VB Voice - April 2023

Editorial Board

Key Contributors

Editorial Staff

Co-Editors

Trevor Garbers

Trevor@voluntary-advantage.com

Heather Garbers

Heather@voluntary-advantage.com

For Media and Marketing Requests contact: Heather@voluntary-advantage.com and Trevor@voluntary-advantage.com

Steve Clabaugh CLU, ChFC

Mark Rosenthal PwC

Michael Stachowiak Colonial Life

Jessica DePhillips Mercer

Jack Holder EBIS

Michael Naumann Reliance Matrix

Jennifer Daniel Aflac

Seif Saghri BenefitHub

Moving from the Lunch Room to the Board Room

One area of our business that is rapidly changing is the success of your sales approach. In the past, our business was as high as 90% relationship based selling – and the other 10% may have been pure luck. That world is changing today. We are seeing groups move brokers, and brokers move blocks of business from longstanding relationships. Why is that?

People need solutions today. We have to change our way of thinking and be open to change and new ideas. If you haven’t noticed, almost everything about our business has changed within the last 10 years.

Worksite products on an individual chassis are now second to voluntary products on a group chassis.

The ancillary and medical carriers who did not care about voluntary benefits in the past, now have significant market shares

A growing portion of clients prefer an online self-service enrollment and digital resources over an onsite face-toface method

Even the employee dynamic itself has changed with remote work and the rapidly growing population of gig and part-time employees

We got out of the lunch room and moved to the board room

With the changing dynamics of our clients, we need to adapt, innovate, and bring solutions Change is hard but change can be necessary I encourage you to ask yourself (or ask your clients), what are problems that my clients and their employees face today, and how can we bring solutions to them? I met with a client that told me that they cannot add any new plans because open enrollment is cumbersome for their HR team I asked the simple question of “why”, and the response was that they have approx 200 employees who are out in the field and do not even have email, and so HR has to meet with them one-on-one to enroll them in their benefits through their benadmin

In this case, the solution to introduce a call center that can take on the legwork of open enrollment for HR, and is funded by the very voluntary benefits they wanted to offer but would have been too much work previously, solved another important need for them

By Heather Garbers

The dynamic of the workforce today includes significant portions of 1099/gig employees When we have recommended solutions for these populations of employees, every single one of them has implemented them They knew the need and wanted to provide benefits to assist with recruitment and retention, but didn’t think it was possible

Employee Perks is another area of our business that is often ignored but solves a great need for both the employer and employee What I mean by employee perks are additional benefits (that may not even have a revenue stream) but have value Discount programs, caregiving benefits, car warranty programs, student loan services, charitable giving… these are all benefits that can have a significant impact on employee wellbeing but are often avoided because they are “too much work” or “don’t drive revenue”. BUT our clients want them, and more importantly, employees find value in them, and if you aren’t including them in strategy presentations or adding them as value-add benefits to your plans, your competitors probably will.

Thinking outside of the box is what is driving the growth in our industry today. We aren’t saying that our business is no longer relationship based, people still do business with people they like, however clients want more. They want solutions and it is our job to provide them.

Leveraging AI for Next-Level Employee Perks

By Seif Saghri, CEO & Founder, BenefitHub

Employee perks are a powerful and expanding tool for companies that want to ensure successful retention and recruitment In today’s economy, perks are more important than ever, saving employees hundreds or thousands of dollars annually Over the last decade, companies have expanded their offerings from a handful of perks to hundreds, or in some cases, thousands – driven by the popularity of this benefit Perks now cover dozens of categories, ranging from travel and electronics to insurance, apparel, live event tickets, dining, fitness, family care, education and more With this vast inventory comes several challenges: employees are too busy and have too many other digital applications competing for their attention to wade through tons content and information that may not be relevant to them They also may not even know what’s available to them We often hear employees say, “I didn’t know my company even offered that”

AI can help to solve these problems It delivers highly relevant and personalized suggestions through learning employees’ purchase patterns, previous transactions, interests, demographics, and other such relevant data These large data sets are combined with intelligent, iterative processing algorithms to provide real-time, context-relevant recommendations The outcome – AI presents employees with what they want when they want it This is personalization, and if you are not personalizing, you are not effectively communicating and engaging

There are many additional benefits that can be derived from AI-driven personalization Employers can finally know what is driving performance, why stats are changing, and how to affect desired outcomes Who would have known that travel is the number one consumed perk at over 90% of US companies? AI enables complex data analysis across billions of data points to understand key behavior drivers, analyze cohorts, and deliver actionable insights The end results can be impressive, with substantially higher rates of participation, engagement (rate of return to the perks platform), consumption, and satisfaction These outcome metrics enable businesses to see what’s working and what isn’t

In year or two, it will seem inconceivable that we were not personalizing user experiences Why were we showing pet-related perks to someone who didn’t have a pet Conversely, if we knew someone had a pet, why didn’t we show them pet insurance, pet food, toys, pet care, etc?

The effects of personalization on employee benefits are clear; employers can save money, streamline the process of creating and administering packages, and build better relationships with their teams Employees benefit from having more focused perks that suit their individual needs, leading to higher job satisfaction and loyalty This heightened level of personalization is shifting the way companies are approaching their benefits programs and creating better employer-employee relationships

Pet Insurance Today

Let’s talk about pet insurance.

It seems to be the #1 requested benefit from clients today. It is one of few benefits that early 20-somethings are excited about. And according to the NAPHIA, the pet insurance industry saw 27.7% growth between 2020 and 2021.

Where does pet insurance fit into the employee benefits conversation today? Here are some facts to consider.

The cost for a dog needing a Tibial Plateau Leveling Osteotomy (TPLO) surgery to repair a torn ACL can range from $3,000 to $8,000 or more depending on the dog’s size, the location of the veterinary clinic and the surgeon’s experience.

Cataract surgery for dogs can cost between $2,500 and $4,000.

