Voluntary Benefits
Mainstream Market
Voluntary Supplemental Benefits
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Insurance Community University
Sponsored and Presented By:
Presented by:
Mike McCarey
President of Essential Benefits
Insurance Services
Our Singular Mission is to: “
Educate & Deliver Colonial Life
Supplemental Benefits to Employees in a
style and process that creates an excellent
employee experience.”
Insurance Community University
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Class Description
• By the end of this class you will understand:
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the viability of the VB marketplace
the buyers knowledge of “mainstream” VB plans
the trends in the VB marketplace
the pro’s & con’s of VB to employers, employees & brokers
the use of Bridge plans combined with major medical to
control premium expenses
the various VB delivery methods to employees
why Benefit’s Education is vital to not only a successful VB
program, but to “every” benefits program
why you need to be growing your revenue stream with VB
why you need to be involved with VB to protect your client
relationships
Insurance Community University
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Legislation Affecting Flexible
Benefits
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Employee Retirement Income Security Act of 1974 (ERISA)
Section 79: Group Term Life Insurance.
Section 125: Cafeteria Plans.
Section 129: Dependent Care Flexible Spending Accounts.
Publication 969: HSAs, HRAs, and Health FSAs
Social Security
State Disability Plans
Privacy Laws and Regulations
Insurance Community University
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Every day, you and your
competitor can walk through your
customers door
Insurance Community University
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Current Situation
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The brokers world looks a little different these days:
– Reduced commissions
– Health Care Reform
– Tough Economy
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Brokers are looking for ways to increase revenue
Employers are starting to hire again
– But Health Care plan premiums are continuing to rise
– Employers are looking to Brokers for help
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Voluntary Supplemental Benefits are a powerful solution
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Brokers primary business has been major medical
It’s not a new industry
Gives many choices to the employer
Gives many choices to the employee
There are many choices of VB carriers
Insurance Community University
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Current Situation
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LIMRA Study, August 2011 – “30% of US employers(10 or more) said
they are considering adding new voluntary options within the next 2
years.”
“Currently, 57% of US employers offer voluntary benefits and the rate
rises quickly as employer size increases.”
“Cancer, Life Insurance and Short Term Disability are the most
commonly offered voluntary benefits”
“Almost 1/3rd of all employers are considering offering new voluntary
benefits to replace existing employer-paid and contributory benefits. This
affects between 19 and 45 million employees in the next 2 years.”
Insurance Community University
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Current Situation
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LIMRA Study, August 2011 - “The compounding health care premium
increases over the last several years have forced many firms to reexamine their benefit offerings and shift costs to their employees.”
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Colonial Life survey, Sept. 2011, 750 HR Managers – “Virtually all
employers (99.6%) in the survey agreed their employees need guidance
to make sound benefits decisions and education to help their workers
understand changes in their benefits program.”
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“Bonnie Brazzell, VP at Eastbridge Consulting Group, Inc., said,
“However, changes have taken place in the last several years – benefit
plans have gotten more expensive and companies are increasingly costsharing with employees – so we see more brokers fully incorporating
voluntary benefits into their business model and proactively cross-selling
these offerings.”
Insurance Community University
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Timing is Right for VB to Grow
Insurance Community University
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Timing is Right for VB to Grow
Insurance Community University
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Timing is Right for VB to Grow
Insurance Community University
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Timing is Right for VB to Grow
“51% of brokers expect to make changes in the VB products they sell
because of Health Care Reform. More than half expect to sell additional
accident, critical illness, short term disability, cancer and term life VB
benefits.” – Eastbidge Consulting, Oct. 2010
Insurance Community University
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Typical Benefit Plan Offerings
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Major Medical Plan
– HMO, PPO, HSA, HRA’s, FSA’s, High Deductible Health Plan (HDHP),
Mini-Med Plans, Self Funded & Fully Insured
– Various methods of funding, premium splits & co-insurance
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Dental & Vision Plans
– Employer Paid or Employee Paid Voluntary Plans
– Discount Cards
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Flexible Spending Accounts (FSA’s)
– Health Care, Dependent Care, Transportation, Non-Employer Sponsored
Premiums
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Short and/or Long Term Disability Income Protection Plans
– Employer paid or Employee Paid Voluntary Plans
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Employer Paid Life
– Term Life, max $50k to avoid IRS issues, usually at $10k to $25k level
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Section 125 Pre-Taxing of Premiums
Insurance Community University
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Additional Benefits
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Long Term Care
Employee Credit Unions
Gym Memberships
401k or 403b Retirement Plans
Safety Awards
Service Awards
Vacation
Holidays
Sick Days
Leaves of Absence
Uniform Program
Holiday Parties, Movie & Sports Event Tickets
Insurance Community University
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Mainstream VB Plans
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Accident & Sickness Disability Insurance
Specified Disease Insurance
Hospital Confinement Indemnity Insurance
Voluntary Life Insurance
Supplemental Dental & Vision Insurance
Also known as:
• Short Term Disability
• Accident Insurance
• Cancer Insurance
• Critical Illness Insurance (heart attack, stroke, renal failure, blindness,
paralysis, coma)
• Hospital Indemnity Insurance
• Term Life, Universal Life, Whole Life Insurance
Insurance Community University
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Mainstream VB Plans
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The Mainstream VB plans are:
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Individually Owned
Paid for by the employee
Portable
Guaranteed Renewable
Usually do not have price increases
Usually do not have minimum participation requirements
Some VB plans are Group plans
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Master policy held by the employer
May or may not be portable or convertible to individual ownership
More likely to have price increases
More likely to have minimum participation requirements
Insurance Community University
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Compare Two Employers
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Without VB
Major Medical
Dental
Vision
Employer Paid Life
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Insurance Community University
With VB
Major Medical
Dental
Vision
Employer Paid Life
Short Term Disability
Accident Insurance
Cancer Insurance
Critical Illness Insurance
Hospital Indemnity Insurance
Term Life, Universal Life,
Whole Life Insurance
Flexible Spending Account
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Questions
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Which employer is more attractive to current employees?
