The Selection of an Employee Benefit Broker/Advisor • The single most important decision. • RFP for broker, not product. • Products are a commodity.
Your Advisor - Things to Expect & Measure • 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.
The Benefit Planning Process • 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.
Understand Alternate Funding • Insured – Life, LTD, Medical • Partial self-funded – Medical • Self-funded – STD, Vision, Dental
Employee Education & Communication • 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.
Evaluating Dental Plans – What You Need to Know. • Employee retention • Tax savings • Increased use of services (financial assistance) Why offer a Dental Plan?
What Does the Plan Pay? Current Plan Designs Question: What’s covered, how often, at what age and for how much? Procedure Design Actual Preventive 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%
Key Elements to Evaluate • Plan design • Funding • Statistical data and analysis • Customer service
Composite Metrics on Dental Plans • 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%+
Plan Persistency • 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?
Utilization of Dental Care(Actuarial Studies of MARACON Services – Dental Expenses Incurred/Individual/Year) Expenses % of People 35% 14% 16% 9% 15% 11% • 0 • 1-225 • 226-550 • 551-1,000 • 1,001-1,750 • 1,751+ • 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
Utilization of Dental Care(Actuarial Studies of MARACON Services – Dental Expenses Incurred/Individual/Year) Bills Claims Paid Percentage • 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 Dental $455 $245 54% Average/Person/Year
What do these Three Things have in Common? • “Dollar based, tax favored, reimbursement accounts” • Family-based, not individual accounts • Suppose these had been created before the advent of “dental insurance”. Result? FSA, HRA, HSA
Three Designs - Dollar Based Dental Reimbursement Accounts • Plan reimburses 65% of all expenses • Plan reimburses 100% of $200 and 50% of excess • Plan reimburses 80% after $150 deductible. • Maximums $500 to $2,500 per individual, $1,500 to $6,000 per family
Plan Funding - Any Plan Design • Insured • Self Funded • Self Funded with Stop Loss Insurance
When to Insure - Insurance 101 • 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.
Different People, Different Teeth, Different Needs 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.
Do Not Change Dental Plans Based on Premiums or Networks Base the decision on how your premium dollars are being used. Analysis of plan performance.
The Virginia Dental Association can assist you in your analysis of your plan • This is a free service to any employer. We have not seen a benefit advisor recommend or offer this type of analysis.