Author: decisely1

Five Reasons Why Employee Assistance Programs (EAP) Are Good For Business

By Geri Moore, VP Human Resources Decisely

May is Mental Health Awareness Month.  And with approximately 1 in 5 adults in the U.S.—43.8 million, or 18.5%—experiencing mental illness in a given year, employers are recognizing that employees’ mental health is just as important as their physical health.  Employee Assistance Programs (EAP) are designed to help small businesses and their employees with mental health services, as well as a variety of issues in and out of the workplace.    As an employer who cares about your employees’ wellbeing and its impact on their capabilities while at work, you may want to consider offering access to an EAP.  While EAPs certainly benefit the workers, there is clear research to suggest that it’s equally beneficial for employers. Here are five reasons why offering an employee assistance program makes good business sense:

  • Attract Top Talent – Like any employer health benefits package, offering an EAP shows a potential prospect that the company cares about its employees.
  • Improve Productivity – Research shows that employees who use EAPs often experience positive changes in their work performance, such higher levels of work productivity and improved work team relations. Why? Because EAPs address potential problems early on, they help prevent significant issues from impacting performance, productivity, and morale.
  • Reduce Absenteeism – A study of over 60,000 cases found that employee absenteeism was reduced from an average of 2.37 days of unscheduled absences or tardy days in the prior 30-day period before using the EAP to only 0.91 days after completing use of the EAP.
  • Reduce Costs Related to Poor Performance – One global study researching the value of Employee Assistance Programs found that 66 percent of its participants had performance issues prior to EAP-assistance, resulting in an average weekly loss of over $1,600. However, after EAP use, the study noted a 74% reduction in employer costs related to poor work performance.
  • Strengthen Workplace Mental Health – Individual mental health has an impact on workplace mental health, so it’s in the company’s best interest to ensure employees feel that they’re able to handle the difficulties life throws at them. An employee assistance program is intended to ensure that employees can manage their daily lives while remaining productive, even during challenging circumstances or experiences.

 

ABOUT THE AUTHOR:  Geri Moore serves as VP of Human Resources for Decisely. She is responsible for the strategic development and management of our growing organization, leading recruitment, retention and expanding our culture as the company ramps up for significant anticipated growth.  Geri believes people are the heart of any business and that great people will always bring the passion needed to make a positive difference in any organization.

 

Small businesses, franchises need to tread lightly with association health plans

 

 

By Chris Duncan

The insurance and broker industries have been abuzz about proposed Labor Department changes that could allow more businesses to offer employer-sponsored group benefits to their workers. While this opportunity is great, both franchisors and the roughly 800,000 franchisee small businesses need to be especially diligent that they don’t expose themselves to legal repercussions in pursuit of association or group sourcing benefits strategies.

To avoid missteps and reap the advantages of these expanding opportunities in collective sourcing options, franchisors, franchisee member associations, and their advisors should navigate these new waters carefully.

New AHP rules

Small business and franchise owners individually are not big enough to qualify for large group plan rates nor the expanded coverage in both medical and non-medical (life, disability, accident, etc.) benefits.  Traditionally, they pay more per employee than large employers and have more stringent “participation” requirements.  Group-based life insurance, disability (short and long term), and other benefits often have more narrow coverage and benefits than what a large company can obtain.

 

Large companies also have the advantage of HR and benefits professionals to navigate the complicated waters of benefits sourcing and delivery.  Small businesses do all this while juggling…well, a small business!  The net result is that many smaller companies either can’t afford benefits or, don’t not offer, leaving employees to fend for themselves on the individual market or through state and federal exchanges.   In fact, only 55% of small businesses nationally offer medical and other benefits to their employees.

Most small employers would like to offer benefits to employees – both because it’s the right thing to do, and because it gives them the ability to compete for talent with larger firms as well as retain the good talent they do have.  Remove the barriers of “not enough” time and “too costly” and small business owners would leap at the chance to add benefits for themselves, as owners, and their employees.  Fortunately, the Labor Department has proposed a rule change that would improve their opportunity to source group benefits.

At its most basic, this modification will use a broader definition of how businesses or franchises can band together to form an association for the purposes of collective sourcing of benefits. This newly expanded set of criteria – including industry, geographic, and professional interests – would enable many more small businesses and franchises to offer benefits through an Association Health Plan (AHP).