– Why?
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Which employer is more attractive to prospective employees?
– Why?
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Which employer has a lower overall turnover rate?
– Why?
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Which employer has a more expensive benefit plan offering?
– Why?
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In which employer would you expect to see greater levels of
measureable levels of accuracy?
– Why?
Insurance Community University
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Positive Influence on
Key Drivers of Satisfaction
Employees who
receive
quality benefits
education report
greater
satisfaction.1
Highly engaged
employees are
26%
more productive2
1 Unum, “Employee Education and Enrollment Survey,” January 2009.
2 Watson Wyatt, “2008/2009 WorkUSA Report,” 2009.
Insurance Community University
Employee Benefits Choices
Can Add Value
Unum, “Employee Education and Enrollment Survey,” January 2009.
Insurance Community University
Who is the Buyer for VB?
Top 5% Wage
Earners
Middle Wage
Earners
Lower Wage
Earners
Opportunity!!! Give VB to un-benefitted employees
Unum, “Employee Education and Enrollment Survey,” January 2009.
Insurance Community University
Benefit
Eligible
Benefit
Eligible
Part Timers
– Not
Benefit
Eligible
VB Plan Carriers (partial list)
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Colonial Life
Aflac
ING
Unum
Hartford
Lincoln
Worksite Benefits
Humana
Assurant
Cigna
Conseco
Jefferson Pilot
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Insurance Community University
Transamerica
SSI
Chimente
Boston Mutual
Combined Insurance
American Fidelity
American General
Reliance Standard
Allstate
Trustmark
Safeco
Provident Life
More….
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How Do Employees
Make Choices?
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Different Carriers have different methods of enrollment
Different Brokers employ different styles of enrollment processes
Different Employers have differing requirements year-to-year that
must be considered
Available methods are:
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One-on-One Benefit Meetings
Group Meetings
Co-Browsing
Telephone
Self Service
Printed Materials
Intranet HR Benefits Websites
Census Enrollment
There are many choices; What is the magic elixir?
Insurance Community University
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Employees Don’t Understand
64%
*Watson Wyatt, “Many Workers Struggle with Basic Healthcare Terms,” July, 2007.
Insurance Community University
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Benefit Communications
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Question
– Give employees a list, prices and a product description of the available VB
plans and have them self enroll.
What should you expect as employee participation?
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Question
– Have employees attend a Group Meeting to receive an overview of the
available plans then go back to work. Then have a flow of employees back
to a VB Benefit Counselor to sit one-on-one to talk privately, ask
questions, receive exact premium costs for employee spouse and
dependents.
What should you expect as employee participation?
Insurance Community University
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Benefit Communications: By The Numbers
Companies Providing
Above-Average
Benefits
Companies Providing
Below-Average
Benefits
Health Care
Health Care
WITH Effective
Communication
83.6%
76.2%
WITHOUT
Effective
Communication
25.7%
22.1%
Watson Wyatt WorkUSA 2004/2005 Study
Education Meetings 1st Year Only
Education Meetings Every 3rd Year
Education Meetings Every Year
Find the Right Partner
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Personal benefits counseling increases participation
A majority of brokers (55%) agree that 1-on-1 benefit counseling
sessions are very effective, but only 17% currently us them as a primary
way to enroll employees.
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Benefit Communications
•
Question
– Give employees a list, prices and a product description of the available VB
plans and have them self enroll.
What should you expect as employee participation?
•
Question
– Have employees attend a Group Meeting to receive an overview of the
available plans then go back to work. Then have a flow of employees back
to a VB Benefit Counselor to sit one-on-one to talk privately, ask
questions, receive exact premium costs for employee spouse and
dependents.
What should you expect as employee participation?
Insurance Community University
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- Employee Group Meeting Mainstream Supplemental
Benefits
*Watson Wyatt, “Many Workers Struggle with Basic Healthcare Terms,” July, 2007.
