lauren e zoltek - sei_investments.fall2011

8/2/2019 Lauren e Zoltek - Sei_investments.fall2011

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Part I: Exposure Analysis for SEI Investments

Benefits Matrix

Loss Exposure Provided Coverage/Benefit Provided

Medical Expenses

Overall Medical Expenses(hospital, physician, etc.)

YesPPO (Plan A)PPO (Plan B)Medical FSA

Dental YesGroup Dental PlanMedical FSA

Vision Yes Vision Program

Prescription YesPrescription Drug PlanMedical FSA

LTC No None

Retiree Health Care YesCOBRAMedicare

Loss of Income: Death

Non-Accidental,Non-OccupationalDeath

Yes

OASDIBasic Life InsuranceGroup Life Insurance401(k)

Accidental Death Yes

OASDIBasic Life InsuranceGroup Life Insurance

401(k)AD&D

Occupational Death Yes

OASDIBasic Life InsuranceGroup Life Insurance401(k)Workers Compensation

Loss of Income: Unemployment

Unemployment YesUnemployment InsuranceSeverance Package

913120499 Benefits Analysis: SEI Investments910480232 Page 1 of 27


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Benefits Matrix (continued)

Loss of Income: Disability

Short Term, Non-OccupationalYes

Short Term Disability (STD)OASDI

AD&D

Long Term, Non-OccupationalYes

Long Term Disability (LTD)OASDIAD&D

Short Term, Occupational Yes

Short Term Disability (STD)OASDIAD&DWorkers Compensation

Long Term, Occupational Yes

Long Term Disability (LTD)OASDIAD&DWorkers Compensation

Loss of Income: Retirement

Retirement Yes 401(k)

Other Exposures

Educational Assistance YesDependent Benefits (AD&D)Work/Life Program

Work/Life Yes

Transportation BenefitsCounseling and Resource BenefitsAdoption Assistance BenefitsChildcare Benefits

Dependent Care Yes Dependent FSA

Property/Liability No None

Legal Expenses No None



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Summary of Benefits

Benefit PlanA.M.Best

RatingFunding Financing

Bi-weeklyPayroll

DeductionsEligibility

IndependenceBlue CrossPersonalChoice PPO(Plan A)

N/A Self-Funded Contributory

Employee $41w/ Child(ren) $76w/ Spouse $98w/ Partner $98w/ Family $110

Full-timeactiveemployeesand theireligibledependents

IndependenceBlue CrossPersonalChoice PPO

(Plan B)

N/A Self-Funded Contributory

Employee $28w/ Child(ren) $53w/ Spouse $67.50w/ Partner $67.50

w/ Family $82

Full-timeactiveemployeesand theireligible

dependents

FSA(ADP BenefitsServices)

N/A Self-FundedFullyContributory

Elected pre-taxcontributions dividedby 26

Full-timeactiveemployeesand theireligibledependents

GuardianDental

A++ Self-Funded ContributoryEmployee $3w/ Family $5

Full-timeactiveemployeesand their

eligibledependents*

Davis Vision(Subsidiary ofHighmark)

A Fully Insured ContributoryIncluded inPPO Plan As Premium

Full-timeactiveemployeesand theireligibledependents**

*excludes dependents on Active Duty in any armed forces.**only available to employees who have elected PPO Plan A as their medical coverage, not offered to PPO Plan Bmembers*** must be enrolled in either medical plans--insureds are automatically enrolled when electing medical coverage

Source of all A.M. Best Ratings: http://www.ambest.com

http://www.ambest.com/http://www.ambest.com/http://www.ambest.com/


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Summary of Benefits (continued)

Benefit PlanA.M.Best

RatingFunding Financing

Bi-weeklyPayroll

DeductionsEligibility

Express ScriptsPrescriptionDrug Plan

N/A Fully Insured ContributoryIncluded in PPO Plan Aand PPO Plan BsPremium

Full-timeactiveemployeesand theireligibledependents***

Hartford LifeInsurance:Basic

A Fully InsuredNon-Contributory

N/AAllfull-timeemployees

Hartford LifeInsurance:Supplemental


N/A

Allfull-timeemployeeswithEvidence ofGoodHealth

Hartford LifeInsurance:AD&D



Hartford Life

Insurance:LTD

A Fully Insured Non-Contributory N/A

All

full-timeemployees

Hartford LifeInsurance:STD



*excludes dependents on Active Duty in any armed forces.**only available to employees who have elected PPO Plan A as their medical coverage, not offered to Plan Bmembers*** must be enrolled in either medical plans--insureds are automatically enrolled when electing medical coverage

Source of all A.M. Best Ratings: http://www.ambest.com

http://www.ambest.com/http://www.ambest.com/http://www.ambest.com/


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Part II: Inventory of Benefits

SEI Investments is an investments services company headquartered in Oaks,Pennsylvania. It is a global provider of asset management, investment processing, and

investment operation solutions. They currently employ 1,994 individuals and cover 2,427

dependents, which is a total of 4,421 insured lives. According to the company website, SEI is

dedicated to helping clients achieve lasting success. 1

SEI Investments wants to provide the most comprehensive benefit plan to theiremployees in order to remain competitive and distinguished from their competitors. Eligible

employees are defined as full-time, active employees who work at least thirty hours per week.

