Stephenson Welsh Insurance Services

If you’re terminated from your job or otherwise lose your employment, you automatically become eligible for COBRA coverage. But it’s not given to you. You have to elect it, and then you’re responsible for its hefty premiums. You also have a deadline for electing coverage and cannot miss a payment without running the risk of plan termination. COBRA also only lasts a set amount of time, so it’s important individuals are looking down the road to their post-COBRA coverage decisions.

Most people also don’t realize that if their former company goes out of business, COBRA coverage will die with it. If there’s no plan, there’s no COBRA. That also means if all the employees under a plan leave or are laid off, that plan—and its associated COBRA benefits—can be terminated.

And then what do you do?

Well, you’ve got to go find your own insurance. And people scramble—especially those with preexisting conditions. They’re all wondering, “How do I secure health insurance for my family?

The reality is people who are considered “uninsurable” by carriers don’t have many options. They either need to find a new job with group coverage or start their own business. (A business owner with at least two employees can secure a guaranteed-issue group plan). Unfortunately, a lot of people are otherwise uninsurable in a market that has only gotten more difficult. Carrier underwriters are extremely picky right now in terms of whom they’ll insure for individual/family coverage.

The most important thing for people in any of these scenarios to know is there are affordable options out there. People just aren’t aware how to find them … or if they’re eligible … or where to look. They should be getting help from their broker to do so—and to discuss all the options and strategies available to someone in their specific situation.

People should also be sure to use their broker for regular reviews of their individual plan to make sure it’s still the best option (with realistic premium levels) for current circumstances. When individual/family plan premiums skyrocket, a lot of times that person is eligible for a free transfer to a more affordable plan under the same carrier. Importantly, that switch can be made without having to again go through the underwriting process. Carriers just aren’t always quick to volunteer that information.

These are all issues and questions that a broker can answer in minutes, as opposed to the hours or days that it may take someone to call customer service lines and do research on their own. There are ways to secure coverage or lower premiums, but people need the help of a good broker to know how.

Brian Stephenson COBRA, Health care plans affordable alternatives, broker's role, COBRA, small business groups, underwriting process

Right now thousands of people are losing their jobs because of the rough economic conditions, and one thing that comes with that is the loss of health insurance.

With so many people out of work, a big question out there is: How do I secure affordable health care?

Quality health care plans are out there, but it’s an extremely difficult process to navigate on your own. The truth is it’s not easy to secure insurance right now in the individual/family (non-employee) market. You almost have to be in perfect health because of underwriting.

Any application has to be underwritten, which means carriers have the right of refusal. It’s up to the carrier do decide if it wants to take on the “risk” of insuring you. If you have any preexisting conditions, the chances are very slim a major carrier will take you on.

The bright side is if you are healthy (as an individual or a family), there are a lot of great, affordable plans out there, including a lot of the same plans you enjoyed under employee group coverage.

As a broker, I find a lot of people paying around $1,500 a month for family coverage who aren’t aware of vastly more affordable alternatives. This is often because they don’t have a broker for their non-employee coverage. They went direct—went online and picked a plan on their own. Now, they’re paying $1,500/month, for example, for coverage they rarely use when they could be on a high-deductible plan and paying around $500/month. They could be saving $1,000 every month in some cases and still have an excellent health care plan.

There are some really affordable plans out there right now. We recently put a healthy 18-year-old female in a plan that was only $70 a month. It’s a nice plan with great preventative care features. It has a high deductible, but she’s not going to pay a lot of money up front.

But unfortunately, there are so many people out there with the same healthy profile and circumstances who are paying far more (or have no insurance at all) because they’re unaware of their options and really need some help.

The issue is that often people simply aren’t aware that they can have a broker representing them for individual/family coverage without it costing them a penny. The carrier pays the broker in full, so there’s no disincentive whatsoever to having the expertise of a broker guiding you through the process of securing individual/family insurance. And even if someone has an existing plan, they can still assign a broker (just like with an employee group) to that plan without having to switch to something else.

It costs you nothing to work with an insurance broker. It doesn’t impact your rates in any way, so you should absolutely have and leverage a broker as your partner in your health care decisions.

This process can be so difficult to figure out on your own—especially now. There are so many plans out there and so many decisions to make. If you didn’t know where to look as an individual, you could search for days trying to understand what all the plans mean and what’s the best fit for you.

