Download - Wa vbis-2012-0508
A Buck Consultants Webinar
Amy Hollis, National Practice Leader, VBIS
May 8, 2012
Buck Voluntary Benefits Integrated Solutions (VBIS)
Making Voluntary Benefits
an Employer Benefit Buck Voluntary Benefits Integrated Solutions (VBIS)
VBIS Objectives
2
• Objective #1: Overarching employee focus – complement and enhance plan
design and delivery to attract and retain talent
• Objective # 2: Strategic employer focus – lower overall benefit spend, while
adhering to Objective #1
Buck Voluntary Benefits Integrated Solutions (VBIS)
VBIS Mission Statement
To ensure and maintain our presence as the nation’s preeminent Voluntary
Benefit practice by:
• Responsibly and creatively crafting employer Voluntary Benefit solutions
that support our clients’ overall benefit and corporate objectives
• Maintaining the highest level of business integrity with full disclosure
• Focusing on long-term, sustainable relationships with our clients
• Working to support the financial well-being of our employer clients and their
employees
Setting the Stage A Couple of Underlying Premises Before We Get Started…
3
Buck Voluntary Benefits Integrated Solutions (VBIS)
Measuring Financial Impact of Benefits Establishing the Scale
How successful are your
benefits in attracting talent?
• Added financial security
• Savings for employees
• Favorable employee
perception of employer
• Time-saving convenience
4
Talent
Expense
Favorable Benefits ROI = retention of talent outweighs the expense of the benefits
Buck Voluntary Benefits Integrated Solutions (VBIS)
What is your investment in your
benefit program in terms of:
• The cost of premiums, claims or
insurance
• The cost of communication and
engagement
• The cost of administering your
plans
• The cost of consulting expenses
Measuring Financial Impact of Voluntary Benefits Using the Same Scale
5
Employer $ Impact = Higher Retention
Buck Voluntary Benefits Integrated Solutions (VBIS)
Lighter
Expense
How can voluntary plans
actually reduce your benefit
expenses?
• Medical plan design modification
to reduce claims or premium
expense
• Drive positive medical plan
selection
• Subsidize communications,
administration or consulting
expenses through permissible
channels
Heavier
Talent
Employer $ Impact = Lower Expenses
How effective are the voluntary
plans in attracting and retaining
talent?
• Added financial security
• Savings for employee
• Favorable employee perception
of employer
• Time-saving convenience
Voluntary Benefit Marketplace Complicated Matrix Plans and Delivery Options
6
Buck Voluntary Benefits Integrated Solutions (VBIS)
• Interest Sensitive Whole Life
• Universal Life
• Individual Term
• Critical Illness
• Accident Insurance
• Cancer Insurance
• Hospital Indemnity
• Individual STD
• Individual LTD
• “Hybrid” (Acc, CI, Perm Life)
• Group Supplemental Term
• Group Auto/Home Insurance
• Group Critical Illness
• Group Disability
• Group Long Term Care
• Legal
• Financial Planning
• Vision
• Dental
• Identity Theft
• Discount Malls
• Limited Medical Plans
Voluntary Plans / Products
“W
ork
sit
e” P
lan
s
“P
latf
orm
” P
lan
s
• Aflac
• Colonial
• Unum
• Trustmark
• Guardian
• ING
• AIG
• Colonial
• Allstate
• Transamerica
• Lincoln Financial
• Prudential
• Humana
• UHC
• Aetna (Allstate)
• AIG
• MetLife
• Unum
• Aetna
• MetLife
• Travelers
• CNA
• Aetna
• Liberty
• ARAG
• AYCO
• Cigna
• Hyatt Legal
• The Hartford
• Prudential
• VPI
• VSP
“Worksite” Carriers
Representative Carriers
“Platform” Carriers
• Metlife
• Beneplace
• YouDecide
• Motivano
• Marsh
• Perkspot
• Empowered
Or employer-to-carrier direct
• Univers
• EOI
• BCI
• BenefitVision
• Hodges Mace
• Farmington
• Winston Financial
“Worksite” Enrollment Firms
VB Outsourcers (Examples)
“Platform” VBO’s
Employer’s enrollment system
Commission Structure of Voluntary Plans Employer Be Aware, not Beware
7
* Illustration of Voluntary Benefit Commission
** You can remove all commissions from most “Platform” plans
0%
20%
40%
60%
80%
Yr 1 Yr 2 Yr 3
Commission as a Percent of Policy Premium Dollars * Year 1 through Year 5
100%
Yr 4 Yr 5
Too Good To Be True??
