EServing
UCLID MANAGERS
the independent agent since 1976
®
A Legislative Review Service by Euclid Managers
June 2010
EUCLID MANAGERS®
has served the independent agent
since 1976, offering a portfolio
of group health, professional
liability, individual life, health,
annuity and long-term
care products.
We proudly represent many
fine carriers including
Group Products:
UnitedHealthcare of Illinois
Delta Dental of Illinois
MetLife
Individual Products:
American General Life Companies
AXA/Equitable
Banner Life
Genworth Financial Insurance Co.
Guarantee Trust Life
HumanaOne
John Hancock Life
Lincoln National Life
MetLife
Prudential Financial
RBC Insurance
Transamerica
West Coast Life
…and many more!
Contact Information
234 Spring Lake Drive
Itasca, Illinois 60143
Phone: (630) 238-1900
Outside Chicagoland:
(800) 345-7868
Fax: (630) 773-8790
Visit us at:
www.euclidmanagers.com
Reflections
Health Care Reform - Broker "To-Do" List
to Assist Clients
Everyone is talking about health reform. Unfortunately, beyond laying out
the time frame for reform measures, there are way too many unanswered
questions. But, one thing is sure, businesses need help – and expect help –
from their brokers in responding to the threats and opportunities of health
care reform.
This issue of Reflections provides a “to-do" list of sorts for brokers to use in
thinking about client needs as a result of health reform.
continued on page 2
A letter from Karen Knippen
Remember the saying, “If you don’t know where you’re going, how will you
know when you’re there?" I’ve been so focused on understanding what
happens NOW in health reform– that I hadn’t really thought about planning.
I was reminded of this as some of our brokers began to pose questions
specific to their clients. Those conversations often start with, “I have a
client who …." By going through the “to-do’s" described in this issue of
Reflections, brokers will be able to complete that sentence with
significant details that may make the path for the employer to follow
much clearer.
Sincerely yours,
Karen Knippen, RHU, REBC, CLTC
EUCLID MANAGERS® has been serving the independent agent since 1976 with a portfolio of group health, professional
liability and individual life and health, annuity and long-term care products. We proudly represent UnitedHealthcare,
Delta Dental of Illinois, MetLife and HumanaOne. We encourage your feedback and suggestions. Please call your
EUCLID MANAGERS® Marketing Representative or Marcy Graefen at (630) 238-2915 for more information. Outside
Chicagoland, call (800) 345-7868. Website: www.euclidmanagers.com
Learn the Basics
Any broker selling and servicing group benefits has a
duty to learn the basics of health care reform. It is
no longer sufficient to focus on the political drama
surrounding health care reform. Brokers and insurers
are confused – clients, even more so.
At the same time, brokers need to understand the
limits of their expertise. Unless a broker has a strong
accounting background, it is wiser to talk about tax
issues in general terms. Then, advise the client to seek
accounting expertise (or legal expertise) or refer the
client to trusted advisors.
Keep in touch with carriers and General Agents. Each
carrier may respond to some of the less defined issues
of health reform in a different way. General Agents are
often among the first to understand how carriers are
reacting to change.
Communicate with Clients
Clients are confused and, as a result, they may
make decisions that are not well considered. It’s
important to keep clients informed. This can be
done by forwarding relevant information, phone
calls, emails, and newsletters – the gamut of
communication options.
Not communicating may result in the loss of a client.
Stories are circulating that brokers are picking up new
clients by asking if the current broker on the case has
mentioned the availability of tax credits. If the answer
is no, the new broker then uses that as leverage to take
over the case. Even if the client decides the tax credit
is not worthwhile after all, the case is still lost.
Develop Client Profiles
Some of the most successful brokers know more about
a client’s business than the client. This is the time to
be one of those brokers. Develop a set of data points
that can be completed for every client. This will allow
for quick responses to opportunities based on a
particular client’s profile.
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Reflections
Some data points to consider include:
• Industry demographics and challenges
• Corporate structure
• Customer financials
• Employee demographics
• Plan of benefits
• Eligibility for benefits
• Union involvement
• Trusted advisors
Industry demographics and challenges should consider
industry norms. This would include: hiring, salaries,
structure, competitive environment for products or
services as well as labor, opportunities for industry
growth and the like.
Corporate structure analysis contemplates whether
the firm is a C-Corp, S-Corp, Limited Liability
Company, or Partnership. The organization of the
company is often critical to addressing tax and
benefit issues. Also important is whether the firm
is a profit or not-for-profit organization. It’s also
important to determine whether there are other
commonly-held companies. A firm that may appear
to be 30 employees may be closely linked to one or
a number of other firms – complicating the question
of the company’s size.