Some plan names and terminology can be misleading; you could think you’re going to be covered only to find out that what you bought on your own wasn’t what you thought it was. And terribly, most people find that out when in the hospital or submitting a big claim—when they have much more important things to focus on.

A broker can help you navigate your way through the approval process, find the right plan for you and your family and understand the benefits of that plan. Families can save money every month with the right plan, and in this economy the savings go a long way.

It’s just all about understanding what’s out there and what it takes to get covered when insurance isn’t guaranteed-issue. It’s not the friendliest market out there right now for individual/family coverage, but with a little help you can still end up in a great insurance situation.

Brian Stephenson Health care plans affordable alternatives, broker's role, economic conditions, individual/family coverage, underwriting process

The most frequently talked-about reason for switching to a high-deductible health care plan is the premium savings. But there is also another element to these high-deductible plans that’s highly desirable: rich, useful and comprehensive preventive care benefits.

These services are covered at 100 percent and plan deductibles and HSA dollars don’t apply. So long as you go to an in-network provider and stay within the allowed frequency (some services are annual, etc.), these exceptional benefits are totally free.

Well-baby and well-child preventive care includes vision, hearing and lead exposure screenings as well as a host of free immunizations.

Adult preventive care includes vision, hearing and routine blood and urine screenings. But it also includes “less obvious” free services such as cholesterol and lipid level screenings, blood glucose tests for detecting diabetes, prostate cancer screenings, HIV tests, bone density scans and colonoscopies. There are also breast exams, mammography screenings, pelvic exams, pap tests and contraceptive management for females.

Just always be sure to check in with your doctor first so that you get the coverage to which you’re entitled. Call ahead, give the office your insurance information and ask if the services that interest you are covered in full at that time.

When you schedule a routine office visit, that’s a great opportunity to request additional preventive care services covered under your plan. Just always confirm that those benefits fall under your free preventive care.

Preventive Care Services: What’s In It for Them?

So, why are all of the major carriers offering all these no-charge preventive services with their high-deductible plans? Because they’re counting on these services keeping people healthier and detecting health issues before they become costly catastrophic problems down the road. A healthier America for them translates into fewer insurance claims. A healthier America for you means less time ultimately receiving medical care and a better-conditioned body to live the life you want.

These preventive care services are recommended by everyone from the American Cancer Society to the U.S. Preventive Services Task Force, but people aren’t utilizing these benefits nearly as much as you’d think.

On one hand, that’s because people aren’t used to services of this breadth and scope being truly 100 percent covered. They expect copays and deductibles and other charges to apply, so they stay away unless it’s absolutely medically necessary.

On the other hand, many people simply aren’t aware they’re entitled to these free preventive services with a high-deductible plan or aren’t clear enough about their benefits to feel confident using them.

We picked up a new client the other day that had super-rich preventive benefits as part of their existing plan, but they had no idea so much was covered for free because their last broker didn’t do any reviews with them. They had fantastic insurance but nobody in the group knew how to utilize it or when they could use it.

That’s why the role of the insurance broker is such a critical part of the process. A good broker is a good partner—reviewing or reminding clients about plan benefits and informing employees exactly how to best utilize their plan.

The goal is that hopefully you’re healthy and you don’t need to use you plan services very often, but when something comes up, you need to know what benefits you’re entitled to. It’s the broker’s role to keep people up to speed on how to best take advantage of their insurance.

Whether it’s on a quarterly, semi-annual or annual basis, our role as brokers is to continuously review with groups what benefits they have. That can be a quick highlight summary or a lunch-and-learn refresher meeting. Reeducating groups on little things such as plan usage plays a big role and goes a long way … and you’d be surprised how many people don’t realize or completely forgot what rich benefits are included and free with their insurance plan.

The more the broker can stay in front of people, the easier it is for those individuals to ask questions and find a comfort level. That’s our job as brokers: to be as available and proactive as is necessary to make sure people understand their benefits. And quite frankly, that’s a lost art in this business.

Remember that with employee benefits, the key word is “benefit.” Don’t hesitate to take advantage of what’s included in your plan.

Brian Stephenson Health care plans broker's role, effective communicaton, high-deductible health plans, HSA-compatible plans, Preventive care

Changing plans or cutting programs can be treacherous territory for an employer. Workers can react automatically with a “change is bad” mentality—especially if it looks like something is being taken away. This can happen even when the benefits of the new approach are seemingly clear (because it pushes people outside their comfort zone).

Meanwhile, competing companies in the same situation succeed in making the same changes without a hitch. But how?

