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Friday April 18th 2014

Archives

June 2011 California Broker

June 2011 California BrokerFlying High with Ancillary Sales
Group Legal to the Rescue Employees Face Rampant Foreclosures, Financial hardship, and Soaring Debt

by Tanner Kinkead • Seventy-four percent of workers who used an employer-provided financial or legal advisor had reduced stress, 67% had improved health, 39% had reduced absenteeism, and 36% had increased work productivity, resulting in reduced costs and improved profits for the employer. These are tremendous results for such an affordable employee benefit.
The Only Things Certain In Life Are Death, Taxes, and Personal Legal Needs
by Ann Dieleman • Seven out of 10 Americans said they had been dealing with legal issues during the previous year. They were less productive on the job, took time off and spent, on average, 57 hours on personal legal needs while at work,
Technology and the Future of Voluntary Benefits
by Shawn Jenkins • Those who can use technology to provide a more convenient and interactive experience will be well positioned for long-term success.
Innovative Dental Plans That Keep Costs Under Control
by Chris Swanker • Employers are looking for innovative dental plan designs that allow them to retain a robust benefits package while maintaining a healthy bottom line.
Dental Insurance Helps Detect a Growing Concern
by Karen Gustin, LLIF • While many people are aware of the importance of good oral care, they need to understand the significance of regular dental appointments for cleanings and oral checkups to detect dental concerns and early signs of oral, head, and neck cancer.
Reducing Costs and Boosting Productivity with Absence Management Programs
by Rick Shube • Establishing a strong absence management program should always be a primary business objective because of the steep costs of employee absences.
Hospital Confinement Indemnity – A Creative Solution to Rising Premiums
by Joe Willingham • Hospital confinement indemnity plans help relieve some of the financial pressure that employers face with providing quality employee benefits.
Get Well, Stay Well, Be Well–Your Guide to Wellness
by Mark Roberts • Active employers should have plan designs that include wellness options along with the client’s major medical plan and other voluntary benefits.
A Gap Plan That WorksThe Secret to Pairing Worksite Benefits With High Deductible Health Plans
by Toney Chimienti and Sheryl Hunsinger • The gap plan, referred to in this article, is not just any type of wrap plan that has been offered in the insurance market in the past. It does not encourage excessive plan utilization or eliminate all financial risk to an employee.
Why Consumer-Directed Healthcare Continues to Attract Members
by Martin Trussell •Recently published studies show that consumer-directed healthcare plans that use health savings accounts (HSAs) and health reimbursement arrangements (HRAs) to reimburse participants for qualified medical expenses, are growing in popularity and saving employers money.
LAAHU Event Examines the Broker’s Role in Healthcare Reform
Leila Morris • Though the health insurance market has become more challenging, brokers will have an important role in the post-healthcare reform world, stressed industry and government experts who spoke at LAAHU University day April.
Employer Retention
36 412i, 419, Captive Insurance and Section 79 Plans; Buyer Beware
by Lance Wallach • The IRS has been attacking all 419 welfare benefit plans, many 412i retirement plans, captive insurance plans with life insurance in them, and Section 79 plans.
How Technology Makes Producers More Successful
by Jeff Watkins • There are significant advantages to cloud computing or web-based technology including no software to buy and update, no back up issues, no hard drive crashes, and better security than your desktop computer. Plus, you can work wherever there’s an Internet connection.

Flying High with Ancillary –How Disability, Dental, Vision, Prepaid Legal and Medical Bridge are Getting Commissions Off the Ground Group Legal to the Rescue
Employees Face Rampant Foreclosures, Financial hardship, and Soaring Debt

by Tanner Kinkead
One in eight homes stands in foreclosure in Lathrop, Calif. This Northern California city is an extreme example of the troubles sweeping our country. California has a higher foreclosure rate than any other state. Many people have lost their jobs and many more have taken significant pay cuts, particularly government workers. Personal debt has skyrocketed while incomes have fallen. Many of those who are not facing foreclosure also worry about a rising tide of debt.

These burdens on workers impose burdens on their employers as well. More than half of Americans say that financial distress has made them more irritable, angry, tired, and sleepless, leading to lower productivity at work. A pre-recession study in the Harvard Business Review reveals that U.S. companies lose more than $150 billion a year to employee stress. The problem is only getting worse with rampant foreclosures, financial hardship, and soaring debt.

