Boca Benefits Consulting Group Inc.

Please click here for VB proposal.  

Why Did BBCG Select AWD As Its Recommended Carrier As Opposed To Alterntives?

The Broad Issues

• As an employer are you getting the highest return on the investment you make offering voluntary, payroll deduction, benefits (i.e, “VB”) to your employees?
• Do you have a comprehensive VB strategy in place both for the present and for the post-healthcare reform environment?
• Do you have a mechanism in-place that allows your employees to purchase health-related voluntary products with pre-tax money while saving your company related payroll taxes?

New Dynamics Change the Paradigm

How many people don’t know who “the duck” is at AFLAC? One would think that name recognition alone would dictate  that employee benefits brokers lean towards that carrier in order to maximize the perceived satisfaction of clients’ employees pertaining to the benefits for which they pay 100% themselves. Employees who see, and hear, that advertising icon are likely to believe the carrier to be the industry leader, especially true absent any other significant carrier mass media advertising. In fact it is the undisputed leader. However, it earned that position before VB became such a critical part of an employer’s strategy and when many brokers really didn’t mind a little client erosion around the edges by non-competitive, captive, AFLAC agents.

In the last few years, this segment of the industry has evolved into an entirely new species:

• The carrier players have changed.
• The distribution chain has been altered.
• Corporate strategies are newly attuned to how this piece fits.
• Some group carriers have stuck their toe in the water only to find that they really don’t know how the game is played (n.b., mostly from a marketing expense perspective and less so from a product development perspective). Many of those carriers pulled back but the top group carriers are beginning to recognize that VB is a must in the post-healthcare reform environment.
• Projections of 2x and 3x multiples of individual healthcare policies being sold in 2014 and beyond makes product differentiation (i.e., preventing individual healthcare policies from being perceived as no more than a price-driven homogeneous commodity) a critical strategic consideration for the traditional group carriers.
• It is more than likely that the major group carriers known for their “buy” versus “build” decisions are in various forms of acquisition due diligence as this piece is being written. The histories of Wellpoint, Aetna, CIGNA and UnitedHealthcare are replete with those kind of transactions.
• As the VB business shifts more to brokers, a higher level of carrier evaluation will take place. It will not be sufficient for carriers to just dabble around the edges of this segment of the industry any longer. They will need to be at the state-of-the-art both in terms of product and in terms of distribution support.
• Being unusually candid here, carriers will be forced to eliminate unnecessary interim levels of compensation in the distribution chain (i.e., not pay percentages to non-productive carrier management not actually in the broker chain). Failure on this item will shift broker incentives to the group of  VB carriers which maximize their personal compensation. The lack of competition to date has allowed an odd, and significant, skewing of compensation arrangements. However, it is not a sustainable model as the strategic focus shifts and brokers become more VB knowledgeable.

BBCG’s Thinking

A fundamental question for BBCG as a broker has been “How many VB carriers do we want to represent?” There are dozens in the industry. The top 4 or 5 are well known names. Each has strengths and each has weaknesses. Some employers show an inclination to use their primary group carrier to minimize administrative requirements. Others consider the carrier choice in the same light they have for many years (i.e., the AFLAC model with little return on investment). However, BBCG strongly believes that, concurrent with the sea-change we perceive, VB expertise, both in terms of strategic placement of benefit types and in administration, will be the key determinants of the most forward thinking employers.

Clearly, price will be an issue as well. However, BBCG also believes that competition in the industry segment will draw pricing closer to a mean in apples-to-apples product comparisons.

As a broker, the carrier representation decision becomes one of “value added” for our clients. We recognize that we might lose business by not representing all the carrier players in the way group insurance has traditionally been sold. However, as we seek to deliver the “value added” solution, it is our intent to only use carriers which show the most depth in strategic product placement (i.e., the best mix of products to maximize a desired return on employee benefits investment) and in overall support. Strategic product placement requires not only the greatest number and most innovative mix of products. It also requires a sales staff highly trained to design a complementary offering of VB products as opposed to a wholesale portfolio offering with little profound thinking about the end result.