There’s one essential difference between damaging employee morale and sailing smooth into a more affordable health care scenario: effective communication.

As insurance brokers, we see it as our job to help companies successfully communicate the rationale behind changes. Employees need to understand why changes are happening, what it means for them and how they can get the most out of their new plan or situation.

Sometimes that means sitting down with workers one-on-one to go through the reasons why a change makes sense and answering questions about what comes next. That’s okay. We’re happy to do that because we know how crucial it is to a fruitful transition for all involved.

Recently a client made a group change to a high-deductible, HSA-compatible health care plan. We went to their offices in Portland, Seattle and San Francisco to talk to the affected employees face-to-face. After the initial talks and presentations, only two employees out of 50 still objected to the switch. We listened, answered questions and explained benefits. Once those two fully understood how their new plan worked (that they were still in a rich PPO with the same carrier and vastly improved preventative care), even those two people warmed up.

It’s all about the quality of communication.

But if that’s all it takes, why doesn’t it happen more? Honestly, it’s because quality communication takes time. A broker can’t do it with an e-mail blast or ditto sheet. There’s substantial energy involved, and not all brokers are willing to make the commitment.

So if you’re making changes, be sure your broker is going to be willing to put in the necessary effort to make sure your employees “get it.”

Brian Stephenson Ancillary benefits, Health care plans effective communicaton, high-deductible health plans, HSA-compatible plans, plan strategies

In a recent post, we talked about strategies for scaling back benefits when a rough economy forces reductions. This time, we’re going focus on how to find affordable alternatives for employees when a program must be cut entirely.

There are three different paths a thoughtful employer can go down in order to save the necessary money while still putting its employees in the best possible position: The company can make a previously funded product voluntary. The company can switch to an HSA-compatible plan that is capable of compensating for the loss of ancillary benefits. Or, the company can replace a product with a different, less expensive one (e.g. cutting dental but adding or boosting life insurance).

Let’s take a look at the options one at a time:

Making Products Voluntary

There’s an essential difference between dropping a program completely and keeping it on a voluntary basis (where if the employee really wants it, he or she can pay for 100 percent of it). Many families feel more secure with life or disability insurance and will keep that benefit alive … if given the opportunity. And allowing employees to “opt in” means they’ll pay pennies on the dollar through the group rate rather than paying top dollar on the open market.

Before, the company paid for the benefit. Now, the employee will need to have $6 or $7 taken out of their paycheck to keep the benefit in place. But at least it’s still in place. Some workers would never otherwise be able to afford that product, while others might not have an option at all. If an employee has an existing condition, life insurance at the current coverage level might be an impossibility.

In many cases an employee could keep a life and disability product on a voluntary basis for less than $10 a month. It’s a huge benefit to the employee to have the option open, and the employer has been able to save the money.

No employee wants to hear that a financial burden will fall to them. But that’s nothing compared to the reaction to having a safety net completely yanked and learning they’ll have to take their chances on the open market.

The HSA-Compatible Approach

Ancillary products are extremely valuable to employees and help companies attract and retain talent. Still, employers will cut out those programs when financially against the wall. Medical, however, is always critical. That company is most likely never going to do away with its medical plan. And certain medical plans can help pick up the slack when other products are cut.

The old standard for a company offering is medical-dental-vision. But you don’t need dental and vision if you’ve got a good HSA-compatible plan. You can use tax-free dollars to pay for dental and vision costs and save the premium dollars.

We recently ran an analysis on a 20-employee group and found that not one person used the dental insurance in-network in the past year. The company was paying     $15,000 on an annual basis for this top-notch dental plan, but nobody was really using it!

One option in such a situation is to phase out the dental plan and take that cost savings and put $500 tax-free dollars into each employee’s HSA account to pay for dental out-of-pocket expenses. (They were paying for it out-of-pocket anyway since they weren’t using their in-network coverage).

When a company must cut costs and programs, having an HSA plan in place will at least give employees have a tax-free way to fund their out-of-pocket dental and vision expenses.

Giving While Taking Away

Let’s say a company is offering a medical and dental plan, but it’s struggling to make ends meet. That employer could cut dental while switching to a high-deductible, HSA-compatible plan (described above) and add an inexpensive life or disability product.

In this case, the employer could say, “Everyone, we unfortunately have to eliminate the dental plan, but in return we’re going to put a $25,000 life plan in place.”