Insurance Community University
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How much does
an employee
usually spend?
Benefit Counselors
A Well-Informed Yes
is just as valuable as
A Well-Informed No
Colonial Provides Choice
Different People
Different Ages
Different Life Styles
Just Different
Different Needs
Who Pays What?
o Approx 2/3 of medical expenses are covered by
most major medical plans
o 1/3 of expenses are out of pocket.
Deductibles
Co-insurance
Lost Wages
Over the counter medications
Traveling expenses
Who helps you pay your co-pays and
deductible payments?
How do VB Plans Work?
Helps pay Employee
Out-of-Pocket Costs
Expenses
Covered by
Medical
Insurance
Employee
Out of
Pocket
Expenses
• Co-Pays
• Deductibles
• Over-the-Counter
• Non-Medical
• Lost Wages
Colonial Life
The Advantage of Colonial Life
plans:
Most plans pay in addition to other benefits
you may have with other insurance
companies
Benefits are paid directly to you, unless you
specify otherwise
With most plans, you can keep your coverage
even if you change jobs or retire
Most plans are guaranteed renewable
Prompt and courteous customer service
Colonial Life
Short-Term Disability
Accident
Cancer
Critical Illness
Hospital Confinement Indemnity
Universal Life
Term Life
Whole Life
Policies have exclusions and limitations that may affect benefits payable.
All plans may not be available in all states and benefits provided may also vary by state.
www.coloniallife.com
Disability Insurance
95%
6 Month
Benefit Period
Up to 40% of
Income
7 day
14 day
30 day
12 Month
Benefit Period
Up to 40% of
Income
Lost Income
55%
State Disability
55% of Income
To $1011/week
24 Month
Benefit Period
Up to 40% of
Income
Social Security
95% of Disabilities do not happen at work
70% of first time applicants are denied
Time Line
7 days
12 Months
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
24 Months
Disability Insurance – with LTD
100%
95%
6 Month
Benefit Period
Up to 35% of
Income
7 day
14 day
30 day
12 Month
Benefit Period
Up to 35% of
Income
Lost Income
24 Month
Benefit Period
Up to 35% of
Income
60%
55%
Long Term Disability
State Disability
55% of Income
To $1011/week
(90 Day Waiting Period)
Social Security?
Time Line
7 days
12 Months
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
24 Months
Disability Insurance – No SDI
Lost Income
66 2/3%
7 day
14 day
6 Month
Benefit Period
Up to 66% of
Income
12 Month
Benefit Period
Up to 66% of
Income
24 Month
Benefit Period
Up to 66% of
Income
30 day
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Disability Insurance - Standards
You are paid regardless of any other insurance you may
have with another insurance company
World wide coverage
Portable
Benefits are paid directly to you
Waiver of premium
Guaranteed renewable to age 70
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Accident Insurance
Accident 1.0 Insurance
FRACTURES & DISLOCATION
Broken Leg
Dislocated Shoulder
Dislocated Ankle
Broken Hip
Broken Finger or Toe
Broken Shoulder
$825 / $1,650
$330 / $660
$880 / 1,760
$1,650 / 3,300
$110 / 220
$385 / 770
ACCIDENTAL DEATH
Employee
Spouse
Child
$25,000
$25,000
$5,000
HOSPITAL SERVICES
Ambulance/ Air
Emergency Room
Hospital Admission
Hospitalization
Intensive Care
Medical Imaging
Lodging
Rehabilitation Unit
$200/ $2,000
$125
$1,000
$225 per day
$450 per day
$150
$125 per night
$100 per day
CATASTROPHIC ACCIDENT
Employee
Spouse
Child
$25,000
$25,000
$25,000
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Accident Insurance - Options
Disability rider for employee and or spouse
6,12 or 24 month benefit periods
0/7, 7/7, 0/14, 14/14, 0/30, 30/30 waiting periods
Off job coverage of $400 up to 40% of monthly gross income
On job coverage of $400 up to 20% of monthly income
Health Screening Rider
Pap smear = $50 (1 x yr)
Mammogram = $50 (see plan description)
1 of 14 tests = $50 (1 x yr)
Sickness Hospital Confinement Rider
Pays $100 a day for a covered sickness
Pays benefits for up to 30 days
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Cancer Insurance
Cancer Insurance
1 in 3 Americans will be treated for cancer
In the U.S. Men have a 1 in 2 life time risk of developing cancer, and for women the
risk is 1 in 3
The five-year relative survival rate for screening accessible cancers is
about 85%
If all Americans participated in regular cancer screenings, the relative survival rate
would increase
$2 of every $3 dollars spent is Not Covered
Cancer treatment is very expensive. Not all the costs are medical expenses and
covered by medical insurance, and there are indirect or hidden costs.