Eligible dependents are defined as any spouse under a legally valid existing marriage; any

unmarried child(ren), including any stepchild, legally adopted child, child placed for adoption, or

any child whose coverage is your responsibility under the terms of a qualified release or court

order; unmarried children, regardless of age, who are incapable of support because of mental or

physical incapacitation and who are dependent on you for over half of their support; a domestic

partner and their child(ren), as long as a domestic partnership exists; and newly acquired

children. Newly acquired children must be enrolled within 31 days of acquisition. Eligible

dependents vary in most of the benefits given, for instance, the dental plan excludes those

dependents who are on Active Duty in any Armed Forces.


1 Source: http://www.seic.com/
http://www.seic.com/http://www.seic.com/


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Medical Expenses

The Preferred Provider Organization Health Plan

SEI Investments offer medical benefits through their Preferred Provider Organization,Personal Choice. The plan is administered by QCC Insurance Company, a subsidiary of

Independence Blue Cross, which is presently not rated by A.M. Best. Employees are given two

options for their medical plans, PPO Plan A and PPO Plan B. These self-funded, contributory

plans are both Flexible High Deductible Health Plans. Insureds can maximize their coverage

through their PPOs network or any preferred provider who participates in the BlueCard PPO

program. Eligible employees include active, full-time employees who work at least 30 hours a

week and their eligible dependents, which were previously defined.

In PPO Plan A, the deductible for an in-network single insured is $750; the familydeductible is $1,500. The out-of-network deductible for a single insured is $1,500; the family

deductible is $3,000. In PPO Plan B, the deductibles are higher for both in-network and out-of-

network. PPO Plan Bs single insured, in-network deductible is $1,250; the family deductible is

$2,500. The out-of-network, single insured deductible is $5,000; the family deductible is

$10,000. For both plans, in-network, an out-of-pocket maximum does not exist. However, out-

of-network, out-of-pocket maximums do apply. In PPO Plan A, the out-of-pocket maximum for a

single insured is $5,000; for a family it is $15,000. In PPO Plan B, a single insured has an out-of-

pocket maximum of $10,000; the family out-of-pocket maximum is $20,000. Both plans do not

have a lifetime maximum. The primary difference between PPO Plan A and PPO Plan B is the

out-of-network coverage. PPO Plan A offers 80% coverage after the deductible is met, while

PPO Plan B offers only 50% coverage after the deductible. SEIs medical plan also has Stop



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Loss insurance. It is an experience-rated contract, provided by Standard Reinsurance for

catastrophic claims.

Flexible Spending Account

SEI Investments offer a fully-contributory Flexible Spending Account called the FlexibleSpending Plan for medical expenses. The third party administrator, ADP Benefit Services,

performs administrative services for SEI. Employees eligible for participation in this plan are all

permanent employees. Employees can participate in this plan on the first day of the month

following hire.

Under the Flexible Spending Plan, SEI offers the opportunity to participate in a HealthCare Spending Account (HCSA), which allows employees to contribute pre-tax dollars to pay for

certain healthcare or dental insurance expenses. The minimum contributionfor participation inthis plan is $26; the maximum is $3,000 per plan year.

An eligible medical expense is an expense that has not been reimbursed by anothersource, and any amount incurred to diagnose and treat a specific medicalcondition. The planrequires prescriptions for all medications, including over-the-counter (OTC) medicines.

However, no prescription is required for OTC insulins. Medical expenses that are not

reimbursable are health insurance premiums and expenses made during a qualified long-term

care service.



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Dental

Employees of SEI have the option of enrolling in SEIs self-funded dental plan on acontributory basis. Administrative services are provided by Guardian Life. Guardian Life is rated

A++ by A.M. Best 2 . This is the highest designation offered by A.M. Best. The bi-weekly

payroll deductions for the dental plan are $3 for an employee, and $5 for an employee and its

dependents. To be eligible for coverage, one must be an active, full-time employee. Eligible

dependents include an employees legal spouse; unmarried dependent children who are under the

age 19; and unmarried dependent children, ages 19 to 24, who are full-time students at accredited

an school. Dependents that are excluded are those insured by this plan as an employee, and

dependents on Active Duty in any Armed Forces.