Group legal plans provide a solution. With group legal, your clients can get desperately needed legal advice without the cost or hassle that goes into looking for a qualified and honest attorney. Employers that offer group legal plans can reduce the business cost of employee stress and hardship and increase loyalty. And California insurance brokers are poised to earn significant income while meeting this important need.

Benefits to Employees

Most people know they need professional assistance when facing the loss of their homes. They may be aware of the possible paths: debt consolidation, bankruptcy, loan modification, and short sale, to name a few. But many people don’t know which is the best solution for their circumstances. When it comes to complicated legal issues, one size does not fit all. Even though a flood of general information is available, people need direction and advice that is specific to their needs.

Unfortunately, people in financial distress are likely to give their business to whomever advertises the most and this is not likely to be someone who has the consumer’s best interest at heart. After all, a bankruptcy lawyer will recommend bankruptcy and a loan modification group will recommend loan modification. That’s not a consultation; it’s a sales pitch.

A much better option is for the employee to consult with an attorney. A good attorney can address specific issues and find the best solution for each individual. Financial laws and regulations are changing constantly, with state and federal programs being established and then sunsetting. A good attorney can direct the client to the most beneficial programs. The attorney can make calls and write letters on behalf of their clients, relieving them of some of the stress they face. But, that kind of help can be expensive and finding a competent and helpful attorney can be time-consuming.

Unfortunately, Californians face special hurdles when it comes to foreclosures. The state recently passed a law prohibiting lawyers from being paid for loan modification services until the work is complete. The law intended to answer the thousands of complaints about modification swindles received by the California state bar. But it has prevented many legitimate attorneys from taking on loan modification cases. Payments to lawyers are often delayed or denied completely since these cases often last a year or more and may end in bankruptcy. Many attorneys can no longer afford to take loan modification cases while big banks can hire all the lawyers they need.

Fortunately, group legal can help with access to qualified, knowledgeable attorneys. Recently, one California state employee paid $3,500 to a television attorney firm to get help modifying his home loan. He was facing possible foreclosure due to state-imposed furloughs. The firm did little to earn that money, relegating most of the legwork to him. In fact, he had to hound them to get any service at all. He then discovered that his employer offered a legal benefit plan. His legal plan attorneys helped him through another loan modification at no additional charge and showed him the respect of promptly returning his phone calls. The cost of one year of his legal plan was a mere fraction of the $3,500 he paid to the first firm.

There is a great need for attorneys to assist customers with loan modification. Investigations have revealed that big banks often fail at proper record keeping. Lenders have lost thousands of mortgage documents and many more documents may be wrong or fraudulent. Too often, banks are sloppy when processing foreclosure documents and they frequently make mistakes. The law that was intended to protect consumers has made it extremely difficult for people to find an attorney to help defend them from the failures of the mortgage-lending industry.

Group legal is, by far, the best option for employees who are looking for vital information and assistance. A legal plan frees an employee from worrying about their lawyer and allows them to focus on solving their problems.

It’s important to remember that employees need legal services whether or not the economy is doing well and group legal plans provide assistance with more than foreclosures or financial issues. Employees need consultations on family law, divorce, estate planning, and more. Some group legal plans even provide tax advice and preparation services, which is another benefit that can save employees time, money, and trouble. Above all, group legal plans allow members to find reliable, experienced attorneys who rely on the group legal company for business and therefore treat their group legal clients with an extra degree of respect and care.

Additionally, group legal plans can function as preventive care. Group legal providers can review documents and contracts for their members, such as renter’s agreements, insurance policies, adoption papers, and more – often at no additional cost. When employees have the freedom to consult an attorney proactively, group legal can keep small issues from becoming serious.

Seventy percent of Americans face at least one legal problem in a given year, but most do not seek legal assistance, according to an American Bar Association study conducted before the crash of the housing market. They fear the high cost of legal help and they don’t know how to find the right attorney. Legal problems can grow with inattention and negligence. Group legal plans solve both issues by providing a network of qualified and capable attorneys and by covering much or all of the cost of legal aid – help that’s designed to get someone’s life back on track.

Benefits to Employers

Because financial stress and legal problems go hand-in-hand, an employer must consider how these problems affect the workplace. A December 2008 survey by the Employee Assistance Society of North America reveals a startling 88% increase in employee requests for financial services over the previous year and a corresponding increase in requests for credit counseling, debt management, and bankruptcy assistance.

