New Small Group Prospect Thinks Will Save, Need Other Benefits to Convince

Discussion in 'Employee Benefits Forum' started by yorkriver1, Apr 26, 2017.

  1. yorkriver1
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    yorkriver1 Well-Known Member

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    My heart sank a bit when the owner of the tax prep office in my friend circle asked me to come and set up group insurance now that there are enough employees on staff. The owner spoke of spending $350/month for health insurance, which is actually a pretty good deal. All workers + owner are paid under payroll. Saving money for the owner isn't going to happen in the pure dollar to dollar sense. I think we are talking about a super small group, 3-5 employees.

    I am thinking of what list of benefits a group coverage program will provide the owner. Employee security and loyalty is one, now that ACA's future is so uncertain. The employer gets tax breaks, but it's still an expense. The owner can get better coverage in terms of wider networks and out of state treatment options under good PPO networks.

    Since the employer is a tax pro I will suggest an HSA compatible plan as one option.

    Your thoughts?
     
  2. scagnt83
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    scagnt83 Well-Known Member

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    The benefit to the Owner is greatly increasing employee retention. A white collar business with no benefits to offer, is at a serious competitive disadvantage when recruiting.

    The only tax benefit is that Premiums the business pays are tax-deductible.

    HSAs are popular with CPAs. I would certainly go that route.


    You arent going to "talk them into it". Either the owner sees the value or they dont. But whatever they do.... it will be a hell of a lot more than $350 a month... sounds like they have a Short Term Plan right now.... or they are 25 years old... or they are deducting everything and getting premium credits.
     
  3. kgmom219
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    kgmom219 Well-Known Member

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    CRITICAL...

    make sure he understands the family glitch. Telling people with a family that make $15/hour that they no longer get free health insurance because they aren't subsidy eligible can really become an issue for small business owners. (If they are all over subsidy line, it won't matter, but bring it up anyway)

    Also:

    1. Offer 2 or 3 plans, one of which is an HSA (Even with 5 ee's). Show how he can pay for the lowest cost plan at 50% of the ee rate. Do not use the carrier HSA. Go direct with hsabank.com. Stupid suggestion, but it works: Have a 2 or 3 page spreadsheet, but still print the quotes. Let them see the 400 pages of paper you have to understand to get them to the actual quote/benefits. For the 1st meeting, it impresses them everytime.
    2. Do voluntary dental with whatever health carrier you choose (just make sure you explain the participation guidelines, so he understands the rules)
    3. Do company paid life (employees love it and the reality is that if he doesn't and someone dies without life insurance, the family will look to him for funeral costs. Its stupid cheap)
    4. If he is married, MAKE SURE the wife is happy. If the wife isn't happy with the plan/benefits, its going to be your fault at 7am, when she is bitching. Then you will get a crappy phone call on the way to work, after he got chewed out. (I'm not kidding) If its an HSA, specifically ask if the wife understands the benefit how to use the debit card. If he has kids and isn't going to pre-fund the account so she doesn't have to pay full price when the kids are sick and screaming, you are going to have a problem.

    Hope this helps! Good luck!
     
  4. junkman
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    junkman Well-Known Member

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    In many states dental premiums will cost less than actually paying for 2 cleanings and x-rays. Run all of the employee paid premiums through a 125 POP.

    Accountants understand "incremental analysis". Looking at only out of pocket, have the lowest premium plan on the table (BCBST used to nave $5,000 100% which I loved). Show a lower OOP that exactly matches the structure of the lowest premium plan (say $3,000 OOP). Then, show the same plan with owner deductible and copays. Most people will take the highest OOP.

    Note any underwriting requirements and waiting periods for any plans you present in the environment on the day you are enrolling. Rules are in flux (in case you haven't noticed). Don't answer "yes" if the question is limited to 5 yrs and the incident happened 5 yrs and a day ago.

    Note that the owner's premiums may or may not be deductible as a business expense. Any entity filing a Schedule C doesn't get the full deduction that a corporation does. He should know this as a CPA but you should also as an agent.
     
  5. yorkriver1
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    yorkriver1 Well-Known Member

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    Great info! Expecting the census later this week. Stopped by and chatted briefly, apparently none have tax credits. Now, the question is, do we age rate or composite. Will discuss with owner, who will have to pay 50% of employee cost, either way.
    What do you all do with super small groups? My last one had EE's not too far apart in age, so I did composite. Group of 5.
     
  6. kgmom219
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    kgmom219 Well-Known Member

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    I always explain the difference and give the owner the choice.
     
  7. scagnt83
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    scagnt83 Well-Known Member

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    I dont think SCblues will allow composite rates on a group that small, will they? Are they young? Are they healthy? There are some interesting bundled solutions out there these days for a self-funded small group.
     
  8. kgmom219
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    kgmom219 Well-Known Member

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    This is his and his clients first rodeo with group.

    I vote NO on self funding at this time.
     
  9. scagnt83
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    scagnt83 Well-Known Member

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    Good point. I thought he has placed groups before.
     
  10. junkman
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    junkman Well-Known Member

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    Self funding works great ....................until a claim gets processed late and stop loss runs out and client gets bill dropped on his desk.

    A $5,000 HDHP is like a fully insured self funded with a $5,000 spec. 90% of insureds have claims under $5k. No telling what happens with a 50 life group.

    The client can buy the deductible down for employees by using an HRA. All employee premiums should go through a 125 plan. Offer everything ....dental, vision, cancer etc. If you don't, someone else will. Ancillary products are worth as much to the agent as the group. You do not want competing agents messing around with your clients.

    Everyone either elects or declines coverage. No exceptions.
     
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