The average cost to treat feline leukemia virus is around $650-$700, but can vary depending on the size of your cat, and the stage of feline leukemia

On top of that, prices for vet services jumped 10% from 2021 to 2022, making pet insurance a financial wellness solution with growing importance

Today only 389% of dogs and 95% of cats in the US are insured With average monthly premiums for coverage for accidents and illnesses for a dog at $4866 and $2857 for a cat, many find the coverage cost prohibitive In this case, they may be foregoing care for their pet or making decisions based on the cost of care as they are unable to afford it

By Parker Garbers

This is where employer-based programs come in, today every penny counts, and the savings offered by group discounts make this coverage more affordable for consumers

We interviewed experts Barrett Prater (BP), Director Business Development, PetPartners, Inc; Amy Crane (AC), Vice President, Pet Benefit Solutions; Devyn Kettner (DK), Senior Partnership Manager, Spot Pet; and Melissa Lovely (ML), Vice President of Sales, Nationwide; for their take on the market and the future of pet insurance

What are current pet insurance trends in the marketplace?

BP - Pet insurance continues to grow year over year Not only are individual pet owners signing up for pet insurance at higher rates, but more employers are offering pet insurance as a voluntary benefit We have seen a continued increase in employers and brokers that are interested in providing pet insurance as a benefit as employers of all sizes and across all sectors are looking for more pet-friendly benefits to adapt to employees’ needs

As more pet owners recognize the benefits of having coverage for unexpected veterinary expenses, the pet insurance industry is evolving to meet the changing needs and expectations of pet owners

Over the last few years, we have seen a shift in the need for virtual vet telehealth services due to the pandemic, and now we see another shift as people return to work The cost of vet care is on the rise and pet owners are looking for ways they can cut their costs According to a study conducted by Rover in 2022, 35% of pet parents admitted to foregoing regular vet visits just to save money Also, just as the pandemic caused a surge in the need for telehealth services, we now see the importance in providing coverage for behavioral conditions as more people return to work We are seeing more pets with anxiety and aggression issues, so it is important to support pet parents with addressing problems like excessive barking or chewing or their cat’s separation anxiety

What is the next generation of pet insurance? What are unique features that are here or coming?

AC - More integration with Ben Admins – this is where employees are enrolling in their core benefits, and there’s no reason pet plans shouldn’t be there too!

DK - A top question frequently asked by pet owners is about pre-existing conditions coverage Many people don’t realize how beneficial pet insurance can be until they end up needing it, and most carriers do not cover pre-existing conditions We believe in plans that are affordable and accessible to all and believe that there is room for deeper group discounts in the marketplace to make it more appealing for a group to offer these benefits to their employees

It seems that there are new vendors entering the marketplace all of the time - what are best practices to look for when choosing a partner?

DK - When choosing a pet insurance partner, research both the pet insurance provider and pet insurance product to help ensure client satisfaction and expectations will be met Consider vendors that have great reviews and a strong, attentive online presence It’s also important to consider providers that offer plans with comprehensive benefits and coverage flexibility that can be customized to fit the unique needs of a pet When it comes to implementing and enrolling in pet insurance, the overall process should be quick, engaging, and easy to understand for everyone

BP

We see pet insurance becoming more streamlined for employers to offer to their employees – instead of multiple plans, employers are now introducing one to two options that are customized to fit the company’s demographics and needs We expect this trend to continue and for pet insurance to further align with an employer’s overall benefit package Tapping into this trend, we have begun to offer unique features that we expect to become the industry norm Including:

Enabling employees to enroll during a defined open enrollment period, where all certificates and policies renew together at the employer level. Instead of employees enrolling at different times, being able to offer pet insurance during open enrollment makes it easy for HR to track who is and isn’t enrolled.

Providing a group rate for a company. Instead of individually rating each pet, a group rate allows employers to offer one policy at the same rate, streamlining enrollment and the management of the plan.

Having the option for employers to contribute toward the plan, bringing down premiums and further demonstrating employer’s recognition of the important role pets play in employees lives.

ML - Consider a carrier’s experience and longevity in the employer market and research the resources that will be dedicated to account service Ask if there will be an account manager and team assigned specifically to the pet insurance benefit This is crucial in promoting and servicing the benefit, as well as keeping up to date on changes It is also important to have a Call Center with sales and service agents who have extensive knowledge of products, underwriting and claims processes Claims turnaround times should also be a factor when considering a partner Ask about a carrier’s track record Policyholders should not have to wait weeks to get reimbursed for services they have already paid out of pocket Another best practice is to always read the fine print to fully understand the scope of coverage, paying special attention to language on waiting periods and limitations Lastly, ask about what extras or value-adds are included Some plans have very robust offerings to their policies such as a mortality benefit or 24/7 access to experienced veterinary experts

AC - There are several important questions to ask before choosing a partner How long has the company been in business? Does the company offer the same product to individuals and employer groups? If yes, what is the benefit of enrolling through the employer? Does the company offer options that accommodate all types of pet families?

BP - When looking for a partner, look for a pet insurance plan that is easy to implement for HR and payroll teams and easy for employees to understand and enroll in.

What

ML - The pet insurance benefit is an evergreen product. It may be promoted throughout the year and enrollment is always open. The benefit to employees is that they are receiving a preferred price on a plan that is not offered to the general public and premiums are payroll deducted for maximum convenience.

BP - Keep it simple! Providing streamlined communications about the offerings and access to the company providing the insurance helps employees navigate what they need for their pet. Ask for a simple benefit guide or summary and send out a series of communications prior to enrollment, if possible

AC - Employees are usually excited to hear that their company is offering pet benefits! To help spread the word, we recommend celebrating employees’ pets through fun activities like Take Your Dog to Work Day (June 23), adoption events, and even nail trim clinics! These and other petrelated events are a great way to make sure employees know about the great benefits you offer for their furry friends Of course, this isn’t realistic for every company but resources like a themed flyer each month to keep the conversation going can help

Devyn Kettner is Senior Partnership Manager with Spot Pet Insurance where she manages relationships with Brokers and HR Professionals across the country, in addition to training new Partnership Managers in our product, processes, and culture.