The dental plan offers four levels of care: Preventive Care, Basic Care, Major Care, andOrthodontia. The in-network deductibles are 100%, 80%, 60%, and 50%, respectively. The out-

of-network coverages are 90%, 70%, 50%, and 50% respective to each level. A deductible of $50

applies to both in-network and out-of-network for an individual; the family deductible is $100.

There is an annual maximum benefit in-network and out-of-network of $1,000.

Vision

SEI offersemployees a fully insured, routine vision plan through Davis Vision, asubsidiary of HVHC Inc., a Highmark company3. Highmark is given an A rating from A.M. Best,

meaning excellent. The vision plan is only offered to employees and their eligible dependents

that are enrolled in PPO Plan A. The premium is included when the employee elects PPO Plan A;

therefore, the plan is financed on a contributory basis. The plan covers one routine eye exam


2 Source for all A.M. Best Ratings: http:www.ambest.com/

3 Source: http://www.davisvision.com/Corporate-Structure/
http://www.davisvision.com/Corporate-Structure/http://www.davisvision.com/Corporate-Structure/http:///reader/full/www.ambest.comhttp:///reader/full/www.ambest.com


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every two calendar years. Eye exams are covered at 100% of the UCR (Usual, Customary, and

Reasonable Amount). The plan also covers $100 towards the purchase of eyeglasses or contact

lenses every two calendar years.

Prescription Drug

Employees of SEI are offered a self-funded, Prescription Drug Plan through ExpressScripts. Express Scripts is currently not rated by A.M. Best. Employees and their dependents are

automatically enrolled when participating in either PPO plan. The premium is included in the

PPO plan premium, which is on a contributory basis. The coverage is the same, regardless of

which plan is chosen, and the plan cannot be elected as a stand alone policy. There is an annual

deductible of $25 for a single insured, and $50 for a family. They offer three tiers of coverage for

up to a 30 day supply. Generic medications are $5, Brand Name medications are $25, and Non-

Formulary medications are $40. Express Scripts offers an incentive through a mail order program

for maintenance medications. In this incentive, members can receive 90 days worth of

medication for the cost of a 60-day supply. They utilize a step therapy program, which requires

certification from a doctor. This certification states that a preferred medication has been used and

found ineffective, before paying for a more expensive medication.



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Loss of Income: Death

Life Insurance

SEI offers a Group Life Insurance Policy governed by Hartford Life, which is rated A forexcellent by A.M. Best. This is a fully insured, experience rated contract, and premiums are paid

on a non-contributory basis by SEI Investments. All active, full-time employees whowork atleast 30 hours per week and are U.S. citizens or U.S. residents are eligible, excluding temporary

and seasonal workers. They offer two levels of coverage, basic and supplemental. The minimum

amount paid in each levels will be no less than $10,000.

The basic amount of life insurance payable is equal to two times an employees annualrate of basic earnings, rounded to the next higher multiple of $1,000. It is subject to a maximum

of $200,000. The supplemental life insurance is provided in two ways. The first option is a

guaranteed issue amount equal to an amount an employee elects in increments of $10,000; thisis subject to the lesser of $500,000 or five times the employees annual rate of basic earnings

without Evidence of Good Health. The second option is the same benefit, without a guaranteed

issue; it requires Evidence of Good Health. Supplemental Life Insurance excludes suicide,regardless of the individuals sanity. Life insurance for employees decrease by 33% at age 70 and

again at age 75.

The plan includes Accelerated Death benefits, and Accidental Death and Dismembermentbenefits. Accelerated Death benefits are offered to the terminally disabled, defined as an

individual who has a life expectancy of twelve months or less. Insureds must have coverage for

at least $10,000. Insureds can request payment prior to death but the payment cannot exceed

80% of the life insurance amount and the maximum amount paid to an insured will be $500,000.

Accidental Death and Dismemberment is a loss occurring within 365 days after the date of the



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accident causing the injury and a loss resulting directly from an injury, independent from other

causes.

Loss of Income: Unemployment

Severance Package Required by law, unemployment insurance is provided for all employees. SEI provides aseverance package to employees in order to compensate for loss of income due to termination

and layoffs. The severance package amounts to a percentage of salary, multiplied by the length of

service, and is limited o a years worth of salary.

