My fringe benefit marketing firm focuses on employers who have 10 to 100 employees. A marketing strategy that has worked effectively in recent years is to improve the value of the non-health insurance offerings, because the health insurance product has become a commodity in plan design and pricing (a broker's expertise cannot affect the plan design features or the price tag).
In addition to demonstrating to the decision maker the improvement in value on the non-health insurance offerings, we offer a disciplined approach to service that includes the following:
o A welcome letter.
o A 90-day follow up letter.
o A mid-year evaluation letter that requests the employer's comments on the carrier's performance and my firm's performance.
o Quarterly service calls to all employers.
o A renewal announcement letter 90 days in advance of the anniversary.
o A renewal planning meeting 60 days in advance of the anniversary.
My involvement with two study groups and membership in United Benefit Advisors has given me the opportunity to observe the expertise and services offered to large employers. My firm now offers the following value-added services to the 10 to 100 size group market:
o COBRA administration.
o Online enrollment assistance.
o Web-based employee communication of benefits.
o Flexible spending account administration.
o ERISA attorney on retainer.
o HIPAA guidance / Compliance expertise.
o Section 105 plan / HRA / HSA administration.
o Self-funded dental plan administration.
o Fringe benefit statement.
o A specialist / consultant for:
-Group disability insurance
-Human resource issues
-Qualified plans (401k, etc.), and
-Long-term care.
It is very important to have a detailed fact finder session. Using my fact finder, I usually can identify 10 to 12 areas of improvement or fine-tuning for the prospective employer. The fine-tuning usually results in finding the dollars to add or upgrade the short-term disability, long-term disability, and dental plans.
To improve the value of the non-health insurance offering, I offer:
Group Life: I use a voluntary-only platform on which the employer pays for the cost of the first $20,000 (or so) on all participants using step rates vs. composite rates. This results in lower premiums to participants who buy up an additional $10,000 to $30,000 of coverage. And it uses pretax dollars. Improved guarantee issue is available for spousal coverage. There is portability (not convertibility) on the total amount purchased. Finally, the cost to the employer is similar or lower because of corporate Social Security savings than the traditional composite premium design. The bottom line is a 25% to 40% improvement in value.
Short Term Disability: I have the employer pay for a $100 a week benefit on all participants and allow interested employees to buy up to a 60% benefit. Instead of the buy-up premiums going to the insurance carrier, they go into an employer-owned reserve fund, and those monies pay for the difference in benefit between the $100 a week insured amount and the total 60% amount. A specific legal document makes this concept work. This offers good value to the employer and great value to the participant who buys up.
Long-Term Disability: I use found monies (from the fact finder) to upgrade existing group long-term disability policies, which can limit offsets that result from contractual wording and make disability benefits non-taxable. Distributions from defined benefit pension plans and K-1 earnings usually offset the group disability insurance benefit. The bottom line is that this can produce a 20% to 50% larger claim check for a disabled employee.
Dental: I offer a self-funded dental plan (dollar-based plan design) where there is freedom of choice of dentist. The retention is paid by a $15 withholding from the claim check paid to the provider. This is instead of having the retention included in the monthly premium (fully insured dental plan). The plan design uses a $10 co-pay instead of the usual $50 deductible. The bottom line is that it produces a 30% improvement in value.
A Section 105 Plan: This newly developed expansion of the dollar-based dental plan (which now covers dental, vision, and medical expenses) has allowed employers and employees to save $1,000 to $2,000 a year per employee on the health insurance offerings by combining dental plan monies and savings on high deductible health plans. And benefits to participants improve!
All of the above concepts and products have improved my marketing results (profits) and provided me the satisfaction (passion) of knowing my firm is improving value to many thousands of participants.
John R. Stoner, CLU, MSFS, is the president of the John Stoner Organization, Inc., an independent employee benefits firm. A professional benefits adviser, John is also president of the Consumer Directed Benefit Association and a member of the United Benefit Advisors. He is a life and qualifying member of the Million Dollar Round Table and a member of the Florida West Coast Employer Benefits Council. This article is a summary of the presentation he gave at the Society of Financial Service Professionals' annual Financial Service Forum.