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Cancer Insurance
Direct Costs
Most Major Medical
Plans Cover 38%
Hospital charges
Surgeon fees
Physician fees
Indirect Cost
You Pay 62%
Loss of wages or salary
Deductibles or coinsurance
Medical and drug costs
Travel expenses to and
from treatment centers
Radiological fees
Lodging and meals
Nursing costs
Child care
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Cancer Insurance
Initial Diagnosis of Internal Cancer (rider)
This benefit pays a lump sum for the initial diagnosis of internal cancer
that occurs after the waiting period.
$ 5,000
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Cancer Insurance
Level 3 Sample Benefits
Inpatient Benefits
$300 per day Hospital Confinement
$150 per day full time nursing services
Treatment Benefits
$300 per day for radiation/chemotherapy injected by medical personnel
$10,000 bone marrow stem cell transplant
Transportation/Lodging Benefits
$75 per day for lodging
Surgical Procedures
Up to 5,000 per procedure
Up to $3,000 for reconstructive
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Cancer Insurance
Health Screening Benefit / Incentive
Pap Smear = $70 annually
Mammogram = $100 annually ( see plan description)
1 of 15 additional cancer screenings = $25 ~ $125 annually (2 x family)
Thin Prep Pap Test
Colonoscopy
CA 125 Blood Test for Ovarian
Cancer
Virtual Colonoscopy
Breast Ultrasound
CA 15-3 Blood test for breast cancer
PSA Test
Chest X-Ray
Biopsy of Skin Lesion
Hemocult Stool Analysis
Flexible Sigmoidoscopy
CEA Blood test for colon cancer
Bone Marrow Aspiration/Biopsy
Thermography
Serum Protein Electrophoresis Blood
test for Myeloma
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Cancer Insurance - Standards
No increase in premiums
No cancellation after you beat Cancer
Kicks in again if you have a recurrence
No age bands and not smoker rated
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Critical Illness Insurance
Critical Illness Insurance
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With Colonials Life’s Specific Critical Illness Insurance,
you’re paid a benefit that can help you cover:
o Deductibles, co-pays and co-insurance of your health insurance
o Home health care needs and household modifications
o Travel expenses to and from treatment centers
o Lost income
o Rehabilitation
o Child care expenses
o Everyday living expenses
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Critical Illness Insurance
o You choose the benefit amount
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Employee $5,000 to $75,000 in increments of $1,000
Spouse $5,000 to $40,000 in increments of $1,000
Family Plan:
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Employee chooses $5,000 to $75,000 in increments of $1,000
Spouse receives 50% of face amount
Child receives 25% of face amount
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Critical Illness Insurance
Health Screening
Covered Specified Critical Illness
For this illness…
We will pay this percentage
of the face amount
Heart Attack (Myocardial Infarction)
100%
Stroke
100%
Major Organ Failure
100%
End Stage Renal (Kidney) Failure
100%
Permanent Paralysis due to a covered accident
100%
Coma
100%
Blindness
100%
Coronary Artery Bypass Graft Surgery
25%
The Maximum Benefit Amount for this policy is 100% of the face amount for each covered person. We will not pay more than 100% of the face
amount for all Specific Critical Illnesses combined. The policy will terminate when the Maximum Benefit Amount for Specific Critical
Illnesses has been paid. Please see the definitions, exclusions and other details in the Outline of Coverage. CI-1.0-O-CA
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Critical Illness Insurance
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Health Screening Benefit
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Cervical Cancer Screening Test = $70 annually per covered person
Mammogram = $200 annually (see plan description)
1 of 21 additional cancer screenings = $50 annually per covered person
Stress Test on bicycle or treadmill
Breast Ultrasound
Fasting Blood Glucose
CA 15-3 blood test for breast cancer
Blood Test for Triglycerides
CA125 Blood Test for Ovarian cancer
Serum Cholesterol
CEA blood test for colon cancer
Bone Marrow Test
Chest x-ray
Carotid Doppler
Colonoscopy
EKG & ECG
Flexible Sigmoidoscopy
Echocardiogram
Hemocult Stool Analysis
Skin Cancer Biopsy
PSA Test
Serum Protein Electrophoresis
Thermography
Virtual Colonoscopy
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Hospital Confinement Insurance
Hospital Confinement Insurance
As major medical plans move toward larger deductibles
and higher co-payments, you may be left with more gaps to fill.
