Wa vbis-2012-0508

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Wa vbis-2012-0508

  1. 1. Buck Voluntary Benefits Integrated Solutions (VBIS)Making Voluntary Benefits an Employer BenefitBuck Voluntary Benefits Integrated Solutions (VBIS) A Buck Consultants Webinar Amy Hollis, National Practice Leader, VBIS May 8, 2012
  2. 2. Buck Voluntary Benefits Integrated Solutions (VBIS)VBIS Objectives• 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 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 2
  3. 3. Buck Voluntary Benefits Integrated Solutions (VBIS)Setting the StageA Couple of Underlying Premises Before We Get Started… 3
  4. 4. Buck Voluntary Benefits Integrated Solutions (VBIS)Measuring Financial Impact of BenefitsEstablishing the ScaleHow successful are your What is your investment in yourbenefits in attracting talent? Expense benefit program in terms of:• Added financial security Talent • The cost of premiums, claims or• Savings for employees insurance• Favorable employee • The cost of communication and perception of employer engagement• Time-saving convenience • The cost of administering your plans • The cost of consulting expenses Favorable Benefits ROI = retention of talent outweighs the expense of the benefits 4
  5. 5. Buck Voluntary Benefits Integrated Solutions (VBIS) Measuring Financial Impact of Voluntary Benefits Using the Same Scale How effective are the voluntary How can voluntary plans plans in attracting and retaining Lighter actually reduce your benefit Expense talent? Heavier expenses? Talent • Added financial security • Medical plan design modification • Savings for employee to reduce claims or premium expense • Favorable employee perception of employer • Drive positive medical plan selection • Time-saving convenience • Subsidize communications, administration or consulting expenses through permissible channelsEmployer $ Impact = Higher Retention Employer $ Impact = Lower Expenses 5
  6. 6. Buck Voluntary Benefits Integrated Solutions (VBIS)Voluntary Benefit MarketplaceComplicated Matrix Plans and Delivery Options Voluntary Plans / Products Representative Carriers VB Outsourcers (Examples) “Worksite” Carriers “Worksite” Enrollment Firms • Interest Sensitive Whole Life“Worksite” Plans • Universal Life • Aflac • Allstate • Univers • Individual Term • Colonial • Transamerica • EOI • Critical Illness • Unum • Lincoln Financial • BCI • Accident Insurance • Trustmark • Prudential • BenefitVision • Cancer Insurance • Guardian • Humana • Hodges Mace • Hospital Indemnity • ING • UHC • Farmington • Individual STD • AIG • Aetna (Allstate) • Winston Financial • Individual LTD • Colonial • “Hybrid” (Acc, CI, Perm Life) Employer’s enrollment system • Group Supplemental Term • Group Auto/Home Insurance “Platform” Carriers “Platform” VBO’s “Platform” Plans • Group Critical Illness • AIG • ARAG • Metlife • Group Disability • MetLife • AYCO • Beneplace • Group Long Term Care • Unum • Cigna • YouDecide • Legal • Aetna • Hyatt Legal • Motivano • Financial Planning • MetLife • The Hartford • Marsh • Vision • Travelers • Prudential • Perkspot • Dental • CNA • VPI • Empowered • Identity Theft • Aetna • VSP • Discount Malls • Liberty Or employer-to-carrier direct • Limited Medical Plans 6
  7. 7. Buck Voluntary Benefits Integrated Solutions (VBIS) Commission Structure of Voluntary Plans Employer Be Aware, not Beware Commission as a Percent of Policy Premium Dollars * Year 1 through Year 5 100% Too Good To Be True?? Commission % of Premium 80% Front-loaded commissions can provide permissible subsidies for services that support the more 60% strategic initiatives through: • Communications • Consulting 40% • Administration 20% 0% Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Pro-active Plan Commissions Re-active Plan Commissions (Worksite Products) (Platform Products)*** Illustration of Voluntary Benefit Commission** You can remove all commissions from most “Platform” plans 7
  8. 8. Buck Voluntary Benefits Integrated Solutions (VBIS) Employer Financial Impact of Voluntary Plans The Possibilities $ Impact Plan The ‘What’ The ‘How’ Type Raise Lower Retention Expenses1 More aggressive med plan cost shifting Filling gaps with voluntary plans WS YES YES Launching voluntary plans through your Carriers offer rate concessions on core2 WS YES major med carrier plans Soften the perceived ‘blow’ of high-3 Increase ‘favored’ health plan participation WS YES YES deductible plans with VBs Subsidize communications, consulting or Permissible redistribution of VB4 WS YES admin costs commissions Stronger retention through selected WS/5 Measure success with participation YES voluntary plans PFLegend:WS – Worksite or Hybrid PlansPF – Platform Plans 8
  9. 9. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Medical Plan ‘Remodeling’ to Save MoneyWhat• 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 wellHow• 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 9
