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Key Employee Benefit Decisions

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• The single most important decision.• RFP for broker, not product.• Products are a commodity.

The Selection of an Employee Benefit Broker/Advisor

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• Informs and educates.• Brings options and advice.• A support team that you get to know. 90% of your time will

be spent with them.• Learn compensation up front on every plan and service.• Compliance guidance.• A formal planning process.• Innovation – insurers are not creative.• Technology – billing, enrollment, changes, claims analysis.• Proactive – schedule meetings for the year.• If you ever question their objectivity, advice or knowledge,

you have the wrong firm.

Your Advisor - Things to Expect & Measure

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• Discussion of goals, objectives (HR & Financial).• Gather data, reports, renewals, policies.• Develop RFPs – current & modified plans.• Review before sending to insurers, TPAs.• Analysis of proposals received and finalist selection.• Negotiations on rates, services, performance guarantees.• Final selection & implementation schedule.• Communication, education & enrollment processes.• Review policies, admin agreements, SPDs, billings.• Establish monthly/quarterly meetings on claims, services &

planning.

The Benefit Planning Process

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• Insured – Life, LTD, Medical• Partial self-funded – Medical• Self-funded – STD, Vision, Dental

Understand Alternate Funding

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• HR – no time, no budget, no experience, no staff.

• Multifunctional – printed, call center, website, meetings (in priority order).

• Budget $50/ee (1/2 % of $10,000).• Must instruct employee on how to make

proper selection – core vs. secondary.• Core – Medical, Disability, Death,

Retirement.

Employee Education & Communication

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Who is the Financial Planner for 85% of your Employees?

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• Employee retention• Tax savings• Increased use of services (financial

assistance)

Why offer a Dental Plan?

Evaluating Dental Plans – What You Need to Know.

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Question: What’s covered, how often, at what age and for how much?

Current Plan Designs

What Does the Plan Pay?Procedure Design ActualPreventive 100% 81%Corrective 80% 58%Restorative 50% 36%Orthodontic 50% 26%Percentage of dental costs paid:•Average of all fees to insurers 53%•Patients pay 47%

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• Plan design• Funding• Statistical data and analysis• Customer service

Key Elements to Evaluate

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• Average expenses per person/year $420• Average claim cost per person $240• Number of claims per person 1.6• Number of claims per employee 3.2• Percentage of reimbursement– Traditional 45-55%– Reimbursement 50-65%

• Cost of administration 6-18%• Broker compensation ?• PPO savings 7%+

Composite Metrics on Dental Plans

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• 30% of employers change plans every year. Why?

• Insurers swap policyholders every year. Why?

• Are insurers willing to pay for more expensive procedures that produce the best long term outcomes?

Plan Persistency

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Utilization of Dental Care(Actuarial Studies of MARACON Services – Dental Expenses Incurred/Individual/Year)

•49% of all people spent $225/yr or less •65% of all people spent $550/yr or less•74% of all people spent $1,000/yr or less

$ 0$ 1-225$ 226-550$ 551-1,000$ 1,001-1,750$ 1,751+

Expenses % of People35%14%16% 9%15%11%

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38% of people see the dentist twice/yr 27% of people see the dentist once /yr 35% of people do not visit the dentist in a year

Utilization of Dental Care(Actuarial Studies of MARACON Services – Dental Expenses Incurred/Individual/Year)

Average/Person/Year

Dental $455 $245 54% Bills Claims Paid Percentage

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• “Dollar based, tax favored, reimbursement accounts”

• Family-based, not individual accounts• Suppose these had been created before

the advent of “dental insurance”. Result?

What do these Three Things have in Common?FSA, HRA, HSA

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1. Plan reimburses 65% of all expenses2. Plan reimburses 100% of $200 and

50% of excess3. Plan reimburses 80% after $150

deductible.

• Maximums $500 to $2,500 per individual, $1,500 to $6,000 per family

Three Designs - Dollar Based Dental Reimbursement Accounts

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• Insured• Self Funded• Self Funded with Stop Loss Insurance

Plan Funding - Any Plan Design

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• When losses are unpredictable, large and not budgetable.

• Does this apply to dental? How about vision or STD plans?

• Cost of Insuring a dental plan:– Premium - $1.50/ee/month– State Tax - $1.00/ee/month– Claims Reserves – 10% of annual claims– Insurers keep 8% of excess premiums they bill. Not

needed for claims or administration.

When to Insure - Insurance 101

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For every person in the room, your teeth and their needs are different than anyone else’s. The frequency, age and procedures that are the best for your neighbor are different than the ones best for you. Make certain that your dental plan has the flexibility to meet each person’s specific needs.

Different People, Different Teeth, Different Needs

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Base the decision on how your premium dollars are being used. Analysis of plan performance.

Do Not Change Dental Plans Based on Premiums or Networks

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• This is a free service to any employer. We have not seen a benefit advisor recommend or offer this type of analysis.

The Virginia Dental Association can assist you in your analysis

of your plan

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Questions

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End of Presentation

Thank You for Your Time!