Loss of Income: Disability

Short Term Disability Insurance

SEI Investments automatically enrolls active, permanent, full-time employees working atleast 30 hours a week in a non-contributory, experience rated contract for Short Term Disability

(STD) insurance. This insurance is provided for both occupational and non-occupational

disability. STD insurance provides you with short term income protection in the event an

employee becomes disabled from a covered accident, sickness or pregnancy. Issued through

Hartford Life, which is rated A by A.M. Best, this coverage offers 70% of compensation, with a

maximum of $1,500 per week for up to thirteen weeks. An employee may return to work

proportionally disabled. A proportionally disabled employee is one who has recovered to the

extent that they are able to perform some job duties with the ability to earn between 20%-80% of

their pre-disability earnings. They receive a percentage of the difference between the pre-

disability earnings and the current weekly earnings. The AD&D benefit provided in lifeinsurance and an employees 401(k) could potentially provide coverage for a short term

disability.



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Long Term Disability Insurance

All active, full-timeemployees of SEI Investments who work at least 30 hours per weekand are U.S. citizens or residents, excluding temporary and seasonal employees, are provided

Long Term Disability insurance. This insurance is an experience rated contract and provides

occupational and non-occupational disability through Hartford Life on a non-contributory basis.

As stated previously in STD, Hartford Life is rated A by A.M. Best. This plan provides an

insured with loss of income protection, if an employee becomes disabled from a covered

accidental bodily injury, sickness, or pregnancy. There is an eligibility requirement of either 90

consecutive days of disability or the termination of employer sponsored STD benefits, which

must be satisfied before benefits become payable. This covers 60% of compensation, with a

maximum of $15,000 per month. Termination can occur when the Group Insurance Policy

terminates, no longer insures the class, premium payment is not paid, the employer ceases to

participate, or the day the insured is no longer an active, full-time employee. As stated in STD,

theAD&D benefit provided in life insurance and an employees 401(k) could potentially providecoverage for a long term disability.



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Loss of Income: Retirement

Capital Accumulation Plan

Commonly referred to as a 401(k), SEIs Capital Accumulation Plan provides employeeswith the opportunity to save for retirement on a tax-advantaged basis. This plan is self-

administered by SEI Investments through the Plan Administrative Committee. It is not insured by

the Pension Benefit Guaranty Corporation (PGBC) because the insurance provisions under

ERISA are not applicable to the plan. Employees who are excluded from this plan are leased

employees, employees in a union, certain non-resident aliens who have no earned income from

sources within the U.S., independent contractors, and interns. All other employees, other than

those previously excluded, will automatically be enrolled on their date of hire. Those employees

will automatically have 3% of their compensation deducted from their regular payroll and

contributed into the plan. The employee may specify their contributions to not be invested in the

default investment options.

The employee will always be 100% vested, meaning they that they will always beentitled to all the amounts that they defer. Salary matching or contributions made by SEI will

only be made if the employee completes a year of service and be actively employed on the last

day of the plan year. The contributions made by SEI will be either the total amount of salary

reduction the employee elected to defer, a matching contribution equal to a percentage of the

salary reduction subject to a maximum, or a discretionary profit contribution. If an employee

contributes up to 50% of pay on a pre-tax basis, up to IRS limits, SEI matches 60%, up to 5% of

compensation.



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Other Exposures

Educational Assistance

Employees are given the opportunity to further their education in SEIs EducationAssistance Program (EAP). The EAP is designed to assist employees in learning and furthering

their professional development through the participation in part-time degree programs. This

program is intended to mutually benefit the employees of SEI and the company. It provides

financial assistance to employees who successfully complete business and work-related courses

outside of the company. If an employee voluntarily terminates their employment within one year

of completing a course, in which they received assistance, that benefit must be repaid to the

company.

SEI Investments offers Educational Assistance Benefits, under the AD&D insurance planto the dependents of the deceased employee. Under its Group Life Insurance, governed by

Hartford Life, rated A by A.M. Best, the AD&D plan provides Education Benefits to the spouse

of the deceased employee. This is to ensure the spouse of the dependent employee able to obtain

an independent source of income. The plan also provides Education Benefits for the employees

eligible children, which are defined as post-high school students who attend a school for higher

learning on a full-time basis on the date or within a year of death. The benefit payable is the

lesser amount of the actual tuition expense for any one school year, 5% of the principal sum, or

$5,000. The plan will not pay more than one Education Benefit per student during any one school

year. If no dependent qualifies as a student, then it will pay $2,500 in accordance with the

beneficiary designation.



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Work/Life

SEIs Work/Life Program accommodates its employees with many benefits. This includesCounseling and Resource Services, Transportation Benefits, Adoption Assistance Programs, and

Child Care Services. These benefits are either directly funded through SEI, a salary reduction

arrangement, or a reimbursement arrangement.

SEI offers Counseling and Resource Services through Carebridge EAP (EmployeeAssistant Program) for all regular, full-time U.S. employees, working at least 30 hours a week.

The Counseling Services provides three free confidential counseling sessions for all employees

and their dependents, 24 hours a day. The counseling encompasses marital relationships, alcohol

and drug problems, grief and loss, and depression. The Resource and Referral Services are for

family/parenting issues, day care referrals, relocation, school selection, college planning, and

personal financial management.

