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Benefits & Compensation Solutions is a business magazine and Web site owned by FieldMedia that provides solutions-based advice and guidance on best-practices benefits and compensation. 
Steven D. Draper is a consulting actuary who specializes in assisting employers with managing the costs for their health benefit plans. He helped develop the "Milliman Medical Index" in both 2006 and 2007. Since the original publication of this article, Draper has joined Hewitt Associates as a consulting actuary.
Ronald M. Cornwell, also a consulting actuary, is the practice leader in the health and welfare employee benefits practice of Milliman's Omaha office, responsible for the overall management of the practice.Any company that provides health insurance for employees will find itself buried by costs if it doesn't persistently find new ways to hold them down. But doing so carelessly can lead to greater impact on workers, leading to greater dissatisfaction and even higher turnover.
Handled carefully, however, the process of changing health plans can help employees feel valued and part of a joint effort to keep costs under control. "Despite rising costs, you can ensure that your most costly benefits remain an effective tool for attracting and retaining the best employees without exhausting all of your compensation dollars," write Steven Draper and Ron Cornwell, health care experts with the benefits firm Milliman.
In an article for the magazine and Web site, Benefits & Compensation Solutions, Draper and Cornwell suggest making modest changes to health plans every year and major ones every three or four years. Not only can relatively minor changes save money, but annual changes encourage employees to pay closer attention every year rather than simply checking a box to re-enroll. That gives employers an extra chance to "remind them of useful and cost-effective benefits of which they may not be fully aware. For example, reminding employees about 24-hour nurse hotlines can lead to employees using services that prove to be both more efficient for them and their families -- and less expensive for the employer."
Being in the habit of making at least major changes every few years, up to and including switching insurance providers or managers, is essential for any firm seeking to save serious money and to improve employee coverage. "There is a lot of competition in the insurance industry and much incentive on the part of insurance companies and administrators to compete for your business," Draper and Cornwell point out. "Even if you end up keeping vendors, the terms of your agreement likely will be much more favorable than your past contract due to increased competition." The health care landscape can also shift a good bit in just three or four years. Most plans have lists of preferred providers that can change with some frequency, for example, and a reputable children's hospital could disappear. The authors say that taking steps to restore such full coverage of such a key provider could help preserve worker confidence and satisfaction.
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