  10. 10. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345 Medical Plan Remodeling With Supplemental Medical Illustrative Example Only 10
  11. 11. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Integrating Supplemental Health Plans Create more aggressive plan changes (shifting cost) Increased employee deductible and coinsurance cost VB Supp. Employee or Health Hospital Accident Critical Employer Plan indemnity plan illness plan Paid “Buffers” Lower Employer Health Care Cost 11
  12. 12. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Redefining Voluntary Plan ReplacementThe Old: Silos of Benefit Delivery Benefits administration Enrolled through carrier or Aggregated through a VBO or enrollment system enrollment firm employer links to carrier system Annual Core Enrollment Worksite VB Benefits Platform VB BenefitsThe New: Integrating the Plan Placement and Decision Process Annual Core Enrollment 12
  13. 13. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Saving Money on Core Health PlansWhat• 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, HumanaHow• 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 13
  14. 14. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Increasing Participation in ‘Favored’ Health PlansWhat• Integrating the supplemental medical plan delivery assists with the decision process• Plan placement and communication strategy establishes medical and supplemental medical plans as a packageHow• 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 14
  15. 15. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Creating “Positive Plan Selection” 15
  16. 16. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Subsidizing Employer Fees Through VBWhat• Reducing or subsidizing employer plan expenses through voluntary plan commission redistribution, potentially funding H&W: - Communication expenses - Consulting expenses - Administration expensesHow• 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 16
  17. 17. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345 Reduced Turnover with Stronger Communications Weaker Plans Better Plans Benefits BELOW Industry Benchmark ABOVE Benchmark Poor Strong Decreased Turnover Decreased Turnover Communications Communications 17% 12% Higher 8% Employee Lower Turnover Lowest Employee Employee Turnover Turnover Do the math: 5% lower turnover – assuming cost of turnover ~ 30% of salary better communications, NOT – Average salary of $35,000 better plans – Cost of losing 1 employee = $10,500 – 5,000 group x 5% impact = 250 ees Savings from 5% retention = $2,625,000Watson and Wyatt – 2004 Study 17
  18. 18. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345 Linking Employee Communications to Company Financial Performance 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.* “Effective employee “Companies that are highly effective communications is a leading communicators had 47% higher total returns to indicator of financial shareholders over the last five years compared performance and a driver of with firms that have the least effective employee engagement.” communications.” According to the Towers Watson, 2009 / 2010 Communication ROI Study Report* Source: “Benefits 101: Would Your Employees Pass the Course?” 3007 18
  19. 19. Buck Voluntary Benefits Integrated Solutions (VBIS) 12345Impacting Retention through VBOffering Isn’t EnoughWhat• 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?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 19
  20. 20. Buck Voluntary Benefits Integrated Solutions (VBIS) Employer Financial Impact of Voluntary Plans The Possibilities $ Impact Plan The ‘What’ The ‘How’ Type Raise Lower Retention Expenses1 More aggressive med plan cost shifting Filling gaps with voluntary plans WS YES YES Launching voluntary plans through your Carriers offer rate concessions on core2 WS YES major med carrier plans Soften the perceived ‘blow’ of high-3 Increase ‘favored’ health plan participation WS YES YES deductible plans with VBs Subsidize communications, consulting or Permissible redistribution of VB4 WS YES admin costs commissions Stronger retention through selected WS/5 Measure success with participation YES voluntary plans PFLegend:WS – Worksite or Hybrid PlansPF – Platform Plans 20
  21. 21. Buck Voluntary Benefits Integrated Solutions (VBIS)VBIS Objectives• 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 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 21
  22. 22. Buck Voluntary Benefits Integrated Solutions (VBIS)Questions Amy Hollis National Practice Leader, VBIS amy.hollis@buckconsultants.com 770.403.8777 Jim Lowder Director, Health and Productivity james.lowder@buckconsultants.com 312.846.3363 22

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