The proposed rules, which are expected to be finalized by the end of 2018, broaden and relax the business purpose and “common business interest” standards by allowing small business owners to join together to sponsor an association health plan if they have:  (1) a common industry, trade, or profession (similar to current law), or (2) a common geographic location (opening the doors for “chamber of commerce or geography-based groups). Associations would only have to meet one of the criteria, not both. Business associations whose members operate in the same trade or industry can sponsor group health plans, regardless of geographic distribution, while members in the same geographic area may work in entirely different industries.

Ultimately, the rule change could help extend workplace benefits to millions more Americans. In just one example of a Decisely AHP client of independent small business owners of a major national brand, over 35 percent of its members’ employees were able to secure employer-sponsored benefits for the first time.  Among those who currently offer benefits, the average savings on medical insurance alone was more than 20 percent (bringing benefits affordability more in reach), and 36 percent were able to offer additional benefits such as dental, vision, life and disability (broadening benefits offered to employees).

The joint-liability concept

 

A long-standing area of legal risk in the world of franchising is a legal concept known as joint liability.

Essentially, joint liability occurs when a franchisor is perceived to be in direct control of the employees of its franchises. If this is judged to be the case, then the franchisor is considered a single, joint employer and can be exposed to lawsuits, collective bargaining, and fines for wrongs committed by franchise employees.

In general, franchisor can reduce their exposure of being considered a “joint employer” by:

  • Making non-control clear – ensuring that within the franchisor/franchisee agreement, documentation, process and true business substance that the franchisor is not acting like the employer, and does not have the power to hire, promote, or fire franchisee employees. Staying true to franchise model – franchisors want to ensure product and service standards are at a high level (for example: product quality control standards, requiring uniforms or customer greetings to maintain the brand), but should not micromanage franchisee business operations, particularly those operations affecting employees.
  • Leaving HR functions to franchisees – in practice, franchisors should leave the typical human resources and employer functions like hiring and firing, pay and benefits determination, employee handbooks, HR policies, etc. to the individual franchisee.

 

Avoiding joint-liability in an AHP

 

If you’re a franchisor, how do you balance your desire and the opportunity to take advantage of Association Health Plans that reduce the cost of benefits for your Franchise ecosystem without creating joint liability exposure?

An AHP or trust can be sponsored by members of your franchisee group or association and overseen by members of this organization.  The AHP or Trust’s role is to aggregate and oversee member needs and to secure coverage on behalf of its members. To avoid joint liability missteps in setting up and managing this Trust, we generally recommend five things to clients:

  1. Leverage an existing association or trust. This should be an existing independent association or Trust to administer benefits. In many cases, though, there may not be an existing association, but you can set a dedicated AHP Trust up as long as you keep it arm’s length.
  2. The AHP/Trust must be SPONSORED by franchisees, not the franchisor.  When creating a new association or trust, the franchisor can help initiate the exploration of collective benefits sourcing through an AHP, but should leave the decision and its establishment to the franchise members. There should be a clear hand off from franchisor to franchisee before the start of the trust.
  3. The AHP/trust must be OVERSEEN by franchise members participating in the AHP/Trust.  All ongoing management and decisions of the Trust should fall to the trust leadership, not the franchisor. Further, a franchisor should not sit on the board of a trust or association health plan. If they do, it should be in an advisory and non-voting status.
  4. Hire a program administrator at the Trust level. A program administrator is usually an outside firm or organization that provides a turnkey offering for creating, launching and managing an AHP. This can be a broker or consultant, law firm, or professional management firm. In cases where Decisely provides program management, brokerage, marketing, or a technology platform for benefits delivery and client administration, we make sure to report directly to the trust board and remain independent from the franchisor.
  5. Choose a multi-faceted program administrator that can offer services other than just benefits. Associations and Trusts can further erode the issue of Joint Liability by offering other independent HR functions beyond just the AHP, such as payroll, recruiting, retirement plans, HR support services such employee handbooks, and more. This combined program helps substantiate the Trust and its services as independent of the franchisor.