Colonial Life and Accident Insurance Company’s Hospital Confinement Indemnity
insurance plan can help you fill those gaps and help protect against those out –
of-pocket expenses that occur when it comes to you and your family members
health care
More than six in ten adults who report problems paying medical bills are covered
by health insurance (USA Today April 25, 2005)
Based on a typical 2006 PPO plan design, the typical American family of four
would pay $2,210 out of their own pocket through member cost sharing (Medical Index
2006, June 30)
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Hospital Confinement Insurance
Plan 2
Hospital Confinement Benefit
Choice 1 $ 1,000
Choice 2 $ 1,500
Outpatient Surgical Procedure Benefit
Tier 1 $ 1,000
Tier 2 $ 1,500
Rehabilitation Unit Benefit
$100 per day up to 15 days per confinement. (see plan description)
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Hospital Confinement Insurance
Plan 4
Hospital Confinement Benefit
Choice 1 $500
Choice 2 $1,000
Outpatient Surgical Procedure Benefit
Tier 1 $500
Tier 2 $1,000
Doctor Office Visit
$25 per visit. (3 x yr for single plan and 5 x yr for family)
Rehabilitation Unit Benefit
$100 per day up to 15 days per confinement. (see plan description)
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Hospital Confinement Insurance
Wellness Benefits
Health Screening Benefit / Incentive
Pap Smear = $70 annually
Mammogram = $150 annually ( see plan description)
1 of 14 additional cancer screenings = $50 annually (2 x family)
Stress Test on bicycle or treadmill
Breast Ultrasound
Fasting Blood Glucose
CA 15-3 blood test for breast cancer
Blood Test for Triglycerides
CA125 Blood Test for Ovarian cancer
Serum Cholesterol
CEA blood test for colon cancer
Serum Protein Electrophoresis
Chest x-ray
PSA Test
Colonoscopy or Flexible Sigmoidoscopy
Virtual Colonoscopy
Hemocult Stool Analysis
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Life Insurance
Life Insurance
Facial Response to the Purchase Price of
Life Insurance Over Time
Today
…time passes
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Life Insurance
You have 3 options
Universal Life
Permanent Life Insurance
Builds Cash Value
Whole Life
Permanent Life Insurance
Builds Cash Value
Liberal Medical Underwriting Guidelines
Term Life
Available in 10, 20 or 30 year periods
Does NOT build cash value
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Life Insurance
Why do I need Life Insurance? Ask Yourself…..
Will my family be able to meet immediate expenses
such as:
Funeral Costs
Outstanding medical bills
Will they have enough money to…..
Maintain their current life style
Make the Mortgage payments
Provide for the Children’s education
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Section 125 Cafeteria Plan Saves Taxes for All
After Tax Plan
$1,000 Taxable Gross Income
250 Taxes
750 After Taxes
Flex dollars or
100 Insurance premiums
$650 Net Spendable
Pre-Tax Plan
$1,000 Taxable Gross Income
Flex dollars or
100 Insurance Premiums
900 New Taxable Income
225 Taxes
$675 Net Spendable
Employee’s can save 15% - 45% of employee-paid benefits!
Section 125 Cafeteria Plan Saves Taxes for All
Governed by the IRS
Allows you to pre-tax qualified premiums such as medical,
dental, disability, cancer, vision, FSA’s etc.
No cost to you to use this plan
Certain regulations apply: Changes can only be made at reenrollment time each year unless there is a family status
change: marriage, divorce, birth or adoption; death of spouse
or child; or spouse changes employment.
Benefit
Statements
Benefit
Counselors will
review the
Benefit Statement
Line-by-line with
the employee
www.coloniallife.com
Enrollment Software
+ 1,057.69
+ 836.36
www.coloniallife.com
- Employee Group Meeting for Flexible Spending Accounts
*Watson Wyatt, “Many Workers Struggle with Basic Healthcare Terms,” July, 2007.
Insurance Community University
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Flexible Spending Accounts
What if you could buy
your prescription and
OTC drugs at a
discount(if prescribed
by a doctor?)
Flexible Spending Accounts
What if you could
pay for dependent
care tax free?
Flexible Spending Accounts
Health Care Flexible Spending Account
You can use this money to be reimbursed for eligible
medical expenses not covered by your major medical
insurance plan
• Prescriptions and over-the-counter medications
prescribed by a Doctor
• Deductibles, co-insurance and co-payments
• Eyeglasses, contact lenses or LASIK
• Dental and orthodontia expenses
Effective with next years, 1/1/2011 HCR rules
disallow over-the-counter meds as reimbursable
items unless prescribed by a Doctor.
Flexible Spending Accounts
Non-Employer Sponsored Premiums
You can use pay major medical plan premiums,
currently paid from your home checkbook(after-tax),
COBRA included, by running the premiums through
your FSA account.