Transportation Benefits include commuter highway vehicle benefits, transit pass benefits,and qualified parking benefits. All full or part-time employees of SEI are eligible for this

program, pending a one month waiting period. The Commuter Highway Vehicle benefit offers

transportation to and from work in a vehicle that seats up to six adults. The Transit Pass benefit

offers passes, tokens, fare-cards, vouchers, or similar items that employees will use to travel on

mass transit. Qualified Parking is parking provided to employees close to a job site or their

employers location.

SEI offers full-time employees, benefits to assist them in the adoption process. Thesebenefits include; financial reimbursement, adoption leave of absence, and resource and referral

services. The adoption benefit has a maximum reimbursement of $4,000 per adoption.



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SEI offers childcare to their employees who have children between the ages six weeksand twelve years old. SEI recognizes a need to offer solutions to their employees when such

benefits are not accessible in the commercial marketplace. They offer two choices of care in their

Family Center.

The Back-up Care program offers childcare to an employee when the primary source ofcare is unavailable. These primary sources of care may be unavailable due to a sick caregiver,

school holidays, and snow days. However, they do not care for children with illnesses. Infants

through kindergarteners are limited to twenty days per year. School age children, defined as first

grade to twelve years old, can attend twenty days during the summer and twenty days during the

school year. A $20 per day fee applies at the time of service.

The Good Start Care program offers childcare to help an employee transition back intothe workplace, and the child to transition into commercial childcare. This is only eligible to SEI

employees who have elected medical benefits and gives priority to first time users. The costs of

the Good Start Care is $100 per week, defined as five days; $20 per day for part-time users.

Dependent Care

SEI Investment offers a Dependent Care Savings Account (DCSA) under the FlexibleSpending Plan to assist employees in reimbursements for eligible day care expenses incurred. A

participant may choose a reimbursement amount up to $5,000 per year. Eligible day care

expenses must be incurred during the plan year. An expense is incurred when the service or

treatment giving rise to the expense has been performed and not in advance of the services.



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Part III Decision Making and Benefits Plan Design Analysis

Introduction

SEI Investments is an investments services firm headquartered in Oaks, Pennsylvania.

Founded by Alfred P. West, it provides innovative business solutions to approximately 7,000

clients. SEI Investments assists their clients in managing their personal and business wealth.

Currently, they service private banking businesses in twelve countries, deal with 27 currencies,

and trade on 53 exchanges.4 In 2011, SEI was named Service Provider of the Year at the

annual Money Management Institute Advisory Solutions Industry Leadership Awards. SEI was

also selected as one of the Healthiest Employers of Greater Philadelphia by the Philadelphia

Business Journal and UnitedHealthcare.5 They have close to 2,000 employees with primary

offices located in United States, Canada, Hong Kong, Ireland, the Netherlands, South Africa, and

the United Kingdom. The average employee age is 34 years of old; over half of the employees

have dependent families.

Originally, SEI Investments operated under a formal setting, composed of a hierarchy

with intervening management between each level of the organization. However, Al West believed

a more untraditional approach would be more beneficial to the workplace. Therefore, as CEO,

West flattened the company, which dissolved the vertical structure of SEI Investments. Al West

has continued to utilize an unconventional method in not only his organizational methods, but in

the benefits he wants for his employees. Previously, SEI participated in an HMO plan. However,

once it was no longer mandated, SEI elected to drop HMOs because of the restrictions. In place

of the HMO, they maintained the PPO plans that were already in place. SEI has continued with


4 Source: http://seic.com/enUS/about/281.htm

5 Source: http://seic.com/enUS/about/284.htm
http://seic.com/enUS/about/284.htmhttp://seic.com/enUS/about/284.htmhttp://seic.com/enUS/about/281.htmhttp://seic.com/enUS/about/281.htm


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this open-area office environment which now has unit leaders and teams. This type of

environment applies to everyone except for the Benefits Administration Department. In lieu of

the Human Resource Management Department, Work Force Development was erected. The

Benefits Administration Department is an entity of SEIs Work Force Development Department.

According to Charlotte Elko, Al Wests philosophy in a horizontal approach to an organization

will be more productive when it comes to communication and decision making.

We had the opportunity to work with Charlotte Elko, who is SEIs Benefits Program

Manager. She began working at SEI Investments in 1983 as a Business Analyst; eventually, she

transferred to the Benefits Administration a few years into her employment. She and her team

work with a broker of Owens and Dowling to get quotes from other carriers as needed and

strategize on plan designs and cost controls. They meet with the broker three or four times a

year before and during the annual contract renewal to review their claims history, review cost

projections for next year and plan any benefit changes.