For the employer, this could result in paying approximately $85/month per employee down to $4.75/month (because a life product is so affordable). And yet that company is still offering something to the employee. It’s more than just an olive branch; it’s a tangible, valuable benefit.

Any of the approaches described above could result in thousands of dollars in annual savings. That’s potentially enough to keep an employee from being fired during budget cuts. Our job as brokers during an economic downturn is to craft the best possible cost-saving strategy for our clients—and many of those approaches can save employee benefits (or even employee jobs).

Brian Stephenson Ancillary benefits, Health care plans affordable alternatives, HSA-compatible plans, plan strategies, premium savings, voluntary products

The American Recovery and Reinvestment Act (the Act) was signed into law by President Obama on February 17, 2009. The Act has wide-reaching ramifications, and we want to make sure you’re aware of the latest developments affecting health insurance.

The Act includes a subsidy for COBRA premiums for a period up to nine months for certain employees that were involuntarily relieved from their job from September 1, 2008, through December 31, 2009.

The COBRA subsidy covers 65 percent of the applicable COBRA premium, initially covered by the employer or the insurer and recouped through payroll tax credits. The remaining 35 percent will be the responsibility of the qualified beneficiary.

The COBRA subsidy becomes effective March 1, 2009. It imposes new COBRA administration and notice requirements on plan sponsors, in addition to those involved with the reimbursement process.

Download this PDF developed by one of our partners for more detailed information. The PDF is intended to provide initial guidance to plan sponsors. It is for informational purposes only and is not intended to interpret laws or regulations or to address specific client situations. The document will be revised as additional information becomes available from insurance carriers and government entities.

There are still many questions surrounding the Act and just how many of the elements will work. For those using Stephenson Welsh Insurance Services, we will continue to stay on top of all the latest developments associated with insurance coverages. We will keep you informed about any changes that might affect you and proactively bring to you any opportunities we see emerging.

The next update will likely come sometime after the U.S. Department of Labor report on this topic on March 19.

If you have any questions or need immediate attention, please call us toll-free (1-866-514-0144) or send us an e-mail.

To the best of our knowledge, based on available resources, the attached piece has been prepared with the intention of providing initial guidance to plan sponsors via the broker. It is for informational purposes only and is not intended to interpret laws or regulations or to address specific client situations. The information contained within may also change or be added to with new issuances by government agencies and/or insurance carriers. By redistributing this piece, Stephenson Welsh Insurance Services is released from all liability.

Brian Stephenson ARRA, COBRA COBRA, insurance services, latest developments, Obama Administration, Recovery Act

In tough economic times, sometimes annual reviews reveal a pressing need for benefit cuts. When companies are forced to scale back the benefits employees enjoy, ancillary products are always the first to be affected. It’s in dental or disability or life insurance that employers first look to make reductions. And in just about every case, there’s a deep concern that “taking anything away” from employees will be perceived as a harsh negative that can have widespread ramifications.

Our job as brokers is to help groups figure out where they save money—while still keeping employees satisfied.

Sometimes it’s as simple as doing a review and switching carriers to get a better rate. Sometimes, it’s changing contribution amounts to be able to keep the benefit. The reality is there are a number of things a broker can do to help a company not lose an ancillary benefit entirely even when facing severe budget restrictions.

A lot of it just comes down to strategy.

It comes down to having a good relationship with your broker where you can sit down and truly be honest about the situation. That can be a tough conversation for people to have—to admit it’s a tight time where they need to save money. But those are the conversations you need to be able to have with your broker. That’s because there’s not just one or two options a broker can give you. There are a whole slew of things that can be looked at to improve the situation without eliminating benefits. If the benefit can be saved, it will continue to be an employee retention tool.

A great example is with dental benefits. As a broker, we can run usage model analyses for groups. With the information we obtain, we can find alternatives that don’t disrupt employee benefits while still saving the employer money.

Perhaps a group has a $2,000 annual maximum on its dental plan, but nobody is using more than a thousand dollars. So, we reduce that down and there’s a cost savings. But that reduction has zero negative impact on employees because no one was using that second thousand anyway.

It’s rare to find a scenario without multiple solutions. The unfortunate truth is many brokers just don’t have the incentive to find those answers, while others haven’t adapted to the times and aren’t aware of them. It takes a lot of effort to really talk with a client, do a thorough review and research other carriers. Many brokers would rather keep things status quo rather than look out for a client’s best interests by being more aggressive and forthcoming.