Embrace the change

Ultimately, the potential of AHP’s will be a game changer in terms of potential savings and efficiencies. Today, six million small businesses buy benefits individually, company by company; while tomorrow, six million small businesses will buy benefits collectively.  Franchisors and their small business franchisees that seek to capitalize on this expanding opportunity can do so with careful planning for arm’s length creations and administration of AHPs.

Chris Duncan is the EVP & COO of Decisely, an insuretech  firms specializing in small business solutions for brokers, associations and franchises.

 

Originally published at Benefits Pro on March 30, 2018.

Decisely celebrates “Bolt Day” with lunch, movie & a whole lotta fun.

 

The Decisely family celebrated “Bolt Day”, a charity event dedicated to helping a member of our extended family, Austin Dunn.

Austin was struck by lightning on July 22nd and miraculously, he survived.  While Austin is still dealing with severe nerve damage and muscle spasms his spirits are up and he continues to work towards recovery.

 

Why Bolt?  In honor of the therapy dog Austin recently received, apparently the name Lightning was already taken.

The voluntary event raised over $2,100 to help with medical bills.

If you would like to help https://www.gofundme.com/4688rwo

Why Small Business Benefits Trust Plans Matter: Argument for Association Health Plans

By Chris Duncan, EVP/COO Decisely

The small business community is a non-partisan place–Democrats, Republicans, Independents, Libertarians, and any other flavor of political outlook all have a stake in small business success. Why so much interest? Because the six million small businesses (2-100 employees) in the U.S. provide over 40 million jobs, representing 34% of the entire U.S. workforce.1 Yet this engine of the U.S. economy and source of so much pride and progress in innovation and entrepreneurship has a major challenge: the ability to offer cost-effective, useful benefits to employees and their families.

Almost all (99%) large firms offer benefits to their employees; only 50% of small businesses offer benefits. This effectively means that over 20 million employees don’t have access to employer-based medical coverage, forcing them to either buy coverage in the largely dysfunctional individual medical insurance market, through the federal or state exchanges or worse, go without any insurance at all.

Beyond Healthcare

Access to healthcare is not the only problem for small businesses. Over 90% of disability insurance that covers loss of income if an employee becomes injured or ill, is purchased through an employer-provided benefits program. If the employer doesn’t offer disability insurance, studies show it is extremely unlikely that an employee will buy disability insurance on their own.2 Only 60% of small businesses offer disability insurance benefits, which means that at least 40% of 40 million small business employees are highly likely NOT to have any long-term disability coverage (as many as 16M employees). Yet, there is a 30% chance a 35- to 65-year-old will be disabled for at least 90 days during their prime working years. Even worse, an estimated 1 in 7 workers will be disabled for more than 5 years. So, a substantial percentage of workers in small businesses can’t protect their most important asset–their ability to work and maintain an income.

 

In addition to traditional benefits, small businesses are also disadvantaged in offering retirement savings options for their employees. Only 30% of small businesses offer any retirement savings programs (401k, IRA) for their employees; even those with access to retirement savings programs still are challenged—overall, over 70% of Americans aren’t saving enough for retirement.

We already know that even employees in businesses with work-provided retirement savings programs aren’t saving enough for retirementSome estimates suggest that as much as 70% of U.S. workers will retire with less than $10,000 in savings!3 A lack of employer-provided retirement options can make saving for retirement that much harder for 34% of the U.S. workforce.

 

There are lots of reasons why small firms struggle to offer benefits – while cost is a major factor, many times absence of viable options, the complexity associated with sourcing and managing benefits, or lack of time by the small business owner to manage the process can all be primary drivers.

Limited Purpose Trusts & AHP

Decisely, a specialty benefits and HR solutions technology firm, was founded on the principle that small businesses should have access to the same comprehensive benefit plans as large corporations. It is the reason we exist. Decisely supports small businesses in their efforts to keep healthy employees and a healthy bottom line.

