LARGE IS NOT THE NEW SMALL: MOVING DOWNSTREAM TO SMALLER CLIENTS

LARGE IS NOT THE NEW SMALL: MOVING DOWNSTREAM TO SMALLER CLIENTS

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FOUR THEMES THAT AFFECT SMALLER BUSINESSES (100-300 employees): Cost is king Small businesses have no mature HR function You will be expected to do it all No formal process to find out what employees want

THE BEGINNING: WHY DO EMPLOYERS BIG OR SMALL PROVIDE BENEFITS?

Reasons for offering attractive benefits packages: Employees expect it Ownership philosophy is to take good care of employees Healthy employees are more productive Employers provide benefits to attract and retain talented employees, but they have to balance that goal with their bottom line. In a Select Broker s Own Words Probably, with the way things are going, less and less will be offered or contributed as an employer.

However small companies are getting beaten up by rising health costs, causing them to reconsider how much they can continue to spend on benefits. More small companies are: Eliminating benefits Reducing coverage Increasing premium contributions and co-pays Moving to consumer driven healthcare options with very high deductibles

Attitudes About Employer-Paid Medical Insurance 65% 52%

Health Care Reform has intensified conversations related to health benefits among small employers because for many smaller companies, the public exchanges could provide employees a place to buy health insurance. In an EBM s Own Words When the information comes out on the exchange, we ll sit down and compare apples to apples. Will it be beneficial to our employees to get on the exchange and pick what they want? We ll pay the penalty we ll give them a bump in salary and say, You re on your own.

VOLUNTARY BENEFITS WHY ARE THEY OFFERED?

Smaller employers look at voluntary benefits as an opportunity to add value to the benefits package without adding cost or administrative hassle to the employees or the company. Some offer some ancillary or voluntary coverage and would expect to continue to do so, even if they were to eliminate health insurance plans. In Brokers Own Words You would still need some kind of benefit package to attract employees. It is not unusual at all to walk into an organization in this day and age where you find people with a line of voluntary coverage or multiple lines. Whereas, even five years ago, you didn t find it nearly to the degree that you do today.

VOLUNTARY BENEFITS IS THERE A NEED AMONG SMALLER EMPLOYERS?

ABSOLUTELY YES!! The 100 300 employee market is often neglected and/or underserved regarding voluntary products. HOWEVER

Human resources departments tend to be small, less professional and overworked. Often an owner makes decisions about benefits. Small employers resist voluntary products because of the additional administration and communication. Voluntary products can mean more work in dealing with enrollments, billing, payroll deduction, and claims. Smaller companies do not have the time, the money or the resources to purchase or develop systems or programs to help them administer voluntary products. In a Broker s Own Words The pain is when you go into an employer that has 50, 75, 100 or 200 employees. A lot of times, you have a single person who does not only payroll but HR, accounts receivable, accounts payable. You go in and you say, I want to put in a new product here, she s going to look at you like, I m going to kill you if you even think about it.

Most Time-Consuming Tasks: Ranked in Top 4 Tasks Causing Job Dissatisfaction: Ranked in Top 4 Payroll Employee questions Monthly employee billing

When selecting which voluntary benefits to offer, it is unusual for an employee survey to be done, which is typical in bigger companies. Often the owner(s) of smaller companies decide with their gut or by using word-of-mouth type information.

Generally life insurance, longterm disability, and short-term disability are first tier voluntary products. Followed by traditional worksite benefits like critical illness and cancer insurance. Going in with too many products will quickly overwhelm smaller companies. Many brokers say they come in with Disability or Life then introduce another voluntary product the following year--if the first year was successful.

Preferred methods of communicating with employees include in-person meetings with HR staff and/or carrier reps, lunch and learns, and hardcopy packages. In a Select Broker s Own Words We do Lunch and Learns. Any of you that have CIGNA, those are great, and free. Employees love them. Various topics Just having those to move us towards that wellness program.