Front-loaded commissions can
provide permissible subsidies for
services that support the more
strategic initiatives through:
• Communications
• Consulting
• Administration
Co
mm
iss
ion
% o
f P
rem
ium
Pro-active Plan Commissions
(Worksite Products)
Re-active Plan Commissions
(Platform Products)**
Buck Voluntary Benefits Integrated Solutions (VBIS)
Employer Financial Impact of Voluntary Plans The Possibilities
8
The ‘What’ The ‘How’ Plan
Type
$ Impact
Raise
Retention
Lower
Expenses
1 More aggressive med plan cost shifting Filling gaps with voluntary plans WS YES YES
2 Launching voluntary plans through your
major med carrier
Carriers offer rate concessions on core
plans WS YES
3 Increase ‘favored’ health plan participation Soften the perceived ‘blow’ of high-
deductible plans with VBs WS YES YES
4 Subsidize communications, consulting or
admin costs
Permissible redistribution of VB
commissions WS YES
5 Stronger retention through selected
voluntary plans Measure success with participation
WS/
PF YES
Legend:
WS – Worksite or Hybrid Plans
PF – Platform Plans
Buck Voluntary Benefits Integrated Solutions (VBIS)
Medical Plan ‘Remodeling’ to Save Money
9
What
• Reducing cost through more aggressive plan modifications
- Stronger cost-shifting or cost sharing to reduce employer plan costs through
higher deductibles, co-pays and coinsurance, etc.
- Most specifically in health plans, but can apply to Disability as well
How
• Filling the financial exposure gaps with supplemental health plans
- Indemnity, schedule-based, lump sump benefits for medical evens, paid directly to
employee
- Most voluntary plans are not coordinated with the health plan (exception Aetna &
UHC plans)
- Sometimes employee perception is that they have equal or better coverage, even
though the employer-paid plan coverage has been reduced
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Medical Plan Remodeling With Supplemental Medical Illustrative Example Only
1 2 3 4 5 Buck Voluntary Benefits Integrated Solutions (VBIS)
10
Integrating Supplemental Health Plans
11
Employee or
Employer
Paid
Critical illness plan
Accident plan
Hospital indemnity
Lower Employer Health Care Cost
VB Supp.
Health
Plan
“Buffers”
Create more aggressive plan changes (shifting cost)
Buck Voluntary Benefits Integrated Solutions (VBIS)
Increased employee deductible and coinsurance cost
1 2 3 4 5
Redefining Voluntary Plan Replacement
12
The Old: Silos of Benefit Delivery
Worksite VB Benefits Platform VB Benefits Annual Core Enrollment
The New: Integrating the Plan Placement and Decision Process
Annual Core Enrollment
Buck Voluntary Benefits Integrated Solutions (VBIS)
Benefits administration
enrollment system
Enrolled through carrier or
enrollment firm
Aggregated through a VBO or
employer links to carrier system
1 2 3 4 5
Saving Money on Core Health Plans
13
What
• Major medical carriers are getting into the VB business
- Primarily viewed as supplemental medical plans, like Critical Illness, Accident
or Hospital Indemnity – plan designs mirrored after worksite supplemental
medical plans
- Aetna (through Allstate), UHC, Humana
How
• Filling the financial exposure gaps with supplemental health plans
- Agreeing to offer their ‘supplemental medical’ plans may avail an employer to
provide concessions on the core medical plan
- Some are coordinated, some are not – depends on the carrier
- Usually the carrier will require an ‘active’ enrollment environment to secure
core plan concessions – they are after participation in the supplemental
medical plans, but so are you
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Increasing Participation in ‘Favored’ Health Plans
14
What
• Integrating the supplemental medical plan delivery assists with the decision
process
• Plan placement and communication strategy establishes medical and
supplemental medical plans as a package
How
• Critical Illness, Accident or Hospital Indemnity plans fit well with HD plans,
offering additional financial security within the perceived ‘unknowns’ of HD
plans
• Requires an appropriate medical plan contribution strategy
• Possible to bundle the contribution of the major medical with the supplemental
medical into a single plan decision
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Creating “Positive Plan Selection”
15
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Subsidizing Employer Fees Through VB
16
What
• Reducing or subsidizing employer plan expenses through voluntary plan
commission redistribution, potentially funding H&W:
- Communication expenses
- Consulting expenses
- Administration expenses
How