One of the ways Decisely helps small businesses is through the formation of Limited Purpose Trusts for the sourcing of more cost-effective and expanded benefits across multiple small businesses. There has been buzz in the news about Association Health Plans and impending moves by the Department of Labor to expand the ability of Associations (and Franchisees) to band together in purchasing pools to source benefits. The idea of collective sourcing of benefits, however, is not new. The DOL allows today those Associations with strong common business interests to band together in trusts (Voluntary Employee Benefits Associations and Multiple Employer Welfare Associations) as long as they meet a few conditions:

Must Be Same Trade/Business Interests (ex. Business owner/operator not “Chamber of Commerce” unrelated entities)

For Employees only (not 1099 contractors)

Employer Members Control Business Decisions (not broker or insurer owned)

AHP/VEBA must be created for MORE than just group healthcare purchasing

New Association Health Plan regulations, when (and if) released, are expected to expand the ability of Associations (and Franchises) to include the aggregation of unrelated businesses (“Chamber of Commerce” programs) and contractors.

Why is this so exciting for small businesses? An example: Decisely, with a Property/Casualty broker partner, launched a Trust program for collective sourcing of medical benefits (including dental and vision), and paired this collective sourcing with other nationally negotiated non-medical benefits for a 10,000+ small business franchise operator. The positive impact on these small businesses is telling, and strikes at the heart of the strong business reasons why collective purchasing/aggregation of benefits sourcing is so good for small businesses and insurance carriers.

We surveyed the first big set of customers in this national Trust program, and here’s what we found:

Saved Big $: On average, these small businesses (average 18 full time employees each), saved over 23% in healthcare insurance versus what they had before. The cost savings per employee was over $1,000! In addition to real savings, the national insurer-partner on the program included more robust network coverage, additional wellness and pharmacy benefits versus typical small business insurance, adding additional savings to the Employers and broader benefits to their Employees.

More Companies Bought Benefits for the First Time: 35% of these small benefits obtained group benefits for the first time as the cost of the all-important health benefits dropped, and ability to access and administer the national program was made much simpler! That’s good news obviously for both the businesses buying, and the insurance carrier, who is essentially creating (and accessing) a new market of customers.

Expanded Benefit Offerings, with Broader Coverage: 36% of these businesses who previously had offered medical coverage added new benefits for their employees for the first time, including Dental, Vision, Life and Disability. Nationally, the trust was able to negotiate better “minimum participation” requirements than they would have been able to source on their own, both on Medical insurance and other non-medical insurance. For example, most of these small businesses were too small to qualify to offer disability, but under this national program, disability was offered to all companies with a minimum of 2 participants.

 In the first 40 days of the program, the trust program saved owners over $1.5 million dollars. That is a lot of money back in the pockets of employees, and to put back into the economy in other ways.

Small business truly is the backbone of the US economy, crossing every boundary of race, religion, politics and socio-economic status. We all want employees and their families to have cost-effective and helpful benefits. Banding small businesses together to source benefits makes our small business community stronger. It broadens access to benefits for employees thereby reducing the uninsured, it reduces stress and helps businesses both save time and money. Today six million small businesses buy individually, tomorrow they will buy collectively with Decisely.

Polar Plunge for Special Olympics of Nevada

 

Whitney, Senior Relationship Manager and her daughter, Molly took a dip in the frigid waters of Lake Tahoe for the  5th Annual Polar Plunge benefiting Northern CA and Northern NV Special Olympics.   

Did we mention it was cold?  It was 21 degrees outside, with 41-degree water temps, when Whitney & Molly took the plunge.

Decisely is a proud sponsor of the St. Patrick’s Day themed event, which raised over $161,000, surpassing its goal!!

Great job Whitney & Molly.  Thank you for supporting such a great cause, stay warm!!

 

 

 

 

Decisely named a TAG Top 40 Innovative Technology Company

Technology Association of Georgia Honors 40 Companies for Innovation

and Contributions to the State’s Technology Community

 

ATLANTA (February 21, 2018) – The Technology Association of Georgia (TAG), the state’s leading association dedicated to the promotion and economic advancement of Georgia’s technology industry, today announced Decisely as one of its Top 40 Innovative Technology Companies in Georgia. TAG will recognize this prestigious group at The Summit 2018 on March 20th and 21st, 2018, at the Cobb Galleria Centre.

TAG’S Top 40 Awards recognize Georgia-based technology  companies for their innovation, financial impact, and their efforts at spreading awareness of Georgia’s technology initiatives throughout the U.S. and globally.