Employee Benefits Plan Design Considerations and Objectives

Goals/Objectives of the Plan

SEI Investments strives to offer a high quality, comprehensive benefits package to their

employees. High quality is very important to SEI, and Charlotte believes it to mean using the

best practices at all times and using vendors who use best practices in their business models.

Their current health plan utilizes the largest PPO network in the area and receives the deepest

discounts. Charlotte says, if no quality exists, then they will switch [to a different provider]. In

addition to attracting and retaining human capital, SEI truly wants their employees to have the

absolute best care in the industry. The main consideration in designing the plan is being



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competitive in a cost-effective way. As much as SEI wants to provide all types of benefits to their

employees, they must keep in consideration the costs in order to stay within its budget. Charlotte

has multiple meetings a year with various employees requesting a certain type of benefit.

However, due to the low number of employees wanting a specific benefit, she cannot always

implement these requests into action. Each year, SEI arranges meetings for employees to come

and discuss what changes or additions they would like in their benefit plan. If enough members

vote to participate, then Charlotte and her team will take the steps to find the discounts available

in order to utilize the benefit.

Funding and Finance Considerations

SEI Investments provides a mixture of self-funded and fully-insured benefits in their

plan. The Medical Plan, Dental Plan, and Prescription Drug Plan are all self-funded plans.

Charlotte states, we chose to self-fund those plans because it would save us money. The cost of

fully-insuring those plans, especially the health plan, would be catastrophically high. We are

banking on the fact that our average employee is 34, who is relatively healthy. If our workforce

were older, our demographics would be different, as would our costs. The plan utilizes a

General Asset Plan as the funding vehicle. The self-funded plan provides protection to a specific

amount; then SEIs Stop Loss Insurance will be activated to cover catastrophic losses. Standard

Reinsurance, previously known as Marlton Risk, provides coverage to SEI Investments in an

experience rated contract. They place money in reserves at the stop loss carrier, and also have

money in reserves at Blue Cross for up to 2-3 months, depending on the contract.

Besides Medical, Dental, and Prescription, all the plans are fully insured. Due to the ever-

increasing healthcare costs, SEI finances the Medical, Prescription, Dental, and Vision Plans on a



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contributory basis. SEI contributes 80% of the plans costs and the employees pay for the

remaining 20%. For a company the size of SEI Investments, a larger contribution on the

employers part would be economically unfeasible. Although, they experienced difficulty due to

the rising costs of healthcare, SEI has managed to keep their contributions at 80%. Due to these

increases in the last year, they had to shift costs. They implemented a shift of costs through an

increase in an employees deductible. Since SEI did not want to hit the employees in their

paychecks, they were approved to keep payroll deductions the same. The Benefits

Administration Department believes it is extremely important SEI contributes 80% of the plans

costs because they believe it will keep employees satisfied. SEI Investments finances their

employees Life, AD&D, and Disability Plans on a non-contributory basis. These benefits are

provided free of cost to the employee because SEI wants to ensure that employees receive

adequate coverage. Also, due to its young workforce and work environment, SEI did not see

any negative impact of covering these benefits with no employee contribution.

Problems, Issues, Concerns, and Considerationsin the Design of the Health Benefits

PPO vs HMO

Currently, SEI self-funds their medical benefits through their Preferred Provider

Organization, Personal Choice. Employees are given two options for their medical plans, Plan A

and Plan B, which has an NCQA Accreditation status of excellent.6 Employees maximize their

coverage through the PPOs network or any preferred provider who participates in the BlueCard

PPO program. Employees who participate in the BlueCard program have access to all providers

across the United States enrolled within this program. Employees are required to call the Blue


6 Source: http://reportcard.ncqa.org/plan/external/plansearch.aspx
http://reportcard.ncqa.org/plan/external/plansearch.aspxhttp://reportcard.ncqa.org/plan/external/plansearch.aspxhttp://reportcard.ncqa.org/plan/external/plansearch.aspx


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Cross number on the card in order to find a preferred provider in their area. There have been

some recent changes in the process of this program; before, emergency visits would be covered

as in-network, but now they are rejected unless it is a true emergency.

Previously, SEI participated in an HMO plan because of government regulation. Once the

HMOs were no longer required to be offered as a benefit, SEI chose to withdrawal the HMO

plan. Al West did not agree with the managed care philosophy. He was adamantly against the

referral process of HMOs. Charlotte did not believe it was a good option for SEIs size, since

[they] are a larger employer and self insure. SEI Investments wanted their employees to be

consumers and to have the ability to decide where and when they were going to get care. With

the PPO Plan, employees still receive a discount. In addition, they have the choice of networks

that HMOs do not offer. This strategic move proved to be good savings for SEI and their

employees. The PPO Plan is very popular among employees. The discounts they receive from

Personal Choice are better than any of the offers SEI has been given by other insurers. Charlotte

states, there is no perfect provider. In the event that another program fits SEIs needs better

than Personal Choice, they would consider the offer. However, she has not seen anything better

for a long time.

