How and why CFOs are in the health benefits business.
As a Chief Financial Officer (CFO), your role in the organization is to oversee financial matters, including budgeting, forecasting, financial reporting, and… Health benefits?
In the past, the responsibility of selecting employee health benefits rested heavily on HR departments. However, with unsustainable annual rate increases every renewal season, organizations are leaning more on their Chief Financial Officers to tackle the increasingly complex puzzle of healthcare benefits.
In this data-driven blog post, we’ll explore how and why CFOs should continue to be involved with this process, and how it can benefit the organizations they serve, as well as the employees they work with.
1. Health benefits are a significant cost for organizations.
The total premium cost of traditional employer sponsored health insurance in the United States has risen substantially over the past decade and has significantly outpaced inflation according to the Kaiser Family Foundation’s Employer Health Benefits 2022 Annual Survey, the average annual premium for employer-sponsored health insurance in 2022, was $7,911 for single coverage, and $22,463 for family coverage. which represents an increase of over 40% against a 10 year inflation increase of 25%.
These rising costs show no signs of slowing down. Annual rate hikes can significantly impact an organization’s bottom line, making it critical for CFOs to carefully evaluate their health benefits options and consider alternative solutions, while still providing comprehensive healthcare coverage for employees.
2. CFOs can ensure alignment with company strategy.
According to a 2019 survey by KPMG, 84% of CFOs said they have a significant role in driving digital transformation within their organizations. Health benefits are an important component of this strategy.
By getting involved in the decision-making process, CFOs can ensure that the plans and solutions being offered align with the company’s overall goals and objectives. For example, if your organization wants to reduce costs, you may explore options such as high-deductible health plans or narrower provider networks.
3. Health benefits can impact employee retention and recruitment.
Attracting and retaining top talent is critical to the ongoing success of any organization. A popular strategy to achieve this goal is to put together a robust health benefits offering that differentiates an employer from its competitors in the labor market. This strategy can directly lead to higher employee retention rates and overall higher employee engagement. According to a survey conducted by Glassdoor, 80% of employees would choose additional benefits over a pay raise.
Why does this matter to a CFO and how can they add value? Turnover costs the organization money. Prioritizing stronger benefits drives employee engagement and potentially offsets the expenses associated with constant turnover. Think of it as coverage as compensation. The more employees know the true value of their benefits, through education and white-glove, concierge enrollment services like those offered by The OneBridge Agency, the more likely they are to appreciate, utilize, and maximize their plan.
Furthermore, with the YourWay ICHRA, employees are empowered to choose the coverage that best fits their needs and the needs of their dependents. In other words, even if they separate from an organization, they keep their coverage and unused funds.
4. Your perspective is unique.
While HR departments are skilled at tailoring programs to meet employee needs, they are not typically responsible for the fiscal solvency of the organization. With benefits so closely connected with an organization’s overall health, it’s no surprise that a 2019 study by Oracle shows that 88% of HR and CFO professionals agree that data-driven collaboration improves business performance.
CFOs, on the other hand, are uniquely qualified to offer fiscally responsible insight into the benefits decision-making process, as they understand how benefits will impact their organization regarding the overall budget and an often overlooked budgetary factor: employee engagement. By working with other benefits decision-makers, more complex issues can be met with smarter, more modern business and benefits solutions.
With data analytics and numbers-driven backgrounds, CFOs can support their HR teams by analyzing the utilization and cost of different health benefit options, ensuring that the organization’s financial goals are met while still providing competitive benefits packages.
5. Compliance awareness.
CFOs are often responsible for ensuring compliance with various regulatory requirements within their organizations. An example would be adhering to the rules and regulations of the Affordable Care Act (ACA), which requires “large” employers to offer affordable health insurance to eligible employees. Failure to comply with the ACA can result in significant financial penalties. For the 2023 tax year, the monthly “per employee penalty” for failing to comply is $240, or $2,880 annually per employee, according to The ACA Times.
When involved in the decision-making process early and often, the ICHRA compliance team at OneBridge are able to assist CFOs with regulatory issues, and can safely ensure ACA compliance as well as other state and federal regulations, helping avoid costly penalties.
OneBridge Benefits offers a solution to these financial foes.
OneBridge can help CFOs assess the potential cost savings and other benefits that YourWay ICHRA can bring to an organization.
Through the YourWay ICHRA, employers provide tax-free funds for their employees via an Individual Coverage HRA account. OneBridge then helps the employees select tailor-fit coverage from their community marketplaces, and employees use the funds in their ICHRA accounts to pay monthly insurance premiums. Additionally, unused funds are kept by the employees for future qualified medical expenses—such as office co-pays, prescriptions, dental/vision, etc.
Implementing the YourWay ICHRA can help organizations and their CFOs make smarter and more cost-effective benefits decisions, enhance employee satisfaction and retention, and drive organizational success. If you’re a CFO looking to improve your organization’s benefits strategy and achieve better financial outcomes, contact OneBridge Benefits today.