“The 2018 Top 40 finalists are an elite group of innovators who represent the very best of Georgia’s Technology community,” said Larry Williams, president & CEO of TAG. “The 2018 Top 40 finalists are shining examples of what makes our State such a hotbed for technology and we applaud them for standing out as leaders in Georgia’s technology community.”

This year’s Top 40 were selected from among over 100 applications submitted by companies from across Georgia. Companies selected for the “Top 40” will be showcased in an exhibition at The Summit 2018.

“This year’s Top 40 was more competitive than ever,” said Dennis Zakas, managing partner of Zakas & Leonard, LLP and chairperson of the Top 40 Selection Committee. “In our quest to showcase the most innovative companies in Georgia, we had to make hard decisions, resulting in the exclusion of numerous deserving companies, many of which had been recognized as a Top 10 company in the past. The companies that we selected this year are truly outstanding.”

The Summit 2018 is expected to draw a crowd of more than 1,500 C-level executives, entrepreneurs, technology professionals and academia to celebrate and recognize Georgia’s technology community. In addition to presentations from some of the top technology influencers in the nation, the newest member of the Technology Hall of Fame of Georgia will be inducted.

For more information about TAG and The Summit and to register for the event, visit http://www.tagsummit.com/ Follow the conversation on Twitter through #TAGSUMMIT.

 

About The Technology Association of Georgia (TAG)

TAG is the leading technology industry association in the state, serving more than 30,000 members through regional chapters in Metro Atlanta, Athens, Augusta, Columbus, Macon/Middle Georgia, and Savannah. TAG’s mission is to educate, promote, and unite Georgia’s technology community to foster an innovative and connected marketplace that stimulates and enhances a tech-based economy.

Additionally, the TAG Education Collaborative (TAG’s charitable arm) focuses on helping science, technology, engineering and math (STEM) education initiatives thrive.

For more information visit the TAG website at www.tagonline.org or TAG’s community website at http://www.hubga.com  To learn about the TAG-Ed Collaborative visit http://www.tagedonline.org/

Turning small business broker attrition into an opportunity

By Kevin Dunn, CEO Decisely

 

“Our producer is retiring. We have to talk about how we allocate her book.”

That statement is an all-too-familiar one for leadership at many brokerages around the country today.  As the industry faces consolidation and turnover on a massive scale, attrition is happening more frequently and agencies are being forced to make some difficult decisions. The challenge is particularly acute for brokerages with a large percentage of small company books of business.

It’s no secret that the economics of small business benefits puts financial pressures on a brokerage. Many brokerages service a mix of business that looks something like this: 30 percent small business, 50 percent mid-market, and 20 percent large business. But the mid-to-large size clients often drive the majority of a firm’s revenue and cash profits. At best, the smaller clients return a slim, single digit margin, and end up pulling down the firm’s bottom line.

This is because as a commission-based business, it’s nearly impossible to return a solid profit on clients with less than 50 lives. They generally require the same service intensity of a 100-life group, but with only one-fifth the revenue.  Some individual employee benefits clients might be profitable, but overall, small group business with expanded HR service needs and a technology experience expectation effectively blows the profit and loss formula.

Despite this, many brokerages continue to service small business clients, as they are often a producer’s income hedge and perceived lottery ticket in the hopes they’ll grow into larger, more profitable clients one day. But what happens when the producer servicing those small business clients leave an agency? Is it business (and margins) as usual, or is it an opportunity to transfer the portfolio and reallocate client services to focus on more revenue-generating work?

Some forward leaning agencies are learning that they can deliver a higher standard of client service and contribute to the bottom line by monetizing their small book of business.  They are monetizing small business clients using a short-term outsourced partner that will pay cash for the book and provide a return of the business to the broker at a predetermined threshold, effectively freeing up time and resources to newer, mid-sized or larger clients.  This approach provides a roadmap for managing broker attrition and delivering better service to your clients for the long-term.

Below are three approaches brokerages can take to more effectively determine how to manage their small business book of business — either as part of a proactive exercise or because broker departures force a decision.

  1. Assess the performance of your overall portfolio. Understand tenure over time and evaluate how many and which companies are more likely to grow and become larger, more profitable pieces of business.  How many of your accounts have been a 10-15 employee firm for the last five years?  Are your smaller clients likely to follow that path, or is there a strategic relationship for keeping them as firm accounts?