Flexible Spending Accounts
List of typical eligible medical expenses
Acupuncture
Alcoholism
Ambulance hire
Artificial limbs/teeth
Birth control pills
Birth prevention surgery
Braces
Braille - books and magazines
Care for handicapped child
Chiropractors
Christian Science fees
Co-insurance
Communication equipment/deaf
Contact lenses and cleaning solution
Crutches
Deductibles
Dental fees
Dentures
Diagnostic fees
Drug and medical supplies
Education for the blind
Eyeglasses, including exam fee
Healing service fee
Hearing devices and batteries
Home improvements motivated by
medical consideration
Hospital bills/hospitalization insurance
Insulin
Laboratory fees
Lasik Eye Surgery
Lead base paint removal for
children with lead poisoning
Membership fee in association
with furnishing medical services,
hospitalization and clinical care
Needed medical supplies, prescribed
by doctor
Nurses’ fees
Obstetrical expenses
Operations
Orthodontia
Orthopedic shoes
Osteopaths
Flexible Spending Accounts
List of typical eligible medical expenses (continued)
Oxygen
Prescribed medicines (including
over-the-counter)
Psychiatric care
Psychologist fees
Routine physicals and other
non-diagnostic services and treatments
“Seeing Eye” dog and its upkeep
Sterilization fees
Stop Smoking Programs
Surgical fees
Therapeutic care for drug/alcohol addiction
Therapy treatments
Transportation expenses
Transportation expenses primarily for
rendition of medical services
Tuition at special school for handicapped
Wheelchair
Wigs (prescribed by a physician)
X-rays
Flexible Spending Accounts
Dependent Care Flexible Spending Account
This is a valuable benefit that allows you to pay for day
care to take care of your children or elderly parents
while you work
For qualifying dependents that are:
Under the age of 13
Are mentally or physically incapable of self-care,
spend at least 8 hours per day in your home
For work-related dependent care expenses and are
primarily for the care of the qualifying person
Child care
Elder care
Before and after school care
Care for the disabled dependents
Flexible Spending Accounts
Eligible Providers
Child Care Centers (if more than 6 children, state
and local regulations must be met)
Elder Care Services
In-Home Providers
Care providers must report the income!!!
Flexible Spending Accounts
Transportation Reimbursement
Transit Passes for mass transit – Max $230/mo
Commuter vehicles (must have seating for 6 or
more) – Max $230/mo, in conjunction with Transit
Passes above. Not a separate benefit.
Qualified parking – Max $230/mo
You may change your elections at any time.
Flexible Spending Accounts – How they work
Monthly Deposit
from your
paycheck
Open your
Get Fully
Reimbursed Account at
Tax Savings
FSA
Work
Fill out
Reimbursement
Claim Form
Use Debit Card to
Receive Medical or
Day Care Service
OR
Flexible Spending Accounts
The IRS Rule: “Use it or Lose it” (only set aside
50% if you are a first year user, or 70% if you are a veteran)
HSA PARTICIPANTS HAVE SPECIAL RULES FOR FSA USE
Annual Maximum Health Care FSA is $2,500
Annual Maximum Dependent Care FSA is $5,000
Run Out Period is 90 days
Sit with your Benefits Counselor to review the worksheets &
establish proper amount to set aside
Decisions are fixed for plan year unless you have a qualifying event
Go to www.tasconline.com for support, history & planning
Enjoy the Tax Savings!!!
TASC Mobile Tools
Managing Benefits in the Go!
MyTASC Mobile App
Free download from Apple® and
Android Market™ for smart
phones and tablets
Secure login with MyTASC
username and password
Check real-time account balance
Request a Reimbursement wizard
Submit substantiation (use embedded camera
to capture receipt or form)
Screen images are simulated
Flexible Spending Accounts
Your Plan Year is 6/1 thru 5/30 annually.
That is a 12 month plan year. Do the math accordingly!!!
There is no special network of providers.
The FSA Debit Card is a “smart card.” It is accepted at medical
providers that display the MasterCard logo.
Small pharmacies may not be in the network. If this happens, call
TASC and ask for assistance with that pharmacy.
You will be sent one debit card. You can request a second card at no
charge.
Replacement cards are $10.
Your card can be used for Dependent Care expenses.
Your election forms for FSA are due to HR by _______.
“DONE”
Polling Question
• Can employee FSA payroll deductions can be
managed inside an employers payroll system
with a TPA (Third Party Administrator)?
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IRS Incentives for
Employers and Employees
•
Employee and employer cost savings are created from:
– Section 125: Cafeteria Plans.
– Section 129: Dependent Care Flexible Spending Account
•
•
•
•
•
•
Savings allow the employee to afford more benefits
Savings allow the employer to pay for benefits & services
Savings help pay for an internal administrative resource to reconcile the
premium payments for VB and to reconcile FSA withholdings
distributions to a Third Party Administrator (TPA)
These benefits pay for themselves!
S Corps, LLC’s and Sole Proprietorships – owners cannot pre-tax
premiums for themselves, spouses or 5%+ owners, but their employees
are encouraged to pre-tax and save payroll taxes
Section 125 also creates Worker’s Comp Premium Cost savings for the
employer
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Other Financial Incentives
for Employers
•
•
•
Lower Worker’s Comp premiums through reduced claims (can vary
state-by-state depending upon the level of SDI and Worker’s Comp
available to the employee)
Drives down the experience mod over time
Occurs because of the higher disability benefits available
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Disability Insurance – California
The Monday Morning Effect
Workers
Comp
State
Disability
%
66 2/3 %
55%
Disability
0%
40%
Total Income
Level
66 2/3 %
95%
Product underwritten by Colonial Life & Accident Insurance Company.
Policies have exclusions and limitations that may affect benefits payable.
