Let go of the status quo – Suzy K. Johnson on the benefits industry

By Rick Ramos

Suzy K. Johnson shares her thoughts on the industry and where we are headed.Advisors of the Carolinas,LLC

With more than 32 years of experience as an employee benefit specialist, Suzy K. Johnson understands benefits better than most. She is president and owner of Employee Benefit Advisors of the Carolinas. I had a chance to speak with Suzy and ask her about her thoughts on the industry and where we are headed.

Rick Ramos: Suzy, you’ve qualified for the NAHU Soaring Eagle agency recognition award each year since its inception in 2010. What’s changed most in the benefits space in the last seven years?

Suzy K. Johnson: The better questions is, “What hasn’t changed?”  We used to primarily do small groups under 100 employees and now we only prospect groups with more than 50 employees.  Our average new case used to be 35 lives and now we average around 115 employee lives.

We used to educate about how small groups under 50 employees were rated based on their risk factor, but now it is only ACA community rates or level-funding with underwriting questions for groups of 25 or more in North Carolina.

In 2008, we received a lucrative percentage of commissions along with handsome volume overrides from carriers. This meant we had an automatic increase in annual revenue, even if our new production wasn’t what we targeted. Now we are paid a per employee per month (PEPM) fee for group health of all sizes. Now when employers lay off workers, our revenue decreases. As a result, we must continuously sell new consulting work to grow revenue and the company.

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The Case for Employer Sponsored Group Disability insurance

The Case for Employer Sponsored Group Disability:

Are you providing group disability benefits for your employees?

Today only about 40% of employers actually sponsor a group disability program for their employees but it is one of the most important benefits that an employer can offer after group life, group health insurance and a 401K plan.

Did you know that roughly 25 percent of people entering the workforce today will have their income interrupted for 3 months or more due to illness or injury?

Most commonly this is due to musculoskeletal issues, depression or other mental/nervous disorders or cancer.

As you might expect, older individuals are more likely to file a claim, however companies with young women see a lot of claim activity under Short Term Disability for maternities. The plan will pay for the period the Doctor disables that employee upon giving birth.

Group Short Term Disability provides an income replacement for a disabled employee equal to 60 or 66 2/3% of their pre-disability income and it can be created to be a tax-free income replacement. Typically, a Short Term Disability benefit will begin paying after two weeks of disability and the employee receives a weekly check up to a maximum of $1500 week.

The costs for this coverage is related to income but averages about $18.00 to $20.00 per employee per month.

Group Long Term Disability plans typically begin paying after an elimination period of either 90 or 180 days (can be designed to dovetail with the Short Term Disability benefit) and typically cover 60% of pre-disability income up to a monthly maximum. These programs can be set up to provide a taxable or tax-free benefit (a tax-free benefit typically costs a little more). The total cost of group disability is based on the contract, industry and income of the employee however, the average group cost is $20 to $25 per employee per month for a comprehensive plan.

A quality group Long Term Disability plan will typically provide benefits for as long as the employee is disabled up to their normal Social Security disability age.

These plans are good for employers as well. There is a premium cost but it is a benefit employees appreciate and are looking for and the plan can be designed to share the low group rate with the employee if they elect coverage.

If you have a group disability plan in place the disability benefit is what will be paid to the employee if they become disabled. You as an employer can feel good about the fact that you put a plan in place to provide income security for that employee.

Further, you don’t have to struggle with decisions about how long to keep their job open and when you can actually begin finding someone to replace that person’s job duties.

After the FMLA period is met, the employee can be terminated and offered Cobra coverage. If there is a job for them when and if they become well enough to return to work, there is no problem hiring them back but no obligation to either.

All in all, group disability insurance is a “win/win” for the employer and the employee and more employers should be offering this benefit to attract and retain the best employees.

Suzy K. Johnson
Employee Benefit Strategist

Clients need an employee benefits advisor who works for them

Suzy K Johnson – CEBS, RHU, President and Owner at Employee Benefit Advisors of the Carolinas,LLC

The most difficult and challenging role in any benefits agency today is new client acquisition. Finding and engaging the right clients takes research, knowledge, persistence, organization, a challengers mentality and a tremendous belief in the agency’s ability to provide the right guidance, advice and solutions for the client.