  2. Assess your small business clients’ appetite for change. Many small businesses today are comfortable with modern tech and app-based tools, so a transition to an online platform with client dedicated relationship managers via phone could be a natural fit for them.

  3. If you can transition the bulk of your small business clients to a technology based solution, then you must next chart the best course to market. This requires an evaluation of the cost versus benefits of building a technology in-house or utilizing available SaaS technology platforms. A custom-built solution is great for accommodating the unique nature of your business and staff. But it can also be expensive — both to develop and sustain — and take longer to roll out. There are enough outsourced platforms on the market today that you will likely find one that suits your firm’s needs, whether outsourcing servicing, market quoting or selling the book. If you are able to sell your small business book, be sure to consider sale to a firm that provides a path back to you in case that book grows to the next Google.

At the end of day, it’s possible to turn broker attrition into an agency opportunity. By playing your cards right, you can use that moment in time to transform the underperforming majority of your client mix into a more sustainable and growth oriented portfolio that will improve overall margins.

 

ABOUT THE AUTHOR: As the CEO of Decisely, Kevin Dunn is building Decisely as the new standard in the benefits technology and brokerage insurance space. Decisely is a trusted advisor and turnkey SaaS technology for small business in the U.S. Kevin joined Decisely from Mercer, where he created and implemented the strategy and marketing for Mercer Health & Benefits private exchange technology. Kevin has over 20 years of experience in e-commerce and online distribution. He has co-created two start-ups within Fortune 100 companies and built the award winning Delta.com. Learn more at decisely.com.

 

Originally published at benefits pro on January 5, 2018.

How to break into the Association Health Plan market (AHP)

By Kevin Dunn CEO, Decisely

Small business owners have limited options when attempting to provide affordable healthcare benefits for their employees. Roughly 11 million small business employees do not have access to employer-sponsored benefits. In fact, employer-sponsored benefits for small business has dropped by 25% since 2010.

One reason is because the benefits cost per employee for small business is generally much higher than for larger companies. It’s also a much more complicated, time-consuming effort for small businesses to source and deliver benefits to employees. As a result, many small businesses are forced to offer only bare bones or no benefits plan at all; leaving workers to find coverage on the individual market or through state and federal exchanges.

But small businesses often want to offer affordable benefits to their employees. Not only does it help with employee retention, but they realize it’s the right thing to do. Fortunately, there is an effort underway at the Labor Department that could throw a lifeline to these small businesses and their employees.

Currently, ERISA allows groups of business with “common business interests,” such as an industry or a franchise group, to come together under strict guidelines to form collective benefits sourcing programs. A rule change proposed by the Department of Labor would broaden this definition of “commonality-of-interest” to allow small businesses to band together using less stringent industry, geographic, or professional interests, to form association health plans.

This change would mean that much wider groups of small businesses, franchises, smaller associations, and even sole proprietors could qualify for collective sourcing of benefits through an AHP. There are tremendous benefits to this approach:

Economies of scale of collective purchasing will make employer-sponsored benefits affordable for many more small businesses, reducing the number of uninsured.  Typically, health benefits group purchasing can deliver 10%-30% savings compared to individual small employer purchasing, amounting to hundreds and thousands of dollars of savings per employee. An AHP can bring access to broader benefits and services normally available only to larger businesses, including wellness and disease management programs. Access to group benefits can aid in higher retention employees for small businesses, a critical driver of the U.S. economy. Sourcing through an AHP can reduce administrative overhead for small businesses, allowing them to focus on their core business. Instead of being a broker’s smallest client, participating in an AHP give small businesses greater access to professional management, consulting, oversight and advocacy normally available only to large businesses with professional staffs and resources.

For benefits brokers, associations and franchises, this rule change is an opportunity wrapped in a challenge. Before small businesses can unlock the benefits of AHPs, they first need to navigate a complex administrative, governance and sourcing process. These small businesses, association and franchisee members are going to turn to their trusted advisors, industry and franchise organizations for help understanding this new and industry-changing opportunity.

Brokers, association, and franchise leadership must begin preparing now to meet these questions with specific, proven recommendations on how to quickly take advantage of this emerging opportunity to create real value for their client’s members and franchisees.