Other Financial Incentives
for Employers
100 Life Case
EMPLOYER SAVINGS
With FSA
FICA Savings from Flexible
Spending Accounts
FICA Savings
Premium Only Plan - No Charge
Total Savings for Employer
Without FSA
$1,035
$
-
$2,495
$2,495
$
-
$ 150
$3,530
$2,645
$6,804
$6,804
$6,075
$
$12,879
$6,804
$16,409
$9,449
EMPLOYEE SAVINGS
Employee VB Plan Savings
Employee FSA Plan Savings
Total Savings for Employees
Total Combined Savings
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Medical Bridge Plans Create New
Savings Opportunities
•
•
•
•
•
•
•
•
Major medical plan premium costs are rising every year
Health Care Reform did not bring lower plan costs
Employers are seeking relief and looking to brokers
Bridge Plan are becoming more popular and help fill gaps left by rising
deductible plans
There are many different plan designs from several carriers
First-dollar coverage is not necessarily the best plan because these plan
designs promote more experience for the major medical plan
Indemnity plans appear to be the best choice
Simplicity and breadth of options appear to be the key
–
–
–
–
Easy implementation
Easy for employees to understand
Easy for employees to use
Simple claims process
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Employers respond to rising costs
Absorb rate
increase at
renewal
Direct impact to
employer’s
bottom line
Shift more
contributions to
employees
Shift more
contribution to
Employee
Direct impact to
employee’s
pocket book
Re-design plan
and introduce
HDHP solutions
Increase in
employee’s
exposure to
health care costs
Employers respond to rising costs
Current
Health
Plan
New Health
Plan
Employee
out-ofpocket
costs
Employer faces
saves higher
moneyplan
with
new plan
costs
at renewal
design with current
design
•plan
Higher
annual deductible
• Higher co-insurance amounts
Employees face more costs
Expenses covered by
health plan
1
• 2X increase in employees covered
by plan with a $1,000+ deductible1
• 60% of Americans do not have
funds to cover unexpected costs2
Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2010.
National consumer study, Financial Industry Regulatory Authority Investor Education
Foundation in consultation with the U.S. Department of Treasury and President’s Advisory
Council on Financial Literacy, 2009.
2
The Medical BridgeSM opportunity
A solution for employers and their employees
Out-ofpocket
costs
Medical
Bridge
solution
Expenses
covered
byby
Expenses
covered
health
insurance
health
insurance
1
• Employer saves money by
redesigning the health plan
• Employees receive benefits to
help pay out-of-pocket costs
from a hospital confinement or
other covered health care event
•
Pays lump-sum benefits
directly to employees
•
Benefits for Hospital
Confinement, out-patient
surgery, diagnostic tests and
wellness visits may also be
available1
Plan design and benefits vary by state. See state specific plan information for availability
in each state.
The Medical BridgeSM opportunity
Year 1
Health Plan
Year 2
Health Plan
Current
Health Plan
Annual Deductible
$500
$500
$500
Coinsurance
80/20
80/20
80/20
EE Cost
$132
$151
$177
ER Cost
$395
$454
$532
Total Cost
$527
$605
$708
% Increase
-
15%
17%
Total health care cost increased by more than 30%!
Based on actual Colonial Life case.
The Medical BridgeSM opportunity
Current Plan
Proposed Health Plan
Annual Deductible
$500
$1,500
Coinsurance
80/20
70/30
EE Cost
$177
$154
ER Cost
$532
$461
Total Cost
$708
$615
% Increase
+17%
(13%)
Add Colonial
Life’s Hospital
Confinement
Indemnity Plan
MB3000
GMB 1.0
• Premiums have decreased; however, employees are
now faced with more out-of-pocket exposure.
• Solution…
The Medical BridgeSM opportunity
Proposed Health Plan
Annual Deductible
$1,500
Co-insurance
70/30
Total Health Cost
$615 (ER Savings
$72 X 100
is $532
Employees
- $461 == $72/EE/Month)
$7,200/month)
Plus GMB 1.0 Plan 2 with Health Screening*
Hospital Confinement
$1,000
Outpatient Surgery
Option 1 ($500 Tier 1, $1,000 Tier 2, $1,500 CY Max)
Health Screening + Pap Smear + Mammography = $320/yr
$7,200
$17.47
-X
$1,747
100 Employees
= $5,453/month
= $1,747/month
total
savings
EE
Discounted
Composite
Rate
=
$17.47/month
GMB 1.0 Premium
Employer can use savings to purchase GMB1.0 100%
for the employees.**
*Plan options and benefits vary by state, and product may not be available in all
states. Ask your Colonial Life contact for the plan options available in your state.
**Employers who pay 100% of the premium for any Colonial Life product may not
be eligible for certain complimentary employer services offered by Colonial Life.