Even before the recession, more than two-fifths of American employees took time off work each year to deal with legal issues. Employees who are facing financial stress are more likely to be absent from work. A 1987 study by G.T. Adams reveals that stress-related illness is the cause of over 70% of absenteeism.

Financial stress increases the likelihood that employees will need physical and mental healthcare, which increases costs to employers. Employees who report financial stress also report higher levels of physical impairment and reduced physical capacity, possibly leading to increased injuries for employees who have physically demanding jobs.

Stressed employees are less loyal to their employers. They are also less productive at work – a phenomenon that has come to be known as “presenteeism.” A 2004 study by Cornell University reveals that presenteeism costs companies up to three times as much as absenteeism does.

Presenteeism is estimated to cost about $2,000 per-year, per-employee. The Government Accountability Office anticipates more than one million home foreclosures in the next several years. When a home is foreclosed, an employee is forced to move and may have to leave their job. Your clients know the high cost of replacing employees; anything they can do to reduce turnover will be a great benefit.

With all the problems employees are facing, group legal provides employers a tremendous return on investment. The Dept. of Labor estimates that a company will generate a return of $5 to $16 per $1 invested in financial or legal benefits for their employees.

Seventy-four percent of workers who used an employer-provided financial or legal advisor had reduced stress, 67% had improved health, 39% had reduced absenteeism, and 36% had increased work productivity, resulting in reduced costs and improved profits for the employer, according to a 2002 study by Mark Attridge. Those are tremendous results for such an affordable employee benefit.

It is plain to see that an employee who is in crisis is an unproductive employee. There is rapidly growing need for financial and legal assistance from employers. Employers can reap the benefits of making sure that their employees are happy, safe, and healthy.

Finally, several legal administration companies that provide group legal offerings also offer legal plans that cover small businesses, not just the employees. Typical small business plans include benefits, such as contract and document review or telephone calls made and letters written on behalf of the business, as well as legal consultations for the business. Employers have reported that having a good legal plan for their business is like having an attorney on staff who is ready to offer the crucial legal advice and assistance they need to survive tough economic challenges.

Benefits to Brokers

We see why group legal can benefit employees and employers, but how does selling group legal benefit brokers?

• 
A Growth Market – The group legal market is enormous and underserved. Small and medium businesses stand to benefit greatly from group legal, but very few have even considered group legal as an option. Ninety percent of Fortune 500 companies provide financial or legal assistance for their employees, but only 9% of companies with fewer than 50 employees provide this assistance. In addition, less than a quarter of all Americans have any legal coverage.

• 
No California Licensing – Unlike health insurance, group legal requires no licensing in California. This results in lower costs and no time spent satisfying state regulations.

• 
Easy Administration – Group legal plans are easy to administer and they are an excellent source of residual income. They also lack the overhead and maintenance of health and dental plans, which require a lot of paperwork and may require frequent education for employees. In addition, most group legal providers do not restrict enrollment periods. Also, some are flexible about benefit offerings.

• 
Return on Investment – Group legal provides an excellent return on investment for brokers. Since group legal costs significantly less than health insurance, it does offer lower commissions. But, it requires significantly less time and paperwork. Also, there is virtually no work involved for renewals. As such, group legal is an excellent source of residual income.

• 
A Winning Pitch – Above all, group legal makes an excellent case for itself. For business owners and employees alike, having group legal is like having an attorney on call. Group legal can provide relief for troubled employees and legal advice for business owners. The benefits are proven; employers simply need the information and education that you, as their broker, can provide.
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Group legal plans improve quality of life for their employees and increase employee loyalty. They are good for employees, good for employers, and bottom line, very good for you, too.
Tanner Kinkead represents Caldwell Legal, whose founder, Donald Caldwell, pioneered the prepaid legal industry in 1967. For more information call 800-222-3035 or visit us online at www.caldwell-legal.com.

The Only Things Certain In Life Are Death, Taxes
…and Personal Legal Needs

by Ann Dieleman
As Benjamin Franklin once said, “In ..this world nothing can be said to be certain, except death and taxes.” But, other life events seem to be inevitable as well. Personal legal issues can happen to anyone at anytime – affecting quality of life, relationships and careers.

In national studies, seven out of 10 Americans said they had been dealing with legal issues during the previous year. As a result, they were less productive on the job, took time off and spent, on average, 57 hours – the equivalent of seven business days – on personal legal needs while at work, according to a study commissioned by Arag. In our complex society, no one is immune from legal issues and Californians are no exception.