The enrollment process itself can be difficult. In small companies the HR staff collects the paper applications and enters them into a spreadsheet or other program for the carrier s use. This can be very labor intensive. In a Broker s Own Words I think the biggest barrier historically has always been the enrollment process, and it s both the enrollment and billing process and a lot of companies are these days running fairly lean as far as their HR staff goes so anything that s perceived to be labor intensive on their part can be ignored.

After the initial data collection in the enrollment process the role of the broker is varied, BUT.be prepared to do it all or partner. In Brokers Own Words We set up all that for them. We setup the deduction register, the deduction reports for them. We audit their monthly billings. We actually apply the premiums to the carriers that we use so we take that burden off of them. When we work with a Unum or a Colonial they have their own benefit enrollment folks When they do the enrollment and bring their laptops and sit with the employees and sign them up and then send a spreadsheet to the employer, it goes like clockwork.

Expectations for service on voluntary products include: Problems solved quickly and the first time Flexibility in providing employers the administrative service they need in the format they need it (e.g., a variety of enrollment strategies, electronic or paper billing, etc.) Accurate billing and flexibility to match up with payroll cycles for employers Materials produced quickly and as needed Claims handled quickly and accurately with minimal HR or producer involvement In a Broker s Own Words Problems are always going to happen, especially when you have a claim. If the company rep could help get that problem solved quickly, then he proves his worth to me.

WHO IS OFFERING VOLUNTARY BENEFITS?

Due to the increase in interest among small employers, more carriers and brokerages are entering the voluntary products market, including traditional medical carriers. More producers, including big national brokerages, are entering because: The cuts that small employers are being forced to make in their core benefits. They are trying to protect themselves from the possibility of lower commissions and revenues due to Health Care Reform Expectations that health care reform will lead some small employers to drop core health insurance coverage. In a Broker s Own Words I see a lot more companies who are jumping into the voluntary market that I have to compete against since health care reform Five years ago we hardly ever saw big brokers. They dealt with the major medical, primarily, maybe dental and vision, but they weren t as concerned with the cancer, critical illness and these other types of products. Today they are

Brokers value carriers who are willing to be flexible with participation requirements or guaranteed issue amounts. In a Broker s Own Words Ideally, those who sell all lines prefer to work with a single carrier for core and voluntary, whenever possible. This makes for easier enrollment and billing, consistency of communication and ease of administration. Once voluntary insurance is sold to the employees, it is very rarely moved unless the employer experiences a significant problem with claims or billing. We will try to work with the core carrier that already has the employer s paid coverage if they can offer it. If they can t then we ll go to these other markets that might specialize in voluntary benefits but it certainly would be a preference of mine and most of my clients if we could work with our core carrier.

WHAT DOES THIS MEAN WHEN WORKING WITH Cigna?

Products sold alongside When are decisions made Short-term Ancillary Products Same time as medical Long-term Supplement to Medical (replace dual option) Mid-year / off-cycle (sold with 18 month rates) Selling advantages Quality/Value of individual products Integration with medical/other products (word holistic used a lot)

How administered Short-term Same name, different systems Long-term Same enrollment/invoices (with less forms required) How positioned externally Financial piece-of-mind or for the unexpected Quality of life/enabling individual choices (a shopping experience) Word of mouth recommendation HR to HR & Broker opinion Coworker & Friends (yelp.com, JDPower, etc) Cigna Portfolio +

Some specific issues selling to employers with 50 to 300 employees: Paper-driven remains the most common method of enrollment for now Electronic solutions need to be super-simple, have no cost associated and must be really easy to synch up to payroll systems Executive team (and their spouses) still sway any final decisions Employees at smaller companies are hyper-sensitive about privacy, but loudly talk among themselves HR to HR peer interactions are few, so outside knowledge about products and perceptions about different carriers is limited More employers are doing coverage comparisons with local and larger competitive employers (as they start slowly to hire) 50 minutes of the 1 hour meeting will still center around the medical coverage for now Helping out employees in time of crises either financially or otherwise is common and on a case-by-case basis but not taken lightly