With the above objectives in mind, BBCG has spent significant time in analyzing the top stand-alone VB carriers in our markets. We will continue to avail ourselves of the group carrier offerings where appropriate. However, for the more discerning employers we have concluded that Allstate Workplace Division (“AWD”) allows us to deliver the greatest “value added” to our clients and we will use that carrier virtually exclusively for that purpose. Some of our thinking:

• The product offerings have the most depth.
• The sales staff has the greatest expertise in terms of strategic placement.
• The administrative support is state-of-the-art.
• Market results (i.e., year over year premium growth) point to their leadership position.
• Conversely, the erosion of market position of alternative carriers points to their weaknesses.
• As a specialty VB carrier AWD also shows staying power, investment, and continued future innovation as opposed to the “toe in the water” approach mentioned above.

The above being said, we recognize the unique strengths of some of the other VB carriers, especially in the area of Life and Disability products. BBCG intends to use such carriers where the scope of the assignment is relatively narrow to those objectives. However, for the broad strategic assignments we see AWD as the carrier which delivers the most value for employers.

We welcome all questions and inquiries.  Please click here to request a VB proposal or strategic placement meeting with BBCG and an AWD representative.


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In doing some research for a LinkedIn member relative to COBRA eligibility it seems an inconsistency has been detected between (1) long-standing COBRA regulations pertaining to early termination rules and (2) the regulations requiring early termination of the the present 65% federal subsidy. 

Although this inconsistency may be nothing more than an oversight on the part of DOL, it would appear to be more fundamental relative to its overall intent going forward. The newer intent seems to be much more business friendly (i.e., no expense associated with a non-productive former employee). It may not be so much altruistic as the real politic of what has been required to get health reform issues through a divided Congress.

In the specific case, the 65% federal subsidy will be terminated if a former employee is so much as eligible for a new employer plan. No enrollment in the new plan is required for the previous employer to require the full 102% premium to be paid (i.e., as opposed to 35%) to remain in COBRA.  It is purely a matter of eligibility. Unquestionablly, the net result will be less people on COBRA and more people enrolled in their new employer plans. Employers with a sizeable number of COBRA participants should see substantial savings if they monitor this provision closely (i.e., some form of periodic written statement from the COBRA participant that they have never been eligibile for another group plan from the inception of their COBRA participation, either personally or via spouse).

Note that this is not an allowable early termination event as previously defined by DOL where actual enrollment has been required before a former employer can terminate a former employee’s COBRA participation. In this case COBRA termination would be a voluntary former/new employee act based on the relative economics. 

The subsidy regulation above appears to be in line with the “To Age 26” provisions of PPACA 2010 as we understand them. In that case, the parent’s employer can also terminate an adult dependent’s eligibility for its healthplan based solely on eligibility for a new employer’s plan. Again, no enrollment is required for this action. The pure eligibility is the key.

Both the subsidy and the adult dependent regulations seem to reflect the true purpose of all these healthcare delivery mechanisms. The underlying intent has been to ensure that there is a mandatory safety net for those who would lose employer based coverage and have absolutely no other alternative. If there is an alternative, than there is no reason for that safety net (n.b., and the associated non-productive costs) to exist.  None of these devices have been put in place to allow for “plan shopping” on the part of an employee who might otherwise have mutliple eligibilities.

DOL needs to address the COBRA inconsistency and re-write the regulations going forward to allow for early termination of COBRA based solely on eligibility. Rarely, if ever, will there be a negative economic impact on an employee who will revert from 102% of premium to somewhere in the area of 75% of premium (i.e., assuming here a 25% employer contribution). This may require large employers to leverage local politicians if the various applicable federal statutes require amendment.


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Clearly, it has been exceptionally difficult to keep up and make the proper choices relative to the requirements of PPACA 2010.  The steady stream of clarifying  IFR’s (i.e., Interim Final Regulations) has almost become a torrent.

Is you broker keeping you up to date? If not as much as you might like, please click here to contact BBCG for assistance.

LinkedIn page with info:  http://www.linkedin.com/in/rwmurph

Resume from BBCG site: http://bocabenefits.com/resume.htm

“Core Competency” post: http://bocabenefits.com/blog/?p=992

Let BBCG help your organization this fall! 

President/CEO

BBCG Inc.

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Email Contact

With the summer ending and fall approaching many employers start to think about their January 1st group insurance renewals and what strategy they will ask their brokers to employ. Never in the last 30 years has the broker selection issue been so important. PPACA 2010 (i.e., healthcare reform) has defined brokers in two main categories: (1) those that have kept up and can properly advise; and (2) those that will continue business as usual. BBCG puts itself squarely in the former, not the latter, category.

