the employer’s population health to help make coverage decisions, Benson suggests.
“As benefits consultants, we can add significant value by helping to educate our clients,” explains Benson. “We can do this by asking the right questions and fully understanding our clients’ business and needs. The more education we provide to our clients to help them navigate their responsibilities, the better decisions they can make.”