• Usually requires “pro-actively” enrolled voluntary benefits with front-loaded
commission structure, but some plan commissions can be levelled out
• Usually requires acceptance/waiver of voluntary plan(s) with certain percent
of employee population
• Must follow both ERISA and state insurance guidelines for permissible
services
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Reduced Turnover with Stronger Communications
17
Do the math:
– assuming cost of turnover ~ 30% of salary
– Average salary of $35,000
– Cost of losing 1 employee = $10,500
– 5,000 group x 5% impact = 250 ees
Savings from 5% retention = $2,625,000
Poor
Communications
Strong
Communications
Weaker Plans
Benefits BELOW Industry Benchmark
Better Plans
ABOVE Benchmark
Decre
ased
Tu
rno
ver
5% lower turnover better communications, NOT
better plans
De
cre
as
ed
Tu
rno
ve
r
Lower
Employee
Turnover
Higher
Employee
Turnover Lowest
Employee
Turnover
17%
12%
8%
Watson and Wyatt – 2004 Study
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Linking Employee Communications to Company Financial
Performance
18
What
• Communications are crucial, more so now than ever, but expensive
- 85% agreed that one of their biggest challenges is getting employees to understand
their benefits.*
- Over 75% agreed that a well communicated benefits program leads to reduced
turnover.*
- 65% stated they do not have the HR staff to effectively communicate the benefits.*
“Companies that are highly effective
communicators had 47% higher total returns to
shareholders over the last five years compared
with firms that have the least effective
communications.”
“Effective employee
communications is a leading
indicator of financial
performance and a driver of
employee engagement.”
According to the Towers Watson, 2009 / 2010 Communication ROI Study Report
* Source: “Benefits 101: Would Your Employees Pass the Course?” 3007
Buck Voluntary Benefits Integrated Solutions (VBIS) 1 2 3 4 5
Impacting Retention through VB Offering Isn’t Enough
19
What
• Back to original premise – How effective are the voluntary plans in attracting
and retaining the employee, beyond the pay check?
1. Improving employees’ overall financial security?
2. Providing savings opportunities only available through their employer?
3. Making their lives a bit easier in some way?
4. Impacting employees’ perception of why they should work there?
Buck Voluntary Benefits Integrated Solutions (VBIS)
How
• “Eye-candy” vs. creating true employer-employee affinity
- If the employee is not participating in the voluntary plan, the answer to questions
1-3 is NO
- If they see that it is offered, the answer to question 4 may be YES, but if the plans
are not used, the reaction may not be sustainable
- ‘Eye-candy’ may help attract employees in comparing job opportunities, but will not
help retain the employee, unless they are using the plan
1 2 3 4 5
Employer Financial Impact of Voluntary Plans The Possibilities
20
The ‘What’ The ‘How’ Plan
Type
$ Impact
Raise
Retention
Lower
Expenses
1 More aggressive med plan cost shifting Filling gaps with voluntary plans WS YES YES
2 Launching voluntary plans through your
major med carrier
Carriers offer rate concessions on core
plans WS YES
3 Increase ‘favored’ health plan participation Soften the perceived ‘blow’ of high-
deductible plans with VBs WS YES YES
4 Subsidize communications, consulting or
admin costs
Permissible redistribution of VB
commissions WS YES
5 Stronger retention through selected
voluntary plans Measure success with participation
WS/
PF YES
Legend:
WS – Worksite or Hybrid Plans
PF – Platform Plans
Buck Voluntary Benefits Integrated Solutions (VBIS)
VBIS Objectives
21
• Objective #1: Overarching employee focus – complement and enhance plan
design and delivery to attract and retain talent
• Objective # 2: Strategic employer focus – lower overall benefit spend, while
adhering to Objective #1
Buck Voluntary Benefits Integrated Solutions (VBIS)
VBIS Mission Statement
To ensure and maintain our presence as the nation’s preeminent Voluntary
Benefit practice by:
• Responsibly and creatively crafting employer Voluntary Benefit solutions
that support our clients’ overall benefit and corporate objectives
• Maintaining the highest level of business integrity with full disclosure
• Focusing on long-term, sustainable relationships with our clients
• Working to support the financial well-being of our employer clients and their
employees
Questions
Amy Hollis
National Practice Leader, VBIS
770.403.8777
Jim Lowder
Director, Health and Productivity
312.846.3363
22
Buck Voluntary Benefits Integrated Solutions (VBIS)