As you may have noticed from our various types of posts, BBCG is involved in many different types of employee benefits and individual insurance concepts. However, our core competency is group insurance.

I have 30 years of experience in the group insurance business, first starting as a home office underwriter for the largest group insurer in the U.S. at the time (i.e., Prudential prior to selling off its health book of business). That start has given me a technical foundation across all group insurance products that most brokers do not possess. It also gave me an in-depth knowledge of healthcare plan alternative funding and self-insurance concepts (e.g., both ASO approaches with carriers and TPA approaches when using a non-carrier administrator and stand-alone network). Statistics show that the highest rate of broker-related Errors & Omissions events is related to self-funded plan stop-loss insurance due to its complexity and the lack of in-depth understanding by many brokers.

Since my initial career start with Prudential, I have held positions in sales management, product development and brokerage/consulting for three other national companies. Boca Benefits Consulting Group, Inc. was first located in Boca Raton, Florida  where its initial assignment was product development on behalf of an investor group in that area. It was incorporated in the state of Florida in 1996. It was relocated to Clearwater, Florida late in 1999.

BBCG agents are not appointed by every carrier in the market. However, we have access to virtually every one of them (i.e., the de facto standard in the industry is “quote/sell first and appoint after the fact”). For larger companies we will draw up specifications and go to market directly. For smaller/medium sized companies we have access to two general agencies as needed to go to market on our behalf. There is virtually no quality market not available to our clients.

If the economics of a relationship make sense for prospective clients outside Florida or Washington D.C., we will secure the appropriate non-resident licensing in your state. Note: that process has become relatively easy with the centralized on-line based licensing procedures adopted by most states.

Let us help you this fall! You can contact us by clicking here. We prefer not to get into bidding wars with other brokers in order for an orderly approach to the markets on behalf of our clients. However, we will show an alternative quote to those a current broker is showing if we do not feel the market has been fully tested. 

— Bob Murphy, REBC, ChFC, CLU, RHU, MBA

   President/CEO

   BBCG Inc.

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HHS issued rules on what actions would trigger a loss of “grandfathering” status under PPACA Monday, June 14, 2010. Those rules become effective today Thursday, June 17, 2010 concurrent with their publication in the Federal Register. Below is a summary of interpretation of the final interim rules as BBCG understands them. Many employers remain on the fence regarding the trade-off between plan changes flexibility and the accelerated PPACA requirements if “grandfathering” is reqlinquished. HHS esimates indicate that many employers will voluntarily give up “grandfathered” status in return for more control of their plans (versus the additional PPACA compliance requirements).

Changes that will result in loss of grandfathered status:

• Significant cut or reduction in benefits (e.g., elimination of benefits to cover care for a particular condition)
• Increase in co-insurance rates
• Significant increase in cost-sharing co-payment charges (defined as no more than the greater of $5 (indexed annually for medical inflation) or a percentage equal to medical inflation component of CPI plus 15%; estimated to be approximately 19% total currently)
• Significant increase in deductibles (exceeding medical inflation component of CPI plus 15%)
• Significant reduction in employer contributions (exceeding 5% of prior employer contribution)
• Tightening of an existing or adding a new annual dollar limit (unless replacing a lifetime
dollar limit with an annual dollar limit at least as high as the lifetime limit)
• Merger, acquisition or similar business restructuring – if principle purpose is to
cover new individuals under the grandfathered plan
• Switching carriers under an insured plan (unless the insured plan is covered by a collective bargaining agreement. Does not apply to changes in administrators (i.e., TPA’s) for “ASO” (i.e., self-insured Administrative Services Only type plans).
• Moving employees to a grandfathered plan with lesser benefits

Please email us if we can assist with your current brokerage requirements. Note that employers cannot change carrriers under insured plans (including partially self-insured, minimum premium, etc.) without triggering a loss of “grandfathered” status but that the additional PPACA compliance requirements may still be justified if pricing, service, and/or plan provisions under an existing carrier relationship are felt to be inadequate for your needs.

