Find Money Hidden in Your Benefit Program - Foil the Broker Shell Game

Historically, it’s been fairly simple for insurance brokers to conceal the dirty truth about how much extra money they collect when you allow them to call you their client.  We’ve shined a light on this topic many times over the years, but seen no action to stop it.  But now, it looks like school system HR folks and their purchasing departments are beginning to get wise to ways insurance brokers siphon money from benefits programs – sort of.

In 2012, we were pleased to see four RFPs requiring that at least some specific services be  broken out with an accompanying cost for each.  Two went so far as to declare group insurance commissions to be school district money (and it really is!) and require that a robust set of HR-related services be provided in exchange for any dollars a broker receives from an insurance company.  Most RFPs required that a commission percentage be attached to each line of coverage or that a fixed commission dollar amount be disclosed.  

While on the right track, these RFP requirements fail to break through the broker smoke screen. Instead, they seem to have served as a catalyst for brokers to become even stealthier on the compensation front.  It’s easy for a broker to disclose a lower fee or commission amount in their official response, then turn around and require the insurance carrier to pay them an "implementation fee" to the tune of tens of thousands of dollars. Is having the carrier make a contribution to the servicing of your business wrong?  Not necessarily.  But if it’s done behind the scenes and the broker communicates the requirement to the carriers in his bidding process, then the carrier payment just becomes an additional (hidden) cost that gets buried in your (and your employees’) rates and the broker thus obscures a cost that would otherwise be visible – at least to someone who knew where to look.  We saw insurance brokers employ some variation of this tactic on every one of the RFP’s mentioned above.

Best Firm Never Chosen!

Besides pushing up your rates, hidden/undisclosed compensation has another huge consequence.  In the RFP processes discussed above, the systems did not select the advisor that scored the highest on their technical proposal evaluation!  In other words, the firm deemed most capable was never chosen.  With the more frequent use of the State purchasing methodology, which works reasonably well when costs can be clearly identified – the points awarded for (artificially) low bids, tipped the scales in favor of a less qualified firm.  We all make the cost/value decision every day in our personal and work lives – but if the cost element is not clear, then no process, however disciplined, can make up for it.  In this situation, the buyers not only ended up with less capable “partners” -- they likely paid more to a firm that wasn’t deserving of their trust, let alone their business.

With school systems starting to demand that compensation be fully disclosed so that they can ensure value for every dollar they and their employees spend on benefits, brokers have simply moved the shells around to continue to hide their compensation.  We’re not saying that compensation is a bad thing.  You can’t get great work done without paying for it.  We’re just saying you have the right to know exactly what it is.  And ideally, your selected advisor is motivated to keep your costs as low as possible.  No such motivation is evident in the insurance broker community – especially those working with school systems.

Excessive Compensation in Plain Sight

While this article is largely about how cleverly insurance brokers conceal compensation, let’s not forget about the excessive compensation that is hiding in plain sight.  Has your broker installed whole life or universal life products in your benefits program?  Cancer insurance?  If so, you can anticipate your broker receiving 60-90% commissions on your employees’ contributions.  Did your broker put AFLAC or Colonial products in your program?  Why?  They would never win a competitive bid process, so how were they selected?  Think big, undisclosed compensation.  These are technically individual policies that require no disclosure whatsoever.

There is no justification for these high-priced, high-commission products in your program. 

If you’re planning an RFP in 2013, be aware of the new (and old!) hidden ways insurance brokers find to make money off your district and your employees.  Keep in mind that an insurance broker, by definition, makes his money selling insurance for commissions.  If you’re content with the limited services they provide, at least make sure you know where all the dollars are so that you can make a legitimate cost/value analysis.  Hint: you should either be paying a lot less than you are now, or getting much more from someone who can provide a broader scope of service.  You know that benefits are only a piece of the pie in HR—so don’t squander hard-to-find dollars (your system’s or your employees’) on limited or sub-par services.

In an effort to help school systems across Georgia avoid these money-burning pitfalls, we’ve drafted agreements that you can require be signed as part of your RFP process, or to keep your current broker/consultant and carriers honest and transparent.  We’ve also included a chart showing the various types of costs buried in your benefits program so you have a better idea of where to look.  ClickHere to download this packet and protect your System and your employees from being overcharged!

Posted By: Eric Kiesshauer 

Can the new ACA save your school system money on State Health?

Clear Concepts has analyzed the new healthcare law and how it might impact Georgia school systems with State Health.  Check out our white paper for the surprise conclusion.

So far, State Health has taken care of most of the compliance requirements in the Affordable Care Act (commonly known as ObamaCare).  As anticipated, all of them have driven the cost of State Health higher.  Beginning in 2014, school systems will have some compliance responsibilities of their own.  Our whitepaper summarizes your tasks – but also highlights an unintended consequence of the new law – it may actually help you save some big money in the latter half of the 2013 fiscal year and beyond!   Click here to learn how the ACA could help your system avoid the increases in classified staff cost-sharing and lower your employees’ cost without depriving them of a quality health plan.