Prescription Drug Plan

SEIs current drug coverage is through Express Scripts. In early 2011, Walgreens and

Express Scripts were unable to negotiate a contract renewal for 2012. Consequently, Walgreens

and Duane Reade pharmacies will no longer be in Express Scripts network of covered

providers.7 In order to deal with the possibility of insureds not having adequate access to covered


7 Source: http://www.ichoosewalgreens.com/issue-at-a-glance/
http://www.ichoosewalgreens.com/issue-at-a-glance/http://www.ichoosewalgreens.com/issue-at-a-glance/http://www.ichoosewalgreens.com/issue-at-a-glance/


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pharmacies, an account representative ran an analysis of covered lives. This analysis found that

only three insureds would have to travel more than one mile farther than their existing pharmacy.

Cost Inflation and Rising Costs

Cost inflation is a continuous, contributing factor to the concerns of the design of health

benefits. SEI Investments experiences a 6% to 12% increase in the plans cost each year. This

increase of costs are attributed to a combination of utilization, inflation, and new treatments. Due

to costs increasing each year, Charlotte has the job of trying to keep the costs down for SEIs

employees. This year they had to make some changes in their health plan, but they were able to

keep the payroll deductions the same. Instead, they increased the deductible by $100, which they

found to be an easier transition for the employees. The only issue they have with this is that

employees do not understand what the deductible is and what discounts they are receiving.

Charlotte says they are aware of what their competitors offer in their benefits packages through

recruiters and surveys. This allows them to keep tabs on what is being offered outside of their

company, and how they can compete with such places like Vanguard for attraction. In order to

contain costs, SEI educates its employees on healthy lifestyle alternatives and implements

wellness programs as a loss prevention technique. They are thinking long term, and are

focusing more on prevention rather than treatment.

Long Term Care

One benefit SEI Investments has not included in its benefits package is Long Term Care.

When it came to providing Long Term Care, Charlotte said it was too expensive. In addition,

the average age of employees is 34, so the coverage is rarely in demand. She claims that the

way those plans are written, you have to pay into it for a period of time before you can utilize the



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service, and even though some employees may have the need for it, there hasnt been enough

interest. Even though they havent received an adequate amount of interest, they still conduct

surveys every year in order to see if employees have changed their minds and want the coverage.

Problems, Issues, Concerns, and Considerations in the

Design of Other Types of Non-Retirement Benefits

Flexible Benefits

SEI Investments offers their employees the opportunity to enroll in a Flexible Spending

Account. SEI took advantage of this because of the tax benefits. Earlier in the year, the Benefits

Administration Department had an issue with the Dependent Care FSA. This FSA had a problem

arising in discrimination testing. Too many highly compensated employees were taking

advantage of the DCSA. As a result, the Benefits Administration Department had to make

adjustments to employees contributions in order to stay compliant. In order to pass

discrimination testing, they had to calculate the percentage that needed to be deducted from

HCEs contributions. After calculating this figure, the Benefits Administration team members

had to individually contact the employees and notify them that they were not able to fully

contribute up to the $5,000 limit. They made it clear to the employees, that it was not them in

particular but the results of the test.

Communication

The communication of benefits is imperative to accomplish. Charlotte says that

employees often [do not] understand the value of their benefit and therefore tend to ask

additional explanations. The Benefits Administration Department has a very difficult time trying

to communicate the value of the benefit employees are provided. Charlotte wants SEIs



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employees to know the true value of their benefits. Specifically, how much is being spent on

them and how much money is available for them to spend.

This year during open enrollment, the CEO and CFO created a video message for the

employees. They thought that a message coming from the top would make employees want to

pay attention and read the materials provided. Al West opens up the video thanking his

employees for their efforts in making healthy lifestyle choices. He says, those choices you make

have a direct impact on the cost of health benefits to both you and SEI. Healthy lifestyle choices

are an investment in your future and consistent with the principle of doing the right things

right. Dennis McGonigle, CFO of SEI Investments, follows West and outlines what will be

provided the upcoming year for employees and any changes that were executed. Other tools they

use to convey the financial value is through slideshows, videos, and booklets. For new hires,

Workforce Development runs orientations, where speakers come in throughout the day and a one

hour slideshow presentation present the benefits.