 
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CIGNA is hosting an educational teleconference on the subject of early implementation of the “To Age 26” provision of PPACA. Valuable for all employers sponsoring employee health plans (i.e., both insured and self-funded). Possibly broker and CIGNA client oriented. However, pertinent to all regardless of present carrier and/or TPA.

CIGNA teleconference registration link.

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Below from The White House Blog. See http://www.whitehouse.gov/blog/2010/04/27/more-support-young-adults for a list of carriers voluntarily accelerating the “age 26” provision to make in coincide with 2010 college graduation dates as of the date of this posting. BBCG expects that most all carriers will ultimately agree to this timeline.

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But we knew that some young adults graduating from college this spring could risk losing their health insurance before the provision takes effect, only to be added back onto their parents’ policy the next time their parents’ plan comes up for renewal on or after September 23rd.  That was bad news for families and bad news for insurance companies too.  Removing an individual from a health insurance plan and then adding them back on a few months later takes time, and it costs money.

That’s why on April 19, Health and Human Services Secretary Kathleen Sebelius called on leading insurance companies to begin covering young adults voluntarily before the September 23 implementation date required by the new health reform law.  Early implementation would avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and September 23, 2010.   Early enrollment will also enable young, overwhelmingly healthy people who will not engender large insurance costs to stay in the insurance pool.

And we’re pleased to report that the following insurance companies are doing just that:

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BBCG is represented on the board of NAIFA-Pinellas (National Association of Insurance and Financial Advisors, Pinellas County, Florida). The below bullet points are insurance/benefits related items addressed in the Week #8 dispatch from the 2010 regular Florida Legislative Session.  Please see below link to access the dispatch.

• LEGISLATURE SENDS NAIFA-FLORIDA PRIORITY BILL TO THE GOVERNOR (HB 159)
• LEGISLATURE APPROVES LIFE INSURANCE BILL WITH NAIFA-FLORIDA SUITABILITY CE EXEMPTION PROPOSAL (HB885)
• NOVEMBER BALLOT WILL CONTAIN CONSTITUTIONAL AMENDMENT TO EXEMPT FLORIDA  FROM FEDERAL HEALTH REFORM MANDATE (HB 37)
• 2010 SESSION WILL ADJOURN WITHOUT SIGNIFICANT HEALTHCARE REFORMS
• PROPERTY BILL CLEARS SENATE FLOOR; CONSUMER CHOICE STALLED (SB 2044/HB 447)
• NUMEROUS COSTLY MANDATE BILLS FILED

Go to NAIFA archive page for full details.

We have received communications from both CIGNA and Aetna that they will each be implementing the “to age 26” provisions of the Patient Protection and Affordable Care Act earlier than required by statute (9/23/2010).  The concern stated is the potential for a gap in coverage for those in the 21-26 age group who may be graduating from college and who would otherwise lose eligibility once full-time student status was eliminated.

Both companies are making their eligibility changes effective 6/1/2010.

Although we have not seen announcements from either Blue Cross/Blue Shield or United Healthcare, BBCG is surmising that the changes announced by Aetna and CIGNA have become the new de facto eligibility standard and that the other major healthcare insurers will follow.

Click here for CIGNA announcement. 

Click here for Aetna announcement.

There are a number of pressing issues facing employers today including: employee loyalty, retirement and an aging workforce, health and wellness, employee advice and guidance, and the alignment of benefits objectives and strategies. The online benefits benchmarking tool BBCG can make available can help you address these challenges by providing the data you need to determine how your organization measures up compared to similar companies, with the goal to remain competitive in attracting and retaining top employee talent.

In our presentation we will show you how to use the insights contained in an industry-leading benefits benchmarking tool to help you maximize the effectiveness of benefits plans and be responsive to your employees’ benefits priorities.

It will help you answer such questions as:

• Are benefits strategies and objectives on target with a company’s peers’?
• How important are benefits in addressing the goals of attraction and retention of talented workers in a particular industry or region of the country?
• Which benefits are most commonly offered among a company’s peers, and which are most important to employees with similar characteristics?
• How do employees’ attitudes toward their benefits vary by generation?
• Which demographic groups of the workforce say their benefits communications effectively educate them?

For our clients and soon to be clients, we have a link to a one hour benchmarking webinar recently conducted in conjunction with Employee Benefits News. Please contact us at benchmarking@bocabenefits.com to set up an appointment to view the webinar with us.