Barrett Prater, PetPartners Director of Business Development for the Southwest and West Regions. Barrett oversees business development for the SW and W regions of the US, where he builds relationships with brokers and raises awareness of pet insurance

DK - Engaging employees in company pet insurance offerings requires a thoughtful approach that considers their unique needs and preferences Some best practices include off-cycle communication and educational tips to help employees understand the importance of pet insurance Educating employees on the cost saving benefits and peace of mind pet insurance can offer is an important tool for engagement Similarly, educating employees on how to submit their claims and understand the process altogether can give them confidence in the program and increase the likelihood that they will enroll Additionally, offering incentives can help drive employee participation in company pet insurance offerings, for instance, offering a group discount and multi-pet discounts for even more savings When employees know they have coverage for their pets and can worry less about the cost, they are more likely to stay at their job

With pet insurance trending with employers and employees alike, we are excited to see the innovations pet insurance providers offer in the future to help grow participation in these programs and make it more attractive for employees to purchase these programs through their workplace

Melissa Lovely, Vice Preside Sales for Nationwide’s pet insu business, where she oversee sales call center, voluntary b sales and platform teams, me groups and the com independent agency program

Amy Crane, Vice President of Voluntary Benefits, Pet Benefit Solutions. With 13+ years of experience in the pet insurance industry, she specializes in pet employee benefits, helping brokers and employers diversify benefit packages and employees to protect their furry family members

Parker Garbers is 13 years old and living life to the fullest after having been rescued from the Dumb Friends League Today he enjoys spending his days sleeping, going for walks and car rides, and chasing bunnies out of the backyard

are best practices for engaging employees in company pet insurance offerings?

By Heather & Trevor Garbers

Part II: The Current State of Claims

This is the second in our three part series on the claims process as it specifically pertains to Accident, Critical Illness, and Hospital Indemnity insurance. In our February edition of the Voluntary Benefits Voice, we looked at claims from the viewpoint of top carriers in the industry – here, we wanted to dive into what Brokers are seeing in the marketplace and get their feedback on the process today and what they would like to see in the future

We interviewed Jack Holder (JH), President - EBIS; Danny Talley (DT), SVP Voluntary Benefits - HUB International; Brett & Heidi Bullock (BHB), Owners of The Bullock Agency; and Jessica DePhillips (JD), Principal Voluntary Benefits - Mercer; to share their perspectives on claims from different segments of the industry

What are you seeing in the marketplace when it comes to the overall claims process?

JH - More carriers are making it easier to file claims by providing claimants with the ability to upload documents via web or mobile app Some carriers are also assigning a claims representative that will reach out to the claimant or medical facility if anything is needed It's exciting to see carriers work on making it easier for members to receive benefits

BHB - We think the claims process is pretty much the same for each carrier Most carriers seem have an option for policyholders to go online and file their own claims by now, although some are much easier than others The problem we see is that there are a lot of policyholders that do not file claims because it seems too difficult for them or they forget, and so we offer them assistance with this in-house

DT - Carriers are striving to make the process easier for the insured, especially with claims loss ratios coming under more scrutiny.

JD - All medical and life and disability (LAD) carriers are offering simplified claims processing. We are starting to see some nonmedical, non-LAD carriers offering medical claims integration and reminders We are also seeing some carriers offer true autoadjudication with Disability and Supp Health claims Some medical carriers also offer autoadjudication but may limit it to only employerpaid policies or apply a pretty hefty rate load

Carriers are striving to make the process easier for the insured, especially with claims loss ratios coming under more scrutiny.

Danny Talley, HUB International

Do you receive feedback from your clients on the claims process? Are there carriers that perform better or worse than others?

BHB - We receive constant feedback We are also having difficulty with some carriers not allowing us to assist members in filing claims or even call into customer service on behalf of the member to ask questions or get clarification regarding claims or billing

JH - We do receive feedback from our clients on the claims process as we are involved when asked or needed Some carriers are much better than others when it comes to claims in general The type of product, the complexity of the claim, and system of record all play a role in how simple the claim is to process for the carrier Some carriers make claims a focus as they know how important claims are for the client

JD - The simplified claims processing available via an app from carriers is cutting down on the number of steps an employee has to take to submit a claim Some carriers are able to turn around claim payments in just a few days If we could couple a simplified claims process and lower turnaround time on claims payments, that would certainly improve the process

DT - I believe that the carriers are trying to make it easier so the members see more value which helps with participation and persistency Many carriers are also simplifying the claims process by allowing telephonic claims, allowing the member to start the claim process by calling the carrier and then the carrier takes on the legwork of requesting information directly from the provider. We are also starting to see a) some of the medical carriers paying wellness claims automatically once they see a wellness visit has occurred, b) sending out a claims notification letter stating that the policyholder may have an eligible claim based on what they are seeing come through on the medical side and even c) automatically paying predetermined benefits when they see certain claims come through in the event that the insured did not send in all of the possible documentation for services received. An example would be an insured that files a claim for a broken leg and a trip to the ER, but the carrier may also automatically pay a certain number of follow up visits, an appliance benefit, and an x-ray benefit because they know that those services are normally incurred during the treatment of that particular injury. If the insured has additional claims, they can submit those as well, but this way the carriers are getting more dollars quickly into the hands of the insured BHB - The process and the documents required are very similar with each carrier, however, some carriers are much better at reviewing the documentation, identifying the information that is required, and paying the claim Some carriers require an itemized billing statement with insurance codes for every single date and procedure, even when the doctor's note states what was done with the diagnosis Which is fine, except that some billing statements are harder to read than others and when something is overlooked, they won't pay the benefit until we resend the document several times with highlighted codes and arrows and/or additional documents from the doctor We aren't trying to get the carriers to pay claims that aren't legitimate, but it shouldn't be so hard to get them to review the documents and see what the diagnosis and treatments are when the documents are in front of them

In addition, some hospitals and medical facilities make it incredibly difficult for the policyholder to obtain the documents that carriers require to file the claim We have had several policyholders give up on the process because it was too difficult to get documentation from the provider

JH - This depends on the carrier Most are working on simplifying the claims process in some capacity One example would be accepting medical documents for simple claims accessed via a medical group portal instead of the full medical records I have seen a few carriers that have made it a little harder because they have become more specific on what they require, but for the most part, the carriers are working on streamlining this process

Are you seeing "claims integration" in the marketplace and does it actually work?

DT - We are seeing more carriers try claims integration. The medical carriers are positioned to make this as seamless as possible as they already have the medical claims data in-house and see all of the services that were performed. In theory this should work well, but they are still working through these processes and none of the carriers have it perfected as of yet. The standalone voluntary carriers may integrate with a medical claims clearinghouse, but that can become cumbersome, as the employer needs to sign paperwork giving authorization for the clearinghouse to share claims information and the clearinghouse may not see or catch all of them. I think with technology it will become easier over time, but it isn’t a perfect system yet.