Posted by: Eric Kiesshauer

Six Ways to Deal with the Rising Cost of State Health

State Health has announced their plan changes and new rates for 2013.  Rates will increase for nearly all plans/options, but not in the usual across-the-board manner.  For example, if you’re covering just yourself and your children, your costs could stay the same – but family costs will jump more than usual – about $1,100 per year!  The spouse surcharge is eliminated – yet overall, the cost to cover spouses has increased.  Cost-sharing and out of pocket limits increase in all plans, but more so in the standard plans. 

At the same time these costs are increasing, many districts have been forced to slash days and cut pay to manage the relentless budget crunch.  This is hitting families particularly hard.  None harder perhaps than bus drivers and other lower paid staff.

What can one do to mitigate the hit to their wallet?  Quite a lot, actually.  Here's a list of things that can save you money.  not every idea can be used by every plan tier, and some take more work than others, but the savings can add up very quickly.

1. Join Wellness -  It costs less and the benefits are richer.

2. Quit Tobacco -  You will save the $80 surcharge and the cost of tobacco. Help and resources are available to support you in the process.

3. Join the Disease State Management Program (DSM) - if you have asthma, diabetes, or coronary artery disease, you can save a bundle on prescriptions.

4. Choose HRA - The HRA plan is a better deal because of the lower HRA premiums, the 85% coverage for doctor visits, hospital stays, tests, etc. after the deductible is met, and the free HRA account dollars to help you pay for your initial expenses.

5. Work the prescription plan to save – if you can’t take advantage of the DSM, there are many other ways to save on prescriptions.  For example, use 90-day mail order whenever possible.  Know what tier your drugs are in and choose the insurance company which categorizes them in the lowest tier.  Or, forget about using your State Health card and check the $4 list at Walmart, Kroger, CVS etc. to see if your drug (or one you can switch to) is available for $4.

6. Consider PeachCare – If you have kids and you qualify for PeachCare, you could save a bundle.  PeachCare includes your child’s healthcare coverage, but it also includes dental and vision coverage.  Not to mention, kids under 6 are free.  A family of 3 making less than $44,868 or a family of 4 making less than $54,180 could qualify.

We have created a series of one-page guides to help you get the word out to your people on how to save as much as possible in 2013.  CLICK HERE to download this series which includes our Prescription Guide, Disease State Management Enrollment Guide, Quit Tobacco Resource Guide, and more.

And don't forget about our State Health 2013 Open Enrollment Webinars.  They are also free and will guide you through all the important changes for 2013.

The State Health Wellness Promise—Help your Employees get it done right!

Last year, we got our first look at State Health's “wellness plans” – and this year the advantages of those plans over the “standard plans” increase – in the form of lower costs and better benefits.  The “wellness promise” is back as your way to hold on to those advantages. Cost-sharing and out-of-pocket limits increase in all plans, but more so in the standard plans.  

Given the lower cost and richer benefits of the Wellness options, it is very important that your employees understand them and very seriously consider choosing them.  In 2012, many folks did not choose the Wellness plans because they thought they weren’t healthy enough and therefore, ineligible.  Some folks mistakenly thought they could not join because they were pregnant.  We even had people tell us they believe they are too fat to join the Wellness program.  Regardless of how pear-shaped, healthy or unhealthy a person may be, they all have the opportunity to join a wellness plan.  Only those that did not keep their 2012 Wellness Promise are locked out for 2013.

So how do you help your employees figure out what is required of them to enroll in and meet the Wellness requirements?  You could give them the SHBP Decision Guide with its many paragraphs of explanation.  You could send them one of State Health's presentations with bullet after bullet of facts.  Or you could download our free, simple Decision Tree to Wellness.  We designed the Tree to help folks understand what they need to do (or not do!) to keep their Wellness in 2013.  We hope this will help you make things a little easier for your employees—just CLICK HERE to download this free resource!

And don't forget about our State Health 2013 Open Enrollment Webinars.  They are also free and will guide you through all the important changes for 2013.

State Health 2013 Open Enrollment Webinar

 This free webinar is for participants in the GA State Health Benefit Plan.  We will guide you through the changes in the State Health options, explain how the plans work, and help you make a smart, confident decision about your health plan.  

 

The structure of the webinar is a 35 minute presentation followed by a question and answer period. We have three sessions to choose from:

Friday October 12, 3:30 PM - Click Here to sign up for this session.

Monday October 22, 3:30 PM - Click Here to sign up for this session.

Thursday November 1, 3:30 PM - Click Here to sign up for this session.

This webinar is sponsored by Clear Concepts Consulting Group.  We are a Human Resources and Benefits Consulting firm serving GA School Systems.  This is the same presentation given to more than 100 locations across the State during the month of October.  Clear Concepts is an independent organization.  We are not affiliated with State Health or any insurance company.