The problem in the small group space is clients are not getting the attention from their broker that they should, in most cases. They’re just a file in the drawer. When renewal comes up, they get their token letter or e-mail, but there’s no outreach. There’s no push for something else—something better or more appropriate—because either the broker hasn’t stayed up with current trends or is only reactive (instead of proactive). Often it’s in the client’s best interest to make changes, but regrettably in the small group space often that client isn’t aware of what the options are.

No employer wants to go back to its employees and say, “We’re cutting benefits.” It’s hard to do. But when it’s essential to make cuts to important programs, your broker should be engaged and helpful in keeping benefits as rich as possible.

Brian Stephenson Ancillary benefits Ancillary benefits, cost savings, finding solutions, happy employees, partnership

A lot of people worry that if they switch to a high-deductible health plan to save some money, they’ll end up with lousy insurance. It doesn’t have to be that way. Today’s HSA-compatible (high-deductible) plans aren’t the least bit scary; they’re just different … and cash-strapped employers can save up to 60 percent in reduced premium costs.

High-deductible, HSA-compatible health care plans are normal PPO plans. There’s no gatekeeper, and it’s not an HMO where you’re locked into certain doctors or services of the carrier’s choosing. In fact, these plans are actually relatively rich in benefits.

High-deductible health plans are typically thought of as catastrophic prevention plans that won’t help much in the day-to-day. But the current high-deductible health care plans include a wealth of free preventative services that are covered at 100 percent (regardless of your deductible status). You’re also covered at 100 percent after you hit your deductible. Services of such quality are designed to incentivize people to switch. But what’s nice is the model becomes a win-win (for you and the carrier): With more preventative services, carriers are banking on fewer claims and healthier people. Meanwhile, employers get dramatic cost reductions while retaining benefits—and their employees.

Regardless of whether you use your medical insurance a lot or a little, high-deductible health plans can be a great option because your exposure is capped. You know exactly how much your worst-case scenario is going to be on an annual basis.

People pay huge premiums for rich, low-copay plans. But if you’re not going to the doctor, you’re giving the carrier all your money up front for the coziness of having $10 or $20 copays for purely theoretical doctor visits. The truth is that when expenses are broken down, often these low-copay plans end up having a higher out-of-pocket cost to you than the higher-deductible health plans (because of an inefficient usage model).

Your bill might be a little higher up front if you use your high-deductible health plan. But the nice thing is you know where you stand going into every year. You know you have a maximum exposure that is usually lower than a rich copay plan’s potential exposure. And the cost savings are so dramatically different that I would rather save up front than pay through the nose for a low copay that I don’t ever use.

I’m not just saying that. My wife and I switched our family to a high-deductible, HSA-compatible plan. We chose the lowest of these higher-deductible options and we’re still saving $600 a month in premiums. We also know we have a certain maximum exposure and that we’re 100 percent covered after hitting our individual and/or family deductible. I personally love the plan. And in Stephenson Welsh Insurance Services’ most dramatic case, we saved a small business (eight employees) $52,000 initially in premiums. The business then fully funded each employee’s deductible amount (put that money into their individual HSA accounts), so the employees effectively had a zero deductible and 100 percent coverage. After all that, the business still saw a $34,000 savings by switching to a high-deductible plan.

For those totally unfamiliar with HSA plans, it’s a health savings account, which is a portable medical IRA in your name (and tied to your normal health insurance). You can use it to pay for your medically eligible expenses in a manner that’s not subject to federal income taxes. It’s not “use it or lose it.” Funds roll over and accumulate if not spent during the year. In fact, you have a lot of flexibility, including leveraging it to pay for services such as acupuncture, chiropractic, dental and vision.

If any of this is beginning to sound overwhelming (or simply intriguing and worthwhile), we’re here to help. As an insurance broker, we’ll do a free benefits review and free cost analysis to find the right health plan with the right strategy. High deductibles may not be for everybody. And some others want the most-possible savings by going with a high-deductible plan at $4,000 or $5,000 (as opposed to $1,500).

In all honesty, not all brokers are pushing high-deductible plans. That’s because if you lower your premiums, it lowers the broker’s commissions. But it’s the right thing to do by the client. And ultimately if the client is happy, they’ll refer us to others. By having a delighted client, it benefits us in the long run, too.

For more information or a free consultation, please call us at (925) 256-7800 or send us an e-mail.

Brian Stephenson Health care plans cost savings, high-deductible health plans, HSA-compatible plans, premium savings, preventative services