JH - We are seeing a few carriers promoting claims integration, but it hasn't worked as well as expected Many employees seem to think that their claims are automatically filed when they use their medical card We have found that overall, this is not the case as we are still uncovering unfiled claims at open enrollment BHB – This can be a good thing, but it is a little confusing when someone manually files a claim, and then gets a letter stating that the claim was previously paid We have to investigate and usually find out that the claim was indeed paid when it hadn't even been filed

JD - The true claims integration offered by some medical carriers with VB lines and with some carriers on the LAD side, seem to work very well In both cases, the carrier is actually processing the claim on the employee’s behalf We need to see more of this or at the very least, carriers proactively reaching out to employees to initiate claims

Are the requirements to file a claim and the process becoming easier for the member? What is working or not working?

Is the overall claims process and claim integration a consideration in your clients’ decision-making process when choosing which vendor to partner with? How important is it to them?

BHB - The claim filing process isn't always something that the employer or the employee thinks about when choosing the carrier However, the complicated nature of the claims process is definitely the biggest reason that employers and employees decide to terminate their relationship with a carrier

JD - It is absolutely a part of the decision making process, some employers put more of an emphasis on claims integration than others Overall, it is becoming more and more important as the employer wants their employees to have the best user experience possible

JH - Employers want the claims process to be simple for the employee and they also don't want to have to get involved. The claims process is typically a topic of conversation when selecting the carrier with the client - claims are important and they want to make sure that it is not difficult or complicated.

DT - I think it comes into consideration, especially if they currently have a medical carrier that can integrate, but again since none have perfected the integration process, it is not a deciding factor, but rather a perk that can be discussed. Since claims integration is a fairly new topic, employers are still not as familiar with it and all of the ins and outs and they just want to make sure the carrier will pay claims quickly to their employees. I think the integration topic will most certainly become more of a deciding factor in the future as it is perfected and more carriers prove they can do it well.

Where is there room for improvement in the claims process today?

JH - All carriers need to offer several ways to file claims and should make it easy for a claimant to check the status of the claim online If there is more documentation or clarification needed, the carrier needs to proactively reach out to the member (or even facility) immediately and not wait for days or even weeks

All carriers need to offer several ways to file claims and should make it easy for a claimant to check on the claim online

Jack Holder, EBIS

DT - In a perfect world, if a member goes to the doctor, ER or hospital due to an accident or a condition, claims on their voluntary coverages would automatically be paid to them without having to remember to file a claim

That is not reality today, but carriers need to try and keep the process as easy as possible for the insured as we sometimes see that the insured just gives up mid-stream I think communication on the brokers part can also play a huge roll as well in reminding employers and employees throughout the year to make sure they are filing their claims, especially wellness claims so they will continue to see the value that these supplemental benefits can bring

BHB – We would like to see the customer service personnel in the claims departments have more training in how to read medical documents and identify the diagnosis and treatments

JD - Most carriers that offer "claims integration" are simply sending out a reminder to employees when they have a qualified event. This is certainly better than not doing anything, but there is room for growth as we look at low utilization rates and under-utilization of the plans. Carriers have to get more creative on how to drive up utilization or their competition will.

Some conclusions we can make from our experience and field research so far are that:

Claims is a deciding factor for some groups at point of sale, but very important in terms of member satisfaction and the carrier retaining the business over time.

Carriers are making strides towards simplifying and streamlining the claims process to meet market demand, and access to mobile optimized member portals and apps where you can file claims and see their status have an impact on member satisfaction

While claims integration is a hot topic, the actual functionality varies widely and widescale true claims auto-adjudication it not yet available or has not been adopted by the market thus far The method in which proactive claim notifications are sent and the wording of these documents are important in making it clear to the employee what the next steps are to complete the claims process

For carriers that are working on claim integration by accessing 3rd party medical claim data, there are security concerns in addition to client hesitation with sharing HIPAA protected data for this purpose

Carriers should regularly review their incomplete claims and determine if there is room for improvement in their processes

It is becoming more and more important as the employer wants their employees to have the best user experience possible

Jessica DePhillips, Mercer

Part of the value offered by individuals selling voluntary benefits is that they take into consideration the claims process when vetting and recommending carriers and provide resources reminding employees to file claims and educating them on how to file claims throughout the year Predictive claims are of great value to the member and enhance their claims experience and the amount of the benefit they receive

While not a perfect system yet, the reason individuals purchase these products is to receive a benefit after a qualified event

As accidental injuries, hospitalizations, and critical illnesses are many times significant life events, the easier the claim process is for the member, the higher their satisfaction is with the benefit and the perceived value of the benefit increases Recent advances including simplified and streamlined processes, predictive (or proactive) claim payments, claims integration (in its various forms), and virtual claim submission and tracking are all helping to enhance the member experience and drive utilization of these plans At the end of the day, we are selling a promise to pay if a covered event happens, it doesn’t have to be rocket science, we should just make it customer friendly

Jack Holder, President, EBIS. Jack partners with health brokers as an extension of their agency to pick Carriers and design Voluntary Benefit products around the objectives of each client He also helps to create and implement employee engagement strategies to give the employees the best experience possible

Heidi Bullock, Co-Owner, The Bullock Agency, developed a Supplemental Insurance office with her husband Brett, in 1990 She was the leading Utah Sales Associate for many years was the first woman Regional Sales Coordinator in Utah, and the first manager to achieve $2M dollars in production in one year Today she also maintains her RN licensing and manages their agency

Jessica DePhillips, Voluntary Benefits Practice Leader, Mercer. Jessica developes solutions for employers in the mid-market and large/jumbo case employer segments, as well as serving as a regional Mercer Voluntary Benefits representative to align Marsh McLennan sister companies for cross-sell opportunities and other strategic solutions.