For too long some health insurance companies have seen the brokers role as less than it really is.

These markets have tried to control advisors and brokers by granting them a low rate to “be able to get the business”. What the client should realize is the first year low rate comes at a price…an obligation on the part of the broker to “sell the high rate renewal” to allow the carrier who provided the first year discount to make up the lost profit.

Our agency took a lead in our market many years ago to make sure the client recognizes we sit only on their side of the table in an advisory capacity. We also take it as part of our role to know the markets well which includes their strengths and their weaknesses.
If a market has a track record of buying business and selling on first year rate it doesn’t serve the client well and markets who operate this way have not done well with our agency.

We only want to work with those who understand our first obligation is to represent the best interests of our clients.

I have witnessed carriers threaten to de-appoint licensed broker partners if they can’t sell an unreasonably high renewal rate. These carriers engage in these behaviors with the very best of brokers and sometimes it mystifies me.

Because our agency has been very lucky to partner with carriers over the years who know they must have the best product, network, services and value to win, we continue to have faith in the long term viability of most of the insurance companies we work with.
My message to all health insurance carriers is this:

a) Decide what caliber of agent/producer you want to have representing your brand(product) and select them based on their dedication to the industry, credentials and designations, integrity, activity, productivity, doing their job well, representing your product accurately, ability to innovate and commitment to keep up with changes in the industry.

b) Focus on offering the best value and product to clients and forget about selling on a low ball first year price. Get it right from the start by having lower expenses, better product offerings, more accurate underwriting and build a sound foundation and value experience for the client and their employees.

For the carriers who figure this out and execute best, the market is theirs for the taking.

Lots of things are changing in our market and the way the health carriers view the role of their broker partners must as well. Health insurance companies need to be able to win by having the right combination of value and price and seek out broker partners who are not just looking for the lowest rate first year to win the business.

And if the broker focuses on meeting the clients needs, understand that is a good thing and dig deep to understand what those needs are.
In the end, the cream rises to the top. This is true for the client regarding the employees they attract and retain, the carrier’s success in building market share and the broker’s ability to deliver the best guidance and advice to their clients.

Clients desire to create long term stability and a quality benefits program.

A fair product at a fair price for many years will endear the right client to the right insurance provider. And the right client will return the favor by showing loyalty in a tough year if the rate increase request is reasonable.

Employee Benefits communications are crucial to success and employee understanding.

Suzy K Johnson

CEBS, RHU, President and Owner at Employee Benefit Advisors of the Carolinas,LLC

As Employee Benefit Advisors, we can’t fulfill our mission of ensuring the health and financial security of our client’s plan beneficiaries if the employees don’t know what their benefits include or how to use them. Even with a good education campaign it is difficult to assure the message is clearly understood.

Here is a checklist of “dos” for your next employee benefit communication campaign:

1) Keep your message free of jargon. Make your message clear, concise and easily understood.

2) Highlight how the participants benefit from what you provide them.

3) Make the message fun and engaging! A clever graphic or fun campaign theme can help catch their attention and inspire action.

4) Use reminders. Once is not enough. Plan a communication timeline for your message so you can repeat key points and offer helpful reminders. Out of sight out of mind!

How to help your employer clients implement a High Deductible Health Plan with HSA

How to help your employer clients implement a High Deductible Health Plan with Health Savings Account and engage employees so they embrace (may even be excited about) the new plan design:

There is nothing “easy” about initially understanding a Qualified High Deductible Health Plan (plan with no copays) and the accompanying Health Savings Account.

More than 12 years of experience moving employers to these plans has taught us a great deal.

The first recommendation I make to employers is that they need to understand and embrace these plans themselves…for themselves first.

Many employers will say….”We like offering the traditional copays and don’t think our workforce is suited for a plan that doesn’t offer copays”. My next comment is….”Can I show you a way that you can create the same robust benefit plan by spending the same dollars you would on the traditional PPO plan through employer funding into the Health Savings Account and if employees don’t use the dollars…they are the employee’s to keep in the account for future health expenses…even in retirement?”