Case Results #1
Benefit Eligible Lives
109
2010 Plan Premiums
$358,000
2011 Plan Renewal
$390,000
New 2011 Plan (higher
deductible)
$285,000
Colonial GMB Plan Cost
$35,000
New 2011 Plan Premiums
$320,000
Net Savings to Employer
$70,000
GMB Premium Split
100% Employer Paid
Annual
Rates
Case Results #2
Benefit Eligible Lives
20
2010 Plan Premiums
$78,874
2011 Plan Renewal
$91,714
New 2011 Plan (higher
deductible)
$77,280
Colonial GMB Plan Cost
$5,500
New 2011 Plan Premiums
$82,780
Net Savings to Employer
$8,934
GMB Premium Split
75% Employer Paid
Annual
Rates
A solution that works
in today’s marketplace
Indemnity-based plans
•
•
•
•
Indemnity benefits — what you see is what you get.
Doesn’t coordinate with major medical or affect utilization.
Rapid claims payment.
Rate stability — less susceptible to trends.
These are NOT “expense-based” plans
• Sometimes called gap or wrap plans.
• Coordinate with core health insurance.
• Reliant on claims adjudication process
before payment is made.
Process Steps
5 P’s – Planning Prevents Panic &
Precedes Perfection
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Learn
Pre-Enrollment Communications
Orientation
Make Choices
Group Meetings
Individual
Enrollment
Methods
1-on-1
Meeting
Telephonic
& Paper
CoBrowsing
Processing
Servers
Data
Return
Other
Employer
Carriers
Insurance Community University
Planning & Communication are
Essential to a Successful Program
Insurance Community University
Recap
•
•
•
•
•
•
•
•
The Marketplace “has been” ready for VB
Advantages of having VB in the plan design vs not having them
It’s important to “properly educate and communicate” VB benefits
You now understand the mainstream VB plans are and how they work
The advantages of Section 125 pre-taxing of premiums
Employers can save money on Worker’s Comp premiums
Medical Bridge plans can help save BIG on major medical premiums
Questions
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Key Advantages to Employers
•
Better management of their benefit costs
–
•
Lower payroll taxes
–
•
As an added bonus, offering voluntary benefits that qualify for pre-taxing can lower
payroll taxes with each enrolled employee.
Time and money savings
–
•
Employers can offer lower-priced, high-deductible health plans and provide
voluntary insurance to help cover the higher deductibles.
Implementing a comprehensive benefits communication and enrollment program
can help HR departments preserve precious time and budget resources.
Employee satisfaction
–
–
–
Offering voluntary benefits also provides a great incentive for workers to stay with
their employers.
Employees can receive more benefits with no direct cost to the employer.
By providing VB, the employer is helping employees protect their health, savings
and everything they’ve worked so hard to achieve.
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Employers need benefits to drive
business recovery
•
•
•
•
Benefits is a vital business strategy for attracting and retaining quality
workers
Even after companies have recovered the competitiveness for quality
employees will continue
Robust & cost-effective benefit plans will continue to feed corporate
strategies for maintaining a healthy company
This means “Opportunity” for Brokers
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The Benefits Reality Gap
•
•
It takes education – Brokers educating their Clients about the gap and
available solutions.
It takes education – Someone has to educate the employees – the
proper choice of VB carrier will have Benefit Counselors equipped to
handle this for you and your client.
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Key Advantages to Brokers
•
A reliable new revenue stream
–
•
Stronger relationships with group benefit clients
–
–
–
–
•
About 40% percent of employees will purchase a VB product when enrollment
included one-to-one meetings. Each employee in an account could potentially
represent $60 or more in commissions; more with bonuses and renewals.
Brokers can provide their clients with a way to enhance theirr existing benefits
package at little or no cost while helping meet their employees’ needs.
Brokers can bring more value-added services at no additional cost.
This helps position the broker as a full benefits provider, which means clients won’t
have to look elsewhere to meet their needs.
Keep our your competition!!!
Quick ramp up without additional overhead
–
–
Brokers don’t have to become experts in VB or invest in any additional overhead if
they partner with an experienced voluntary benefits carrier.
A full-service VB carrier, for example, has proven enrollment systems and benefits
communications processes in place.
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Developing a VB Practice is Easier
Than Brokers Think
Insurance Community University
111
Find the Right Partner
•
•
•
Employees say 1-on-1 meetings are important
Picking the right partner is VITAL
Look for Certified & Trained Benefit Counselors measured for
persistency; not sales
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Find the Right Partner
•
Ask for References and call them
–
•
Use Local Benefit Counselors – not imported salespeople
–
–
–
–
–
•
•
•
•
See what the VB agent’s customers say
Better long-term strategy with lower expenses
Builds a relationship with the local facility and employees
Builds trust
Builds in accountability for the Benefit Counselor
Contributes to long term relationships
Are other brokers satisfied with the carrier & responsible agent?
What does their planning look like?
What does their after-the-sale service look like?
What does their billing process look like?
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Some Great Advice
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Wrap-Up
•
•
•
•
•
•
Plan Year
Short Plan Year
Best Open Enrollment is with Core Benefits
POP Plans & FSA SPD’s
Guaranteed Issue Benefits
Employer Contributions to employee VB plans
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