BenefitsPro: As compliance becomes more complex, employers turn to brokers for guidance, survey finds

By Alan Goforth

Sixty-nine percent of brokers cited ever-changing federal and state mandates as a leading market force driving their firms to add new products and service offerings.

Employers increasingly are turning to brokers for assistance in navigating complex regulatory and compliance issues.

"We've seen an increase in both state and federal reporting requirements, as well as regulations on the types of benefits which can be offered within a given state, which are driving a sharper focus on compliance," said Kim Buckey, vice president of client services for Optavise. "The myriad regulations that govern employee benefits can carry significant financial and even legal ramifications for employers, whether through fines, penalties and potential litigation costs. Many of these issues can have a direct impact on employee satisfaction and engagement, and employers are increasingly looking toward brokers for support."

Optavise, an employee benefit provider, recently surveyed health insurance brokers nationwide for its 2024 Benefits Broker Report. The results underscore the value that brokers bring to their clients:

• Sixty-nine percent of brokers cited ever-changing federal and state mandates as a leading market force driving their firms to add new products and service offerings.
• Forty-four percent said compliance is one of the top three issues for which employers request their services, trailing only new and innovative ideas for cost containment (57%) and benefits communications support and strategies (46%).
• Ninety-four percent of brokers reported high or moderate reliance by their employer clients for compliance and reporting related to their health care benefits.

"Compliance on both the state and federal levels always has been — and likely always will be — part and parcel of offering benefits packages to employees," the survey report said. "With new regulations issued every year, as well as proposed regulations and several court cases potentially adding to the burden, employers will rely on their brokers even more, both to 'check the boxes' and to communicate critical changes to their employees."

As employers continue to ask their broker partners to help manage health care costs, they are particularly interested in prescription drug management programs (77%) as a cost-control measure. "In an effort to control costs, we are seeing more employers implementing programs that include mandatory generic prescriptions, mandatory mail order, step programs and partnering with various health care entities," Buckey said.

Other popular cost-control measures include shifting to (or from) self-insured coverage (68%); implementing point solutions to target specific health needs (60%); and adding clinical advocacy to help employees become better health care consumers (55%).

The number of employers adding voluntary benefit products to their portfolios increased from 64% to 73%.

• Nearly half of respondents noted that voluntary benefits provide "a lot of value to their business," with another 45% reporting they provide at least some value.
• The three most popular voluntary products continue to be accident (65%, down from 71%); critical Illness (63%, down from 68%)' and hospital indemnity (49%, up from 39%).
• Other voluntary products gaining traction include pet insurance (23%, up from 19%); ID theft protection insurance (22%, up from 13%); and legal services (15%, up from 11%).

Additionally, reflecting an aging population, potential state coverage requirements and an increased awareness of its need, brokers also reported employer interest in long-term-care insurance, with 17% of brokers ranking it among the top supplemental products their clients have added in the past year.

Finally, employers expect brokers to not only provide cost-effective solutions but also explain benefits to their workers. An increasing number of brokers report seeing high demand for benefits communications support from their current and prospective clients (57%, up from 49% in 2023), while 37% reported moderate demand. Additionally, nearly every broker surveyed provides these services, either directly or in partnership with benefits communications specialists. Ninety-six percent offer materials such as enrollment guides and brochures; 94% provide compliance communications; 91% offer virtual communications support; and 90% provide in-person support.

"Clear, open and consistent communication about benefits is increasingly important," Buckey said. "The more information employees have about the types of options available and how to use them, the more confident they will feel about making the right decisions on their benefits."

In the current benefits environment, employers expect their brokers to be partners, not simply vendors.

"Employers are seeking a balance between managing costs and offering benefits that employees want and need," the survey report concluded. "As a result, they are turning to their broker partners for assistance in identifying solutions, communicating about those offerings to their employees, and handling all related compliance requirements. This trend is likely to continue as more and more employers seek to outsource benefits functions."

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