1)      Provide an easy to read, colorful engaging education summary about how these plan works that uses pictures and arrows and graphics to explain the basic concepts about High Deductible Health Plans and Health Savings Accounts to the C Suite involved in the decision making.  The employer will be astounded with all the favorable elements of these types of plans.  Don’t forget to remind your LLC and S Corp owners and Partners that they can fund these accounts as well and deduct them off their taxes.
2)      Let the employer know that if they are moving from a traditional PPO with copays they should be initially committed to spend at least the same dollars for health benefits per employee that they did the prior year.  The difference is that they will be paying lower premiums and applying the saved premiums to fund the employee’s Health Savings Accounts.  I often encourage the employer to offer a dollar for dollar match to what the employee puts into the account since these plans only work if the account is funded and the premium contributions the employee pays for the group plan monthly typically will be less (sometimes significantly less).  I ask for the employer’s permission to encourage the employees to fund the accounts with 100% of their premium savings which is where the employer match incentive helps.
A funded account up to the maximum out of pocket exposure is the goal for the employees to begin really liking the program.  Sometimes an extra funding bump/incentive by the employer in the beginning can make all the difference in how the plan is perceived and embraced.
3)      Sell the heck out of the benefits of the Health Savings Account.  The benefits are too numerous to list here but know these plans inside and out and sell the tax advantages and the benefit of entering retirement with some money allocated to future healthcare expenses.
Health Savings Accounts continue to be a gift provided to us all in year 2004 by the US Department of the Treasury.
4)      I recommend group education meetings with an education PowerPoint or video as well as catchy enrollment materials and one on one counseling for the initial enrollment. Preferably the enrollment would be done with an online tool; however, the employee will still need some explanation and hand holding or they will be very skeptical.
5)      A dual option offering with a High Deductible Health Plan (HDHP) and Health Savings Account(HSA) with a “buy up” to a higher cost PPO with no HSA funding is a great way to reinforce to employees the premium advantages of the lower cost HSA plan.  Many will sign up for the lower cost plan especially if they will be receiving employer funds to their HSA.
6)      If the employer sees these types of plans as a way to reduce cost but is unwilling to consider any funding into the HSA the only way the employees will embrace the  concept is if their premium contributions are much less than in the past.  They need to understand this and be shown the need to fund the Health Savings Accounts with the savings. Much more communication and hand holding is needed if the employer is not going to fund the HSA. However, if the monthly premium savings to the employee is significant, you can still have a successful enrollment with individual counseling.  The employee needs to understand they need to elect automatic contributions to systematically fund their HSA (with the premium savings they are receiving) or they are entering a danger zone!
7)      Provide Telehealth services with a very low copay and sell the heck out of this as well.  Pair the telehealth benefit with one of the newer technology advocacy/ concierge assistance services for members to be able to call and find the lowest price/highest quality providers and facilities and save on RX prior to entering the healthcare system.  Educate employees and family members on the value of this service which allows them to spend their HSA money more wisely. Reinforce to them they will not be on their own in their quest for defined cost/quality information if they use the advocacy/concierge assistance.  Most of these advocacy/concierge services include telemedicine in the package and they can create immense savings not only for the employee but for the plan as well since the claim dollars paid out will be reduced.
8)      The proposed healthcare plan replacement options at the federal level include an expansion of Health Savings Accounts so the demand for these plans will continue to grow as the benefits are enhanced.  
9)      These federal proposals also exclude the funds in the HSA from any employer cap on deductibility of premiums unlike the current Cadillac tax which includes the HSA value.
10)   Now is the time for every employee in America who receives a plan from their employer to be presented with an option to have an HSA . I see the responsibility to drive this education and promotion as that of the Employee Benefit Advisor/broker.  It is our responsibility to educate, communicate and be advocates for these types of consumer driven plans. Not until we eliminate copays that detach employees from the real costs of receiving healthcare will we ever have any chance of combatting the continually increasing costs of healthcare which now equates to 24% of the average American workers paycheck (including employer and employee contributions).  Enough is enough.  The solutions exist and continue to improve.  We must be the advocates of education and change.
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