Fortunately, a proven playbook already exists for how best to deliver these association style benefits. This playbook will simply need to expand to a broader qualified set of small business over time as the DOL regulations are released toward the end of 2018 or early 2019.

Turnkey Solution

Today, an AHP or trust can be sponsored by a group member association and deliver real benefits to its members. The AHP or trust’s role is to aggregate (and oversee) member needs to secure coverage on behalf of its members. The AHP contracts with a broker specializing in small business and program management to create a benefits portfolio for the members, negotiate with insurers on its behalf, and provide program management, enrollment, benefits administration, and ongoing member support. The goal is a turnkey solution for the collective sourcing of small business benefits.

An AHP can be set up using three different structures for medical and other benefits:

  • Fully insured medical: This is the easiest plan to administer and communicate. It requires no initial capital reserves and does not share risk among the members. Instead, the insurer takes on all financial risk with little or no financial outlay from the AHP at startup.

  • Self-funded medical: Insurers prefer this approach because it requires the AHP to fund some initial capital or financial reserves for self-funded claims. This means the association assumes a collective financial risk for providing health care benefits to its members through an earmarked fund to pay claims across all participating members, funded by premium contributions to the AHP or Trust. The advantage to the AHP is group-wide savings if the collective group has good claims experience over time. The downside is it requires some up-front capital or reserves to be set aside by the association and its members.

  • Hybrid medical: Also called a minimum premium program, this approach blends risk for all parties and allows dividends or gain sharing for members based on good loss performance.

In general, the timeline from contracting with a program creator/administrator, through insurer negotiations, to the final launch of any group purchasing plan is six to nine months. First, associations must formalize their intended structure, including the formation of an AHP, if one does not already exist. A qualified ERISA attorney should guide this formation process to ensure proper compliance and governance.

Next, the association should consider sourcing an external program manager to help collect the appropriate data for underwriting AHP members, develop the benefits offering, negotiate with insurers, and initiate the marketing and administration of the AHP program. Once this plan is finalized, the program administrator can begin activating the strategies, tactics and program administration required by AHP member, including call centers, website, reporting, enrollment, and administration. At this point, the new AHP is ready for launch for members and employees.

Ultimately, the DOL’s loosened regulations on AHPs will expand the universe of small businesses and employees that can secure employer-sponsored benefits. This access enables small businesses to save money for their company and their employees, broaden access to better coverage and benefit options, and keep their employees happy and healthy. With a more stable and higher performing workplace, employers and employees alike can focus on the business’s growth and long-term success.

Brokers, associations, and franchises have an important role to play in this equation and should begin preparing now to be a resource and eventual facilitator for their small business clients and members in the days ahead.

 

Kevin Dunn is CEO of Decisely, a platform that supports benefits, HR resources, and technology for small businesses in the U.S.

Originally published at Employee Benefit Adviser on February 12, 2018.

The compelling new AHP opportunity already under your roof

By Kevin Dunn, CEO Decisely

Many brokers hold a small business portfolio for property and casualty insurance. Converting these same clients to employee benefits plans can be daunting because the requirements are so high and the profit margin so slim. Yet, proposed rule changes for Association Health Plans (AHP) by the federal government could make this conversion a much more compelling and financially rewarding proposition for brokers.

Small business benefits generally come with a much higher per employee price tag than larger companies. It’s also a much more complicated, time-consuming effort for brokers to manage small business benefits. Coupled with the financial realities of the insurance advisor business, it’s incredibly difficult for brokers to serve small business customers profitably. Many brokers are in no rush to upsell existing P&C clients into employee benefits.

Yet, small business owners want to provide affordable benefits to employees. Beyond doing the right thing, it’s a hiring and retention advantage often reserved for bigger companies. Unfortunately, owners currently have limited options for providing affordable healthcare benefits for their employees. The result, roughly 11 million small business employees do not have access to employer-sponsored benefits. In fact, employer-sponsored benefits for small business has dropped by 25% since 2010, according to The Wall Street Journal.

