In-The-Know
The CFO’s Role in Benefits Planning
In this issue
An organization’s health benefits represent a significant financial outlay, typically ranking as the second or third-largest expense. For that reason, the benefits conversation is shifting from HR to the C- suite as CFOs focus on reducing costs and managing risk. Historically, Chief Financial Officers (CFOs) approached benefits with a passive, cost-approval mindset. However, the relentless escalation of healthcare costs is a financial drain directly hitting profitability. Now more than two-thirds of CFOs identify healthcare expenses as a major concern, according to a study by Mercer. In response, CFOs are moving past passive approval of minor plan tweaks and inserting themselves into the details of evaluation, utilization, and cost structures.
For benefits consultants, this CFO priority shift is a cue to move beyond plan adjustments or communicating only with HR. The new focus requires collaboration with HR and Finance to deliver both measurable financial performance and better employee health outcomes.
The New Reality: CFOs Drive Financial Ownership of Benefits
Your clients' CFOs have fundamentally changed their perspective: they are no longer just approving routine employee benefits costs. CFOs recognize the impact of high inflation, high-cost claims, and increasing demand for healthcare services on their organization’s financial performance. They are now treating healthcare benefits as a major financial risk—a volatile, executive-level expense that requires sophisticated financial oversight and strategic management. With AON projecting healthcare costs reaching over $17,000 per employee, and predictions for it to increase by 9.5% in 2026, CFOs expect not only independence, data and utilization metrics, but complete transparency on fees, commissions, and compensation structures to address the impact on their organizations’ bottom line.
How You Can Help With Benefits Planning
With the increasing involvement of CFOs in strategic benefits planning, the opportunity for consultants is to serve as a strategic financial partner and risk manager who understands your client’s P&L.
- Be Transparent: Focus on measurable results and cost containment. CFOs are learning that benefit plans have several layers of expense. It’s important to look beyond fixed costs and dig into important variable costs that could ultimately make an attractive plan more expensive than other options. Employers with self-funded plans will be particularly sensitive to variable costs which change based on the actual use of the benefits. Be clear when it comes to provider steerage, value-based care contracting fees, provider integrity programs, network fees/capitations, shared savings, rebate values, and member engagement.
- Leverage Data and Analytics: Tap into claims data and analyze utilization, effectiveness, and ROI. Provide transparent, actionable data that details claim costs and identify where utilization is high or where there are gaps. Some areas that increase variable costs could be high-cost specialty medications, frequent or inappropriate use of the emergency room, and managing chronic diseases. More data empowers CFOs to model various financial scenarios, such as the impact of unbundling services or adopting alternative funding models.
- Embrace Change and Promote Innovation: CFOs are demanding innovative, cost-containment strategies. Be prepared to challenge traditional arrangements, introduce disruptive solutions—such as direct contracting or creative pharmacy benefit programs—and clearly demonstrate how these strategies deliver the measurable financial performance organizations require.
CFOs are proactively looking for partners who can challenge the status quo and deliver accountable, data-driven results. The benefits strategy should be framed as a financial tool that attracts talent, enhances productivity, reduces risk, and increases profitability.
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