Brett Bullock, Director of Sales, The Bullock Agency, he and his wife Heidi, brought their family to Logan, UT, 30 years ago, hoping to bring supplemental insurance to the many businesses and citizens of Cache Valley Today, he works closely with independent agents, business owners, human resource departments, and health brokers to provide up-to-date information in the industry

Danny Talley, SVP HUB International. Danny has helped build several consulting firms before selling his company to HUB International in 2008. Today, he works with the provider community nationally to create innovative solutions that fit the needs of HUB clients in the rapidly changing group benefits environment

Pet Insurance: Growing Demand, Limited Access

You know the basic pitch for voluntary benefits: They provide financial protection for out-of-pocket expenses from unexpected events We usually think of those events as accidents or illnesses that strike us, our spouse or our children But for many of us, the family members we want to protect include the four-legged variety About 70% of US households include a pet, according to a survey by the American Pet Products Association and both dog and cat owners list surgical vet visits among their top expenses

Cue the walk-in music for pet insurance The idea might have raised eyebrows a few years ago, but this nontraditional product now has its teeth in many lists of the most-wanted and highest-potential voluntary benefits Still, it’s not available as widely as interest indicates, according to Eastbridge Consulting Group research Here’s a look at what employees, employers, brokers and carriers are telling us about pet insurance

Employees are willing to pay for access to pet insurance at work. More than a third of all US employees are interested in buying pet insurance on a voluntary basis, according to the most recent “MarketVision The Employee Viewpoint©” report That trails the number interested in buying identity theft protection by a few percentage points and equals the number interested in legal plans But looking at current ownership on a voluntary basis, pet insurance leads the way as the most frequently owned additional product And by the way, that interest is much higher than employees indicate for many traditional voluntary benefits such as life, disability and accident insurance

Employers want to offer pet insurance to their employees in the future. Only 8% of employers offer pet insurance on a voluntary basis, according to the 2022 “MarketVision The Employer Viewpoint©” report. In fact, employers are less likely to include pet insurance in their benefits packages than auto/homeowners insurance, identity theft and legal plans. However, pet insurance has the highest sales potential of any product nontraditional or traditional except identity theft. Sales potential compares the percent of employers that don’t offer a product and the percent interested in offering it on a voluntary basis No wonder, then, employers list pet insurance in the top five of voluntary products they’d like to offer in the future In a tight labor market, employers are looking for help recruiting and retaining employees, and benefits such as pet protection can provide a valued and important solution

Brokers are slowly getting on board with nontraditional products, including pet insurance

About 60% of brokers sell nontraditional products on a regular basis, according to the 2022 “Brokers and the ‘New Normal’ in Voluntary Benefits” Spotlight report However, they tend to lead with identity theft coverage and legal plans, while pet insurance claims third to fifth place, depending on the type of broker Brokers looking for additional revenue streams might consider putting more emphasis on pet insurance, based on our sales potential findings

Carriers have been slow to adopt pet insurance. Only 10% of carriers include pet insurance in their portfolios, according to the 2022 “Voluntary Product Trends” Frontline report. That ranks it well below not only identity theft and legal plans, but also mental health benefits and financial tools. It’s also not in the top four products carriers say they plan to offer in the next two years. But as demand for pet insurance grows, carriers that want to stay competitive will need to be able to offer it or connect employers to other companies that do.

Discount or Nontraditional Benefits Planned

Pet insurance appears to be a product employees want and are willing to pay for, but access is still limited. Employers who want to create more competitive benefit packages and brokers and carriers who want to bite into greater sales potential could consider taking a broader view of employees’ interest in protecting their loved ones to include coverage for furry family members, too

As a Key Contributor to Voluntary Benefits Voice, Eastbridge Consulting will be sharing content from our research and experience that aims to represent the perspectives and “voices” of the many different stakeholders in the voluntary market Eastbridge is the source for research, experience, and advice for companies competing in the voluntary space and for those wishing to enter For over 25 years, they have built the industry’s leading data warehouse and industry-specific consulting practice Today, 20 of the 25 largest voluntary/worksite carriers are both consulting and research clients of Eastbridge.

Nick Rockwell President Danielle Lehman Senior Consultant

By Marc Glickman

77-0-to-Be or Not to Be

Why 7702(b) Matters for Long-Term Care Planning

No, this is not a dissertation on Hamlet Act 3 Scene 1, although considering whether a product meets the IRC section 7702(b) guidelines can seem like it.

Let’s set the scene and provide the backstory. Some states, like Washington, are considering offering a minimal long-term care benefit funded by a payroll tax. California, with its 16M strong workforce, is also considering this publicly funded benefit. Rumor has it (via the feasibility study) that the legislation may allow an exemption from the payroll tax if the employee already owns private long-term care insurance. Like Hamlet, it’s important to understand what is “to be or not to be” by looking at the product types that may qualify for an exemption In this article we explain what section 7702(b) is, how it works, how it differs from chronic illness riders (IRC 101(g)), and the advantages and disadvantages of each

What is Section 7702(b)?

Not all long-term care insurance policies and riders are created equal. Some may offer more benefits, more flexibility, and more tax advantages than others.

Section 7702(b) is a part of the Internal Revenue Code (IRC) that defines what constitutes a qualified longterm care insurance contract and how it is treated for tax purposes. According to Section 7702(b), a qualified long-term care insurance contract must meet certain requirements, such as:

It must provide only coverage of qualified longterm care services

It must be guaranteed renewable

It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed

It must provide that refunds (other than refunds on the death of the insured or complete surrender or cancellation of the contract) and dividends under the contract be used only to reduce future premiums or increase future benefits

It must meet certain consumer protection standards set by the National Association of Insurance Commissioners (NAIC)

Qualified long-term care services are defined as necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services that are:

Required by a chronically ill individual; and Provided pursuant to a plan of care prescribed by a licensed healthcare practitioner

A chronically ill individual is someone who has been certified by a licensed health care practitioner as:

Being unable to perform at least two activities of daily living (ADLs) (such as eating, bathing, dressing, toileting, transferring, and continence) without substantial assistance from another individual for at least 90 days due to a loss of functional capacity; or

Having a severe cognitive impairment (such as Alzheimer's disease or dementia) that requires substantial supervision to protect his or her health and safety.

Why is Section 7702(b) Important?

Section 7702(b) is important because it provides certain tax benefits for qualified long-term care insurance contracts. Specifically:

The premiums paid for qualified long-term care insurance contracts are treated as medical expenses and may be deductible (subject to certain limits) if the taxpayer itemizes deductions on Schedule A

The benefits received from qualified long-term care insurance contracts are generally excluded from gross income as amounts received for personal injuries or sickness

The distributions from life insurance policies or annuities that have qualified long-term care insurance riders are also excluded from gross income (up to certain limits) if they are used to pay for qualified long-term care services

Business owners may be able to take a first-dollar tax deduction as a business expense on some or all of the qualified long-term care insurance premiums for themselves or employees

Individuals may be able to withdraw premiums as a qualified medical expense pre-tax from a health savings account (HSA), health reimbursement arrangement (HRA), or medical savings account (MSA) annually up to an age-based limit States considering a payroll tax to fund a minimum long-term care benefit may exempt individuals from the tax if they own a long-term care policy that meets the 7702(b) requirements

These tax benefits can make qualified long-term care insurance contracts more affordable and attractive for consumers who want to protect themselves from the high costs of long-term care

What are 7702(b) Qualified Riders?

Besides a 7702(b) traditional LTCi policy, a 7702(b) rider is an add-on or feature to a life insurance policy or an annuity contract that provides long-term care benefits in accordance with Section 7702(b) It allows the policyholder to access some or all the death benefit or cash value of the policy or annuity while he or she is alive if he or she becomes chronically ill and needs long-term care services

A 7702(b) rider can offer several advantages over a stand-alone long-term care policy, such as:

Providing multiple benefits in one product: life insurance/annuity plus long-term care coverage. Avoiding premium increases: once the rider is purchased, the premium is often fixed and guaranteed not to increase unless the base policy premium increases.

Preserving some value for heirs if the rider benefits are not exhausted by a long-term care event.

Every day until 2030, 10,000 Baby Boomers will turn 65 and 7 out of 10 people will require long term care in their lifetime

How do 7702(b) riders work?

A 7702(b) rider allows you to access some or all of your life insurance death benefit or annuity value while you are still alive if you meet certain conditions Typically, these conditions include:

Being certified by a licensed health care practitioner as chronically ill This means that you are unable to perform at least two ADLs without substantial assistance for at least 90 days; or you have a severe cognitive impairment that requires substantial supervision for your health and safety Satisfying an elimination period This is a waiting period (usually between 0 and 180 days) before you can start receiving benefits from your rider Submitting proof of claim and receipts for eligible expenses You need to provide evidence that you have incurred qualified long-term care expenses that are covered by your rider

Depending on the type and design of your rider, you may receive benefits in one of the following ways:

Reimbursement: You receive a monthly benefit equal to the actual amount of qualified long-term care expenses that you incur up to a maximum limit

Indemnity: You receive a fixed monthly benefit regardless of the actual amount of qualified longterm care expenses that you incur as long as you meet the eligibility criteria

The benefits from your rider will reduce your life insurance death benefit or annuity value by the same amount If you exhaust your entire death benefit or annuity value through your rider benefits, your policy or contract will terminate, and no further benefits will be payable

Advantages of 7702(b) Riders

Tax advantages: The benefits from your rider are generally income tax-free if they do not exceed certain limits set by the IRS.

Your premiums for your rider may be deductible for income tax purposes if they meet certain requirements.

Certain products offer riders with an extension of long term care benefits that significantly exceed the original death benefit.

Certain products offer features that significantly enhance the long term care coverage like guaranteed compound inflation protection to grow the LTC benefits annually on either the base coverage, the rider, or both.

Flexibility: You can use your rider benefits for any qualified long-term care expenses regardless of where they occur (at home, in a facility, etc) You can also choose among different types of riders depending on your needs and preferences

Protection: You can protect yourself from the rising costs of long-term care services without having to buy a separate stand-alone policy You can also preserve some assets for your beneficiaries if you do not use up all your death benefit or annuity value through your rider benefits

No use-it-or-lose-it risk: Products allow the unused portion of the death benefit to remain intact and is paid to the beneficiaries or may even pay a residual death benefit in addition to LTC benefits being used in full

Disadvantages of 7702(b) Riders

Cost: Adding a rider to your life insurance policy or annuity may increase your premiums or fees significantly depending on factors such as age, health status, type, and amount of coverage

Qualification: Not every life insurance or annuity policy offers a long-term care rider and some riders have limited health underwriting

Premium payment flexibility: Several products require premiums to be paid over a shorter period of time such as a lump sum or over 10 years to get the best value for the long term care benefits

Chronic Illness Riders: How 101(g) Riders Differ from LTC Riders

There is confusion regarding how a long-term care rider differs from a chronic illness rider, a rider that does not qualify as a long-term care rider under section 7702(b). A chronic illness rider is a type of rider that complies with IRC section 101(g). They can be added to a life insurance policy to help pay for permanent qualifying events. More recently, some 101(g) products allow for payments even if the chronic illness is not expected to be permanent. A chronic illness rider is like a long-term care rider, where two out of six ADLs or severe cognitive impairment can trigger benefits, and a licensed health care provider such as your doctor will have to certify this.

A chronic illness rider may provide some flexibility over a long-term care rider, such as:

Less extra rider premium: The extra premium for the chronic illness rider may be minimal or already included in the base life insurance policy However, often the result of no additional cost is a reduced death benefit

Better life insurance features: Often 101(g) products offer greater death benefits, better cash value accumulation, and other features desirable for life insurance protection

Speed-to-market: For carriers, the 101(g) filing process may be quicker, and agents may not have to take additional LTC continuing education to offer these products

A chronic illness rider may have drawbacks, such as:

No standard benefit language: Chronic illness riders vary widely in their contractual definitions and special care must be paid to whether permanency of disability is required, the definition of chronic illness that results in claim eligibility, whether the death benefit is discounted, etc Limited benefit amount: The 101(g) benefit amount may be capped at a percentage of the death benefit For instance, an acceleration of 2% to 5% per month up to a total of 50% to 90% of the total death benefit

Not marketable as long-term care insurance: Chronic illness riders are not allowed to be called long-term care insurance and may be excluded for the purposes of the exemption from a potential payroll tax depending on a state definition

Long-term care insurance companies paid out a record $13.25 Billion in 2022 according to the American Association for Long-Term Care Insurance (AALTCI)

Wait, what?

This is where the confusion happens States allowing for an exemption from a payroll tax, like Washington and possibly California may require that a product meet the 7702(b) requirements One of the reasons for requiring a policy to comply with the 7702(b) guidelines is to make sure that it offers sufficient and suitable coverage for long-term care needs, and that it matches the state’s goals for its own program The goal being to reconcile the exemption criteria with the federal standards, and to prevent possible conflicts or confusion between state and federal tax rules

“To Be or Not to Be…?”

Choosing between a long-term care rider and a chronic illness rider depends on several factors, such as health status, financial situation, tax bracket, and personal preferences But when considering a product that will qualify as long-term care insurance, particularly for tax purposes, make sure that it is compliant with IRC section 7702(b) Indeed, that is the relevant question

Marc Glickman, FSA, CLTC, is CEO and co-founder of BuddyIns, a leading long-term care insurance education, marketing, and technology company. Marc is a licensed insurance agent in all 50 states and serves on the Board of Advisors for CLTC. Marc has over 15 years of experience as an actuary including as the Chief Investment Officer and Chief Sales Officer for a major LTC insurance company. Marc earned his degree in economics from Yale University. In 2019, Marc was named one of the top 20 innovators in the insurance brokerage space.

Transforming Workplace Culture with Charitable Giving as an Employee Benefit

In today's job market, purpose-driven companies that prioritize the positive impact of their work on society enhance their corporate strategy and transform workplace culture. Charitable giving opportunities offered by companies can play a significant role in attracting and retaining top talent and building a sense of community and a culture of giving in the workplace. It can also improve a company's reputation as a socially responsible organization that contributes to the betterment of communities. As a broker, offering a charitable giving platform can serve as a powerful differentiator in a new generation of employee benefits, helping to attract and retain clients who prioritize purpose and social responsibility.

Charitable giving programs are a strong investment for companies. High-purpose brands double their value 4x faster than low-purpose brands according to a study by IR Magazine, proving that purpose is profitable. Purpose Under Pressure also found that 84% of employees consider the positive impact of their work on society and will only work at Purpose-driven companies/brands To meet the needs of employees and increase employee retention, it is important to support the causes that matter most to them Having a reputation as a socially responsible company that improves communities can meet the emotional needs of employees and improve the job satisfaction, leading to more referrals and attracting more talented individuals to the organization

By taking a proactive approach to corporate philanthropy and offering opportunities to give back through corporate campaigns, charitable giving accounts, employee matching programs, or volunteering opportunities, companies can empower employees to become changemakers and align their ideals with their employers

Givinga works with brokers to provide companies and their employees with the tools and resources they need to give back to the causes and communities that matter to them Givinga’s Philantech® platform provides philanthropic technology that drastically reduces admin time, engages employees, and ensures all donations are processed and distributed safely, quickly, and transparently

Givinga will be teaming up with Voluntary Advantage to support our 2023 giving campaign and offer our followers the ability to make charitable donations through their platform. Stay tuned as we launch the giving campaign and allow you to see this great employee perk in action!

To learn more about Givinga, visit givingacom or reach out to Heidi Ortegren,

hortegren@givingacom

Three Steps to Better Mental Health Benefits

Like most good things in my life, my wife provided some inspiration for this article We were driving to lunch, our two- and five-year-old boys in tow, and the youngest asked to listen to Ariana Grande and John Legend’s version of the title track “Beauty and the Beast”. (Yes, he’s that specific!) As I gloriously belted out the tune, my wife joked about how terrible of a singer I am and suggested that our musically inclined child might suffer some harm if he spent too much time listening to me I like to remind her that she thought I had a beautiful voice while we were dating.

Nevertheless, I draw some parallels to the current state of product development in our supplemental health market: good product developers mentor and train good product developers and bad product developers make “Beauty and the Beast” sound like the new intern logging into Microsoft Teams with both their computer and phone at the same time Our wonderfully diverse market has been saturated with product in the last five years that generally looks and feels the same. This is because most product development seeks to copy the competition, and while this philosophy has its merits it shouldn’t preclude product developers from adding benefits that are unique in the marketplace

There are numerous ways to approach differentiation and the best approaches reflect the carrier’s culture while weaving benefits into a cohesive product This is true of caregiving, concierge services, genetic testing, mental health, etc. I just happened to pick mental health as an example for this article. So, since mental health resources and support are the fourth most popular non-insurance benefits for US workers and the #1 benefit for Millennials, how can we build better mental health benefits within our insurance products?

I’m glad you asked!

Step #1: Define Mental Health

Mental health, behavioral health, mental illness, mental wellness, and mental fitness may be used interchangeably with some nuance (for example, behavioral health is typically a broader term that encompasses substance use, physical symptoms of stress, etc.). When these terms are used, however, they can mean different things to different people The Centers for Disease Control and Prevention (CDC) define mental health to include a person’s emotional, psychological, and social well-being[1] The CDC also describes a list of mental illnesses that include attention deficit hyperactivity disorder (ADHD), Alzheimer’s (raise your hand if you associated Alzheimer’s with mental health benefits!), anxiety, autism, and Aspergers – but that’s just the “A’s” Setting aside the fact that just about anyone can claim anxiety, and stress is buried down in the “S’s”, it is estimated that approximately six million children between the ages of 4 and 17 have been diagnosed with ADHD Mental health can be defined in a manner that includes nearly every US citizen, which is obviously an expensive way to structure the benefit.

On the other hand, we could focus on specific mental illnesses such as major depression, bi-polar disorder, schizophrenia, etc This would lower the cost of insurance benefits, but would it cause confusion with consumers? Should a restricted benefit be called something other than “mental health”?

There is a longer discussion necessary on this topic, but typically a valid definition of “mental health” can be obtained through internal surveys, external surveys, and/or focus groups to ensure that benefits reflect the expectations of consumers

Step #2: Write the Contract Language

The contract language needs to be clear and concise while reducing the risk of litigation. Product developers should therefore consider the unique attributes of mental health and illnesses ranging from remissive (e.g. postpartum depression) to episodic (e.g. self-harm) to chronic (Alzheimer’s) and high frequency, low severity (e.g. anxiety) to low frequency, high severity (e.g. anorexia). How the benefit is designed will necessarily affect how it is written into the insurance contract and priced. I will not go into detail on this important topic for this article, but the savvy product developer understands its importance.

It is also important to reward evidence-based modalities of care such that negative outcomes are not incentivized For example, if an insured is reimbursed $50 for a visit to psychiatrist and $100 for a visit to a primary care physician, the insured is incentivized to seek out what is likely a lower level of care for mental health This concept can be extended to types of facilities as well

The bottom line is that mental health is complex and thoughtful consideration should be invested in development of contract language.