Fortunately, there is an effort underway at the Labor Department that could throw a lifeline to these small businesses and their employees. Currently, the Employee Retirement Income Security Act (ERISA) allows groups of business with “common business interests,” such as an industry or a franchise group, to form collective benefits sourcing programs under strict guidelines. A new rule modification proposed by the Department of Labor would broaden this “commonality-of-interest” definition so that small businesses can band together under less stringent industry, geographic, or professional interests, to form AHPs.

If successful, this change would mean that much broader groups of mom-and-pop businesses, franchises, smaller associations, and even sole proprietors could qualify for collective sourcing of benefits through an AHP. For these businesses, the benefits would be tremendous. Employer-sponsored benefits will now be within their reach because health benefits group purchased can typically deliver 10-30% savings compared to individual small employer purchasing. It will also widen the pool of available benefits to employers and employees and can reduce their administrative overhead.

Kevin Dunn – CEO of Decisely

For brokers, this is an enormous opportunity. The rule change will open up an entirely new segment of motivated and eligible small business clients. Because these organizations can band together as an AHP, it will be a much larger and higher performing client than usual. And since many may already be under management as P&C clients, it represents a “warm” sales opportunity already under your roof.

To prepare, brokers unfamiliar with AHPs should begin researching needed requirements now. Newly eligible AHP companies will need a trusted advisor that is well versed on the product and its requirements. Fortunately, a proven playbook already exists for how best to deliver these association style benefits.

Today, an AHP or Trust can be sponsored by a group member association and overseen by members of this organization. The AHP or trust’s role is to aggregate (and oversee) member needs and to secure coverage on behalf of its members. Most will then turn to a broker specializing in small business and program management to create a benefits portfolio for the members, negotiate with insurers on its behalf, and provide program management. Your goal as that advisor should be to deliver a turnkey solution for the collective sourcing of small business benefits.

An AHP can be set up using three different structures for medical and other benefits:

  • Fully Insured Medical: This is the easiest plan to administer and communicate. It requires no initial capital reserves and does not share risk among the members. Instead, the insurer takes on all risk with little or no financial outlay from the AHP at startup.

  • Self-Funded Medical: Insurers prefer this approach because it requires the AHP to fund some initial capital or financial reserves. This means the association assumes a collective financial risk for providing health care benefits to its members through an earmarked fund to pay claims. The advantage to the AHP is group-wide savings if the collective group has good claims experience over time.

  • Hybrid Medical: Also called a Minimum Premium Program, this approach blends risk for all parties and allows dividends or gain sharing for members based on good loss performance.

We have found that more than 90% of our association customers at Decisely opt for Self-Funded Medical plans because even though it brings with it some upfront costs, the potential savings over time are much greater. That cost-benefit calculation will vary for associations, so brokers should be thoughtful about their recommendation to clients.

Let your clients know that they should plan for roughly six months from contracting with a program creator/administrator, through insurer negotiations, to the final launch of any group purchasing plan. This will include the association formalizing their intended structure, including the formation of an AHP, if one does not already exist. A qualified ERISA attorney can guide this formation process to ensure proper compliance and governance.

It will also involve your helping collect the appropriate data for underwriting AHP members, developing the benefits offering, negotiating with insurers, and initiating the marketing and administration of the AHP program. Once this plan is finalized, the program administrator can begin activating the strategies, tactics and program administration required by AHP members, including call centers, website, reporting, enrollment, and administration. At this point, the new AHP is ready for launch for members and employees.

Ultimately, broader requirements of existing regulations will expand the universe of employees that can secure employer-sponsored benefits. Forwarding thinking brokers should be engaging now to ensure they are on the front end of this potentially once in a lifetime opportunity to bring those small businesses into the AHP fold.

 

 

ABOUT THE AUTHOR: As the CEO of Decisely, Kevin Dunn is building Decisely as the new standard in the benefits technology and brokerage insurance space. Decisely is a trusted advisor and turnkey SaaS technology for small business in the U.S. Kevin joined Decisely from Mercer, where he created and implemented the strategy and marketing for Mercer Health & Benefits private exchange technology. Kevin has over 20 years of experience in e-commerce and online distribution. He has co-created two start-ups within Fortune 100 companies and built the award winning Delta.com. Learn more at decisely.com.

 

Originally published at insurance-forums.com on February 13, 2018.