In the same vein, the number of employees and
the type of employees at a firm may also be of
consequence. Health reform essentially defines a
full-time employee as 30 or more hours per week.
This definition may represent a significant factor for
employers using a more stringent requirement for their
current health plans such as 37 or 40 hours per week
for eligibility.
Similarly, provisions in health reform require counting
part-time employees as fractions of full-time employees.
Six employees who work five hours per week will be
counted as one full-time employee. Still other provisions,
notably in the tax credit provisions, may allow for
exclusion of owners, shareholders, seasonal employees
or family members. Therefore, a thorough accounting
of family relationships in a firm, seasonality and use
of labor will help determine which provisions may
work for – or against – an employer.
Customer financials become important when considering
tax issues. They can also be critical to consideration
of self-funding, alternative funding arrangements or
benefit expansions.
Employee demographics provide insight on how
provisions in health reform may impact an employer.
If the group has a large number of older workers,
reform issues may be different than an employer
with a young average age. It will also become more
important to gain an understanding of the salaries
employees earn and whether they have working
spouses. Some of the spending limits refer to
percentages of household income, something
employers haven’t often sought to know to date.
The plan of benefits and cost of coverage should not
be taken for granted. Reform provisions will establish
essential benefit levels. Also, the Cadillac tax of
40% on health coverage in excess of $10,200 for
an individual and $27,500 per family should be
compared to the premiums being paid. Note there are
some increased Cadillac tax thresholds for retirees and
employees in high-risk professions.
Eligibility for benefits will, in some cases, be a critical
issue of consideration with the requirement that
insured plans will have to meet non-discrimination
requirements. Also, plans that currently have long
waiting periods for coverage will have to reduce the
waiting periods to no more than 90 days, effective
January 1, 2014.
Union involvement is always an issue to review with
clients. If the benefit plan is negotiated through
collective bargaining, different effective dates for
reform provisions may apply.
Since health reform is so complex, decisions and
strategy may be best approached by including a firm’s
trusted advisors for financial and legal issues. If an
employer does not have a relationship, the broker may
want to develop a team of advisors to work with clients.
Each broker may have other data points that merit
consideration and notation. Clients may be reluctant
to provide some of the details – and that’s okay.
However, most should be thankful and understand that
this data will be used to assist them in complying with
health reform to their benefit.
Clients Long Term Business Outlook
This analysis may be included as a part of the overall
profile or considered separately. Among the issues to
consider is whether the business is in a growth mode
or tending to decline. This may or may not be the
same as the industry since a business may decline due
to factors such as an owner considering retirement and
the like.
Another factor to consider is whether the employer
has to compete for workers. Once again, industry type
may be a factor but geography or other factors may
be a consideration. A business owner may also want
to be a leader in compensation for an industry or
location. As such, their decisions regarding health
reform may be altogether different than a business
owner who does not consider this to be a goal.
Bottom Line – Think Strategically
Many of the issues regarding health reform are
still unknown. Guidance from federal and state
regulators must be provided to address “grandfathered"
requirements, definitions of key terms, definitions of
essential benefits and preventive services – the list
seems endless.
Now is the perfect opportunity to gain a greater
understanding of the clients to begin to develop –
or at least introduce the idea – of a strategic
approach to health reform. Whether employers
will need to revise their compensation packages,
corporate structures or divest affiliates – these types
of decisions take time and planning to accomplish.
Reflections
-3-
EServing
UCLID MANAGERS
the independent agent since 1976
®
A Legislative Review Service by Euclid Managers
June 2010
Reflections
A service publication for brokers from
Euclid Managers®, proudly representing
UnitedHealthcare of Illinois, Delta Dental of Illinois,
MetLife and HumanaOne.
EUCLID MANAGERS
®
Serving the independent agent since 1976
Visit us online www.euclidmanagers.com.
Editor: Pamela D. Mitroff
Legislative Review is published by Euclid Managers®, 234 Spring Lake Drive., Itasca, IL 60143. For more information, contact your Marketing Representative or Marcy Graefen
at (630) 238-2915 or fax your request to (630) 773-8790. Outside Chicagoland: (800) 345-7868, Fax (877) 444-2250. © Permission to quote with credit to source.
Health Care Reform - Broker "To-Do" List
to Assist Clients
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EServing
UCLID MANAGERS
the independent agent since 1976
®