The Need For Legal Services

People generally recognize the importance of professional services for everyday concerns, such as taxes or medical issues, but they don’t always know where to turn for help with legal matters. Access to legal services can help employees with many types of legal needs including the following:

• Creation of a will or living will.
• Durable power of attorney.
• 
A healthcare directive to make sure loved ones are protected.
• Trust and estate planning documents.
• Review of property agreements.
• Advice on adoption or divorce.
• 
Dispute resolution or family law matters.

Certainly, not all legal needs are negative or necessarily stressful, but some life events, such as bankruptcy, foreclosure, divorce, or child custody issues can have a detrimental effect on private lives and careers. Your clients are understandably concerned about the occurrence and severity of employees’ legal needs and how they can affect employee engagement, productivity, and operating costs. Fortunately, cost-effective resources are available in the benefit market to help your clients’ employees get their lives and careers back on track.

In fact, many progressive organizations in California and across the country have adopted an employee benefit that offers easy access to affordable legal services to prevent or resolve legal issues, create personal safety nets, and achieve legal wellness. They have chosen to offer group legal plans as part of a competitive benefit program for their workforce. Employees gain access to professional services and valuable resources to address personal or family needs.

Why You Should Recommend Legal Plans

Human resource and benefit professionals rely on you for wise counsel, quality products, responsive service, and solutions to business needs. Recommending a quality legal plan to your clients is important because this product does the following:
• 
Helps solve significant workplace challenges, such as presenteeism, absenteeism, and productivity issues.
• 
Enables you to satisfy a wider range of needs for existing and new clients.
• 
Adds value and differentiates your total product portfolio.
• 
Represents a low risk and low maintenance product.
• 
Offers a straightforward, uncomplicated product that doesn’t require extensive client handholding.
• 
Is not subject to the same inflationary drivers as some other employee benefits.
• 
Strengthens your book of business.
• 
Provides a nice offset product for employers who are wrestling with higher operating costs.
Over the past few years, legal coverage has become an important benefit, especially in the ancillary or voluntary market. The types of legal coverage range from discount and access plans to comprehensive coverage:
• 
Discount plans typically include basic covered services, such as will preparation and a discount from an attorney’s standard rate or a guaranteed hourly rate.
• 
Access plans typically provide legal advice and consultation by telephone, attorney calls and follow-up letters and document review and preparation via telephone or fax.
• 
Comprehensive legal plans typically provide a wider range of services (beyond those offered in discount and access plans) including office work and representation for various types of legal matters at no additional cost.

A Valuable Product In Today’s Market

Employees have different interests, needs and concerns, based on their life stage, life style, and life events they’re experiencing, which makes legal plans an important resource to serve today’s multi-generational society. While some specialty products, such as identity theft plans offer some assistance in times of need, leading group legal plans provide more robust benefits. Most comprehensive plans are designed to meet 80% to 90% of the personal legal service needs of middle-income families. Some carriers offer flexibility to customize plan design or offer dual plan designs to meet the needs specific to the client’s employee population. Members typically have access to a group of attorneys and other legal resources to meet their legal needs at an affordable premium.

The following trends have emerged in legal plan offerings:
• 
Online legal documents, such as wills, that are legally-valid and state-specific
• 
Identity theft prevention and resolution services with certified identity theft specialists.
• 
Education and referral resources for various legal needs, such as elder care.
• 
A legal center that offers online educational resources for all employees, plus employee-pay solutions to meet budget and legal needs.

Few things are certain in life, but offering great advice, products, and service is sure to please your clients. One of the best ways is by recommending a group legal plan. Group legal coverage is definitely worth exploring before your competitors discover its potential and stake a claim to your prospects and clients.

Legal plans provide affordable solutions for personal legal matters that touch employees, families and the workplace. Offering a legal plan as a voluntary benefit can help employers keep benefit and operating costs in line with budgetary constraints, and that’s sure to keep clients happy in today’s uncertain economy.
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Ann Dieleman is senior vice president and chief marketing & business development officer for ARAG. She had nearly two decades of sales, marketing and leadership experience in the employee benefit arena. She leads design teams that develop products ranging from ARAG’s interactive website to insurance plans that provide affordable access to legal services. Ann received her bachelor’s degree in business and communications from Simpson College in Indianola, Iowa and her Master’s from Drake University in Des Moines, Iowa. She holds an associate’s degree in customer service designation from the Life Office Management Association. Ann is an executive member of the Creative Good Council. She is a member and former board member of the American Marketing Association, a member of the Direct Marketing Association and a corporate member of LIMRA International.