Step #3: Compare the Alternatives

Great product development leaves no stone unturned. Perhaps, as an alternative to an insurance benefit, a reasonable carrier will settle on third party offerings and/or guided programs (see Unum’s Behavioral Health solution) These solutions may be specific (such as a referral mechanism for top end psychiatrists) or broad by nature (addressing virtually any source of mental anguish). Identifying a useful offering and inking an exclusive deal is one way to provide longer-lasting differentiation in today’s market

This article was intended as a starting point for the development of better mental health benefits. I hope that it helps you and your team jump-start the conversation about building an industry-leading product

Bill Bade, FSA, MAAA – Consultant Bill founded Sydney Consulting Group with a strong desire to provide client-focused actuarial, compliance, and strategic support to carriers of all

in the supplemental benefits industry Sydney Consulting Group’s product expertise includes, but is not limited to,

On Becoming a Championship Team

By Steve Clabaugh, CLU, ChFC

To travel from Greenwood Village, CO to Estes Park, CO takes about an hour and a half. The first half hour is on I-25 North until you turn off onto US. Highway 36 West, which takes you all the way to Estes Park. Four of us left that morning at 10:00 am headed for a sales planning retreat and, before turning off on Highway 36 West, we were engaged in the hottest argument I ever experienced as a leader. This important trip looked like it was about to become a major disaster before it ever got started.

Here were the participants in this, almost, ill-fated journey. As the new CEO, I wanted to be directly involved with the sales team in developing the budget and plan for our first full year together Our Senior Vice President – Sales brought the knowledge acquired from many years of experience with the products, producers and culture of the company One Vice President – Sales had started with the company a few years before in an administrative role and was promoted into the sales role based on his strong people skills and passion for the business The other Vice President – Sales had only been with the company a few weeks and, although relatively new in the industry, had already established a reputation for achieving positive sales results

When I was hired a few months before, it was with the understanding that the goal was to double the size and profitability of the company within 5 years It takes a growth rate of 15% per year to double any number within 5 years and the company had averaged only about 2% growth per year for the past several years It was my intention to achieve the goal, so it seemed obvious to me that we needed to do some things differently to be successful

Unfortunately, this was not so obvious to everyone!

As soon as we were on the road, I began to share some ideas for expanding our field force, improving our products, adding new products, tweaking agent compensation and restructuring our internal operations to support increased sales And as soon as the new ideas were shared, the resistance to them came out with as much, or more, passion than what I had expressed As the “discussion” continued tempers began to rise along with the volume The two Vice Presidents quickly dropped out of the melee, and it became a one-on-one fight to the finish Later, one of the Vice Presidents told me he considered whether he should jump out of the car at the next stop light and escape – I'm glad he didn’t

At its apex the battle lines were clearly drawn It was perceived that my desire was to throw away everything the company stood for and to build some new model that didn’t fit our culture And my perception was that someone I had thought of as a friend for several years wasn’t interested in making changes to improve the company but only in protecting what he was comfortable with Neither perception, of course, was true but as I have often said over the years “perception is often 100% more real than reality” That was certainly the case here

Tempers flared, harsh words were said, and I was close to being, as we say here in the South, “down to my last nerve” And right about the time I was ready to call off the trip and have us head back to the city, a new thought entered my mind I knew exactly what was happening and had an idea of what could be done to, hopefully, get us back on track

In 1965, American Psychologist Bruce Tuckman developed an understanding of how teams are formed and the process they go through to become successful. He called it FSNP, it is still taught today in management and leadership courses around the world, and it is a core principle of Six Sigma. The process he defined and explained includes these four components:

Forming – putting the team together. This can be done in many ways including; being hired, assigned, volunteering and being selected. Teams can be formed for short term projects, long term work teams, specific seasons or around particular goals.

Storming – conflict among the new members of the team This can happen based on differences in personalities, priorities, work habits, perceptions or desired outcomes There are probably as many things to have conflict about as there are team members

Norming – team members start to work together despite their differences Often the team has organizational pressure to accomplish some goals even if they aren’t in alignment with each other professionally As progress is made, the team members learn how to negotiate with one another and develop some level of understanding and acceptance

Performing – the team is working together smoothly in accomplishing small and large goals on a regular basis This, of course, is the ultimate goal of all teams We refer to those teams that excel above expectations, whether in sports, business or other endeavors, as Championship Teams

While I accepted Dr Tuckman’s principles in general, it was always a contention of mine that, of the four steps, Storming was the only one that wasn’t essential to the process And yet, here on US Highway 36 West, Storming was exactly what was taking place And if it was a part of the team building process, I believed we could work through it and become a successful team

Here’s how we changed the paradigm to continue our trip and planning process. First, I called a timeout and reminded everyone that their ideas and concerns were valued and respected even when we disagreed. Then I explained the FSNP steps with particular emphasis on Storming – which they understood immediately. I requested that each of us try to share our ideas, concerns, agreements and disagreements in an objective manner including the “why” of our ideas and not just the “what.” Finally, I pledged to be a dedicated listener to their thoughts and asked them to do the same for me.

The emotional temperature moderated a great deal and, after a delicious lunch beside a mountain stream, we proceeded to the lodge to begin our planning work I could tell you that everything went smoothly after that but that would not be true We still had a lot of feelings, prejudices and differing goals to work through But we left there two days later with a plan to get started And over the next year that sales team began to work together, on their own, and moved well into the Norming phase

As for the Performing phase, I can tell you that those three leaders achieved the goal of doubling our company sales in 4 ½ years and, along with the great work of our other departments, we tripled our profits during the same period

Will the FSNP process work for you in today’s environment? I’m convinced that it will In fact, if you’d like to talk about the specific challenges you are facing please feel free to contact me

One last thing In 1977 Dr Tuckman added the 5th step which he called Adjourning It is specifically related to short term team assignments We’ll think about that one more in a future article

Steve Clabaugh, CLU, ChFC started his career in insurance as a Field Agent, moving on to a Sales Manager, General Manager, Regional Manager, Vice President, Senior Vice President, and President/CEO. A long time serious student of professional leadership, Steve created the Relational Leadership program that has been used to train home office, field sales associates, mid-level managers, and senior vice presidents