Regulatory Compliance

COBRA

The Covered Omnibus Budget Reconciliation Act of 1985 allows employees and

beneficiaries of group health plans to extend coverages up to 36 months after an employee is no

longer deemed an eligible employee. COBRA encompasses medical expense plans, dental plans,

vision care plans, and prescription drug plans. SEI Investments outsources their COBRA

administration to ADP. ADP handles payments, notices, election packets, and cancellation

notifications.



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Enrollment is a frequented problem of COBRA, due to a delay in mail carriers and online

services. The database participants are manually added and deleted. Under COBRA, the former

employee pays 102% of the plan cost, rather than the 20% deductions during employment. ADP

charges a 2% administration cost to the former employee and the other 100% goes to the cost of

the plan.

HIPAA

In order to stay HIPAA compliant, the Benefits Administration Department cannot be in

an open area environment. The files that are in Charlottes care are kept in locked filing

cabinets and does not contain any employment information. This ensures that all PHI (Protected

Health Information) remain confidential. If a member of Work Force Development needed

employment information, they would not go to Benefits Administration. In addition, the benefits

websites have automatic time out periods, in which the member is logged off due to inactivity.

ERISA

SEI Investments offers employees the opportunity to participate in a defined contribution

plan. This defined contribution plan is a 401(k). Kevin Johnston of the Investments Committee at

SEI Investments holds the Fiduciary Responsibility for 401(k) plans. In addition to providing

electronic SPDs, SEI communicates vital information to employees through monthly

orientations. In order to adhere to federal laws, SEI has a number of methods to ensure their

compliance. For example, SEI Investments utilizes ADP for information on employees 401(k)

contributions. When SEI requests an analysis of employee contributions to 401(k)s, ADP will

return a report stating whether or not their plan is non-discriminatory. As an additional measure,

SEI will run their own analysis. If the plan is deemed discriminatory, the Benefits Administration



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Department will contact the highly compensated individuals and notify them that their

contributions will be decreased in order to stay compliant with federal regulations.

Recommendations

Consumer Driven Health Plans and Health Savings Account

In recent years, SEI Investments has been looking to implement a Consumer Driven

Health Plan in the form of a Health Savings Account for cost purposes due to Healthcare

Reform. We recommend that the Benefits Administration Department should consider CDHPs

because with HSAs employees would still have the tax advantages, plus they could put money

into the account and carry it over to the next year. In their current FSA, employees must spend

that money or forfeit the balance at the end of the year. A CDHP would allow employees to save

funds through high deductible plans, and they would have more freedom to determine the types

of benefits they wish to receive. It would also force employees to be better consumers of

healthcare goods, much like traditional consumers. Since employees would be in control of what

they receive, they would have the potential to save money. The downfall to that benefit would be

employees not receiving care because the costs of the treatment would appear higher than if they

were choosing a PPO. These plans are the new direction, but SEI and the Benefits

Administration Department want to wait until they see what exactly happens with Healthcare

Legislation.

Retiree Healthcare

With the current number of employees SEI employs, it is surprising they do not provide

Retiree Healthcare. Their current stance is that since their employees average age is 34, SEI

does not need to provide it. However, we see it as a tool to retain employees for a long term.



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Retiree Healthcare benefits are slowly disappearing and being cut by employers. In order to gain

a competitive edge, now is the time to introduce these benefits to SEI employees. Having the

ability to offer secure retirement healthcare benefits is a major advantage for SEI. It would be an

incentive for employees to continue to work at SEI, and create an atmosphere at work that would

promote productivity. In essence, SEI would be investing in their employees.

Opt-Out

Currently, SEI Investments does not offer an opt-out option for the medical plan. If an

employee is covered under their spouse, or chooses to retain any medical costs incurred, the total

compensation received by this employee is 80% of the plans costs less than an employee who

chose to enroll in these benefits. We recommend they offer this to their employees to offer a

menu of benefits. To implement this option, we recommend they perform a cost analysis to

calculate the administrative costs associated in offering an opt-out option.

Conclusion

SEI Investments has a strong and attractive benefits package. Charlottes experience at

SEI has gave her extensive knowledge on what employees need and want. She is able to balance

this with the constraints given to her by budgets and regulations. SEI continues to offer

competitive benefits to remain attractive to new and existing human capital by analyzing new

trends in healthcare.



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Works Cited

A.M. Best Ratings. (2011). Retrieved December 1, 2011, from http://www.ambest.com

DavisVision. (2011). Retrieved December 1, 2011, from http://www.davisvision.com/

Corporate-Structure/

ChooseWalgreens. (2011). Retrieved December 5, 2011, from http://

www.ichoosewalgreens.com/issue-at-a-glance/

SEI Investments. (2011). Retrieved December 1, 2011, from http://www.seic.com/

NCQA Report Cards. (2011). Retrieved December 5, 2011, from http://reportcard.ncqa.org/

plan/external/plansearch.aspx
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