 

Five Reasons You Don't Get the State Health Help You Need

Georgia School System HR and Benefits managers rejoice!  It’s that special time of year when we get to digest and decipher all the changes State Health has made for the upcoming year.  Not only are you working hard to understand the changes, but you also have to communicate them to all your faithful and hard-working employees.  State Health is the most costly and important benefit your system provides.  It’s a good thing that all the insurance brokers out there tout their expertise in Employee Communications….but wait; does YOUR broker help you explain State Health to your employees?  Not boilerplate, off-the-shelf generalities—but real guidance folks can use?  We’re guessing the answer is no—here’s why.

It's Not Their "Job".

Most brokers (and insurance companies too) define the broker's job as selling insurance to employers and their employees.  Many folks on the broker's staff will have the title of "producer" because they "produce" business for insurance companies.  A broker gets paid via commissions built into the rates of your various benefit plans.  He is probably also getting some large bonus checks if he’s directing all his clients to one or two carriers.  We won’t go into all the ways the financial incentives are in the broker’s favor, and not in yours (Go here to learn about that).  But he certainly isn’t getting any money from State Health.  So despite this being the most important and expensive benefit you offer, the broker does not view it as his job to help you with it.

They Really Don't Care About It

No Broker will ever tell you they don’t care about you and your employees—they’d never win your business!  But the brokers we know don’t provide any real help on what employees care about - State Health.  Sure, they might link to the SHBP website in the employee benefits portal, or hand out the State Health phone number.  But beyond that—they don’t help your employees understand the State Health options, how each plan works, or give them tips for making the best decisions. And yet, State Health is the most important benefit to your employees!  Building employee appreciation for the enormous amount you’re spending on their behalf starts with a cohesive explanation of ALL the benefits they’re offered and how they all work together. 

Your Benefits Program is Not Really a Program to Them.

Brokers sell "products".  The more products they can put on payroll deduction and the more expensive those products are, the more money they make.  This random collection of insurance is not viewed as a program where the components work together to help employees and your system.  Rather, it’s a means to an end: commissions.  State Health is at the core of your benefits program.  Other benefits, like FSAs, should be talked about in terms of how they work in conjunction with State Health.  Disability should recognize sick leave and discourage absenteeism.  Cancer and all other specific diseases are covered by State Health so additional coverage should not be a priority in the program. 

They don’t understand it.

Most brokers lack the knowledge to really dig into the SHBP plans.  While some of them may regurgitate what's in a State Health presentation, that doesn’t cut it if your goal is to help employees.  Employees need to see how the plans work in the real world and understand trade-offs so they can figure out what plan is best for them.  If brokers do anything at all, they just provide a list of plan features.  No analysis.  No guidance.

State Health HAS a phone number…

Why spend the time to understand State Health when there is a toll-free number for the broker to send your employees to?  Some of them even declare, “Just two numbers to call—ours and State Health!”  How about just one number?  For 2012, our research shows that nearly 65% of the questions asked by employees during open enrollment were about State Health.  If you are not equipped to answer these questions in your presentations, call centers, and email banks then you’re not going to accomplish much.  Your employees are not getting what they really need. 

To make confident decisions, your employees need to be educated on their State Health choices.  For you to get the appreciation you deserve from all the dollars flowing to State Health, you want your employees to be sure they’re making the right decisions.  Brokers just don’t do that.  It's not their job.  Moving away from the broker model to a benefits consulting model for your benefits program is the answer to this.  Our next post will address the consulting model, how it works, and what advantages it has over the broker model.

4 Ways to Attract the Best Candidates

If you’ve been sniffing around our yard for awhile, you may have heard us mention the HR Path. The first step along the HR path is Recruitment. You can’t hope to hire the best folks for your system if you don’t attract an ample pool of high-caliber candidates for every open job. From teachers to bus drivers, maintenance staff to administrators, you should to be driven to create a list of superb candidates from which to select. Each hire presents an opportunity for your system to improve and to run your day-to-day operations in a way that will bolster your success! Read on for some tips to get started.

1. Create a brand for your system - Brand identity is built based on the culture at your organization, your mission and values, and the way you communicate those things to those inside and outside your organization. A person’s perception of your system is based on the various cues that you are sending.

2. Properly utilize your website - Oftentimes the first place people will go when they want to know more about any organization is the website. Many of today’s job seekers are technology-savvy and are put off by potential employers with a difficult to use, cluttered-looking website or arduous application process. The best websites will reflect a system’s brand identity, be easy to navigate and look professional.

3. Use benefits as a recruitment tool - People are motivated by pay at all career levels. And, they tend to look only at base pay or cash compensation as opposed to total compensation You know how much you spend on State Health, TRS, Paid Time Off and other benefits. Can you instantly articulate how much value these benefits add to basic pay and how much you’re saving for your average employee? If you can’t, it’s a sure bet your prospective candidates can’t either. (Is your benefits program among the best? Click here to take the Benefits Quiz) 

4. Reinforce your image with current employees -  You should take every opportunity to re-enforce your brand identity as you deal with current employees and design processes in your system. Happy employees are much more likely to sing your praises to their friends on Facebook, Twitter, or in general conversation.

For a more in-depth discussion of these topics and more, be sure to download our Kit on Recruiting the BEST!

Posted By: Sarah Harris