Technology and the Future of Voluntary Benefits

by Shawn Jenkins
Brokers and agents are at a crossroads in the voluntary-benefit marketplace. Some will adapt and survive while others will disappear. The differentiator will be the use of technology in the marketplace. Those who can use technology to provide a more convenient and interactive experience will be well positioned for long-term success.

Technology advancements of the past decade have changed the benefit-selling game forever. The new market requires a new way of thinking since consumers operate in an entirely different way than they did 10 years ago. Your clients may be looking to conduct business in a different environment with a different service delivery model. In fact, the concept of worksite benefits could be extinct in five or 10 years.

If you are a veteran of the industry, you may need to temporarily ignore everything you know about buying and selling voluntary benefits as you build your strategy. While the fundamental aspects of the industry are likely to remain, success in this landscape requires an entirely fresh perspective and an open mind.

The first thing you should ask yourself is, “Do I understand what my client wants?” The answer can be found in consumers’ online purchasing behavior in the past few years. People in the United States spent several billion dollars more online in 2010 than they did in 2009 and online spending is not slowing down. It is clear that consumers are more comfortable than ever with online purchasing, which highlights the necessity of an online presence for brokers and agents.
It’s going to be more imperative than ever for voluntary benefit providers to make the buying experience convenient. While some clients still favor the worksite meeting, many will turn to the online marketplace for information about their benefits and possibly to compare and purchase coverage. This presents a unique challenge for brokers who based their careers on relationship building through one-on-one interactions with clients. While face-to-face conversations build rapport, the trust factor is changing dramatically as people conduct more transactions online.

In the same way consumers turned to online banking to manage finances and pay bills, they are turning to the Internet to get information about their insurance. For most, it’s still important to know have access to an actual human being when you need advice or have an issue. However, the preference for online service and information is undeniable. If this is not evident, think about how iTunes and Amazon.com have changed their industries so dramatically.

Like many other industries, the future of voluntary benefit selling success, rests upon the ability to harness technology and provide consumers with more convenient access to the products they need.

Many brokers think they already know how to provide a convenient experience. After all, what could be more convenient than somebody coming to your office to explain voluntary products in a face-to-face meeting? For many, this is an ideal scenario and will continue to be for years to come. However, brokers and agents should recognize that there is a significant opportunity to provide a more competitive and convenient experience.

A broker who walks into a meeting with an iPad full of helpful applications is likely to be more well-received than a broker who walks in with a stack of brochures and forms. If you can use mobile applications or online tools in your presentations, now is the time to begin. As people continue to embrace new technologies in their everyday lives, they will be more likely to recognize and appreciate vendors who provide a more interactive and dynamic shopping experience.
Finally, it is important for brokers to remember that, by embracing and using technology, they are positioning themselves as a trusted partner to employers during a very challenging time. In light of healthcare reform, employers know that it is more important than ever to provide their workforce with a comprehensive and flexible variety of benefits. Employers need product options; they need help providing education about the insurance products; and they need an effective service delivery model that does not drain time or resources. Brokers and agents who can position themselves as trusted advisors and technology innovators will undoubtedly experience the most long-term success.
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Shawn Jenkins is the CEO of Benefitfocus, a benefit software company. He can be reached at 843-849-7476.

Innovative Dental Plans That Keep Costs Under Control

by Chris Swanker
Employers are looking for innovative dental plan designs that allow them to retain a robust benefits package while maintaining a healthy bottom line. It’s an environment that the leaders in our field know well. Our industry can’t afford to ignore trends that are driving change in dental plan design, with plans that re-define the cost versus flexibility trade-off. Cutting-edge producers are staying in touch with the prevailing trends.

Take the situation in California. UCLA economists predict that an economic recovery won’t gain sure footing until later in 2011, but you can bet that small and mid-sized businesses aren’t standing still. They’re looking for ways to reduce all costs in a slow-to-no growth regional economy including expenditures on employee benefits. Your role is to help employers offer affordable benefits that their employees want. Every day, brokers are asking for new ways to help their clients reduce costs without sacrificing benefits.
The good news is that leading dental insurance providers are one step ahead; they’re developing affordable plans that help businesses, of all sizes, hold down costs while providing their workforce one of the most popular employee benefits.
Below are examples of innovative, flexible solutions that offer more choices and more ways to save for both employees and employers:

1. 
Dual Choice – More Choice For Employees And More Savings For Employers

Dental HMO and PPO networks are solutions you probably know well. Dental HMOs can be adjusted a variety of ways to balance network size with different price points to meet a client’s needs. Dental PPOs add flexibility by giving participants options at the time of service. Insurance industry leaders haven’t stopped there. Dual choice plans combine the best qualities of HMOs and PPOs. They give employees a choice of network structure to enroll in either an HMO or PPO. Enrollees can choose between these options:

1. 
A select roster of Dental HMO dentists provide deeply discounted services with unlimited benefits for low, pre-determined member co-pays.
2. 
Broader PPO networks cover more dentists. The cost sharing structure between the member and the insurance company is based on the fees that the dentists actually charges – up to an annual maximum.

2. 
Tiered Plan Designs Two PPO Networks To Maximize Benefits

A number of new, lower cost PPO options are becoming popular while maintaining the traditional PPO emphasis on flexibility. They help companies manage their PPO dental premiums without reducing the level of benefits. And more importantly, they give participants control of their healthcare choices as well as the price they pay.

An exciting innovation combines two PPO networks to take the advantages of dual choice programs a step further. This type of plan can combine the traditional preferred PPO network and standard benefit reimbursement with a second, more exclusive PPO network of dentists, offering deeper discounts in return for a third tier of enhanced member benefits. Because it is a PPO, employees can see a dentist outside of the network and still receive some level of benefit. This combination of multiple PPO networks offers a choice of any dentist while giving employees an opportunity to reduce their out-of-pocket costs through in-network incentives. Just as importantly, this kind of plan gives employers the ability to offer better benefits without paying higher premiums.

3. 
Voluntary Benefits – Shifting costs without sacrificing benefits

Offering voluntary plans is another popular way for employers to offer benefits without breaking the bank. According to LIMRA, the use of contributory plans dropped from 52% in 2002 to 47% in 2009 while voluntary plans grew to 31% in 2009 from 26% for 2002.
Since dental remains one of the most popular benefits among employees, offering voluntary dental is a great way for employers to leverage their purchasing power for the benefit of their employees without adding any cost to their benefit program. They can also offer more choice through voluntary dental buy-up plans. These plans allow employers to reduce costs while giving employees a choice between two plan options, one lower cost and one more comprehensive.

4. 
Focus on Preventive Care – Improve health and productivity, while reducing costs

Savvy brokers and employers recognize that encouraging employees to utilize their preventive dental coverage can put them on the road to better oral hygiene and better overall health since dentists can address patient problems early on.
There’s a very good reason to see things this way: It is becoming more recognized that dentistry is a cornerstone to a comprehensive wellness benefit. The Surgeon General estimates that the American economy loses some 160 million employee work hours each year because of oral health problems. Dental benefits make it possible for participants to address oral health issues early, which keeps employees on the job and productive; it boosts output and contains healthcare costs at the same time. Coverage of benefits, such as oral cancer screenings and enhanced periodontal treatments, make it more affordable to take care of oral health and can impact long-term costs in the future.

Staying Ahead

There’s good reason why leading carriers have been so active in developing networks and products. Small and mid-sized companies know that offering dental benefits is a way for them to keep up with larger employers as the labor market becomes more competitive. A 2011 LIMRA study reveals that 62% of employees consider benefits an important factor when weighing comparable job offers. In fact, it’s the single most critical factor — ahead of employer stability, salary increases, paid leave, and work environment.

Employers understand that offering dental coverage helps keep employees healthy and productive. But during this sluggish recovery, most companies are focused squarely on affordability. It’s our job to respond to both near-term and longer-term market forces in order to help them stay competitive.
In the end, there are a number of ways to keep abreast of the dental benefits marketplace:
1) 
Recognize the importance of dental coverage and the need to find new solutions to meet client needs.
2) 
Stay on top of new plan design trends.
3) 
 Approach dental coverage as a supplement to a wellness plan that can help keep employees healthy and productive while reducing overall costs.
These are the very best ways to stay at the forefront of our business and do the very best for our employer and employee clients because Dental benefits are important.
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Chris Swanker is Vice President, Group Dental & Vision for The Guardian Life Insurance Company of America. For more information call (800) 662-6464.

Dental Insurance Helps Detect a Growing Concern

by Karen Gustin, LLIF
Dental insurance has been a popular employee benefit for several decades. Particularly essential to employee health are preventive care services, with teeth cleanings and checkups to discover dental problems in the early stages. Medical research has identified another reason to value preventive dental care checkups: early detection of oral, head and neck cancer.

Babe Ruth, Sigmund Freud, Ulysses S. Grant and Michael Douglas are recognized legends from different fields who have one thing in common: oral, head, and neck cancer. Oral, head and neck cancer is considered the sixth most common cancer in the United States, with more than 50,000 people diagnosed with the disease each year, usually after age 40.

The disease is highly curable if caught in an early stage. Unfortunately, many people ignore the early signs of the disease, so it is often in stage three or four when medical professionals make the actual diagnosis. Five years after people are diagnosed with the disease, only 50% survive. These fatal outcomes are higher than for Hodgkin’s disease, malignant melanoma, cervical cancer, or testicular cancer.

Warning Signs

There are many early warning signs of oral, head, and neck cancer, if people pay attention to changes in their body. The disease usually develops in cells in the mucosal surfaces of the mouth, nose, or throat. These tissue areas are easily exposed to environmental conditions. According to medical researchers, normal mucosal cells look like scales when examined closely, leading them to label the disease squamous cell carcinomas.

Oral, head and neck cancer attacks the nasal cavity, sinuses, lips, mouth, salivary glands, thyroid, throat or larynx (voice box). Since the symptoms are often subtle, it is helpful to know the warnings signs:
• Red or white mouth sore that doesn’t heal within two weeks or increases in size.
• Lump in the neck.
• Hoarseness or change in voice that lasts more than two weeks.
• Swelling or persistent pain in the mouth or neck that does not abate.
• Thickening in the cheek.
• Difficulty swallowing, speaking, chewing or moving the tongue.
• Soreness or a feeling that something is caught in the throat.
• Numbness in the tongue, mouth or facial muscles.
• Pain in the upper teeth or problems with dentures fitting correctly.
• Chronic sinus infections that do not respond to antibiotics.
• Swelling under the chin or around the jawbone.
• Difficulty breathing.
• Persistent earache.
• Changes in skin color and texture.
• Blood in saliva or phlegm.

Risk Factors

What causes oral, head and neck cancer? There are several common risk factors associated with the disease:
• 85% of diagnosed cases are linked to tobacco use.
• Smoking cigarettes – Major cause of most head and neck cancers.
• Smokeless or chewing tobacco – Often causes mouth cancer; contains the highest amounts of nicotine easily absorbed by the body.
• Use of tobacco and alcohol – The risk is higher if these products are used together.
• More than 200,000 Americans die from smoking-related illnesses. While this statistic has decreased in past years due to the number of people who have quit smoking, many of these people have switched to smokeless tobacco products, believing they are a safe alternative. Unfortunately, they are only exchanging the site of potential cancer concerns from their lungs to their mouth, neck, or throat.
• Extensive sun exposure to the lips.
• Radiation to the head and neck.
• Inhalation of nickel or wood dust, asbestos, formaldehyde, glues, mustard gas or radium in a work environment.
• Human papillomavirus (HPV) – An increased number of young nonsmokers have been diagnosed with this cancer-causing virus, which is transmitted through oral sex.
• Poor oral hygiene due to inconsistent practices of daily brushing and flossing teeth or regular dental examinations for oral health checkups and teeth cleanings.
• Consumption of certain preservatives or salted foods.
• Use of mouthwash with a high alcohol content.

Treatment Options

For people diagnosed with oral, head, and neck cancer, the exact treatment plan is determined by the location of the disease, the person’s age, and overall health. Options typically include surgery to remove the source of the cancer and radiation therapy and chemotherapy to kill cancer cells.
People who have been diagnosed and treated for oral, head, and neck cancer have an increased risk of developing a new cancer in the head, neck, esophagus, or lungs. Usually it is dependent on the original diagnosis, but there is a higher risk for those who continue to smoke and consume alcohol.

Avoiding the Risk

According to medical professionals, the best solution to avoid getting oral, head and neck cancer is to follow these practices:
• Maintain a healthy lifestyle, exercise at least 30 minutes, five days a week.
• Enjoy a nutritious diet high in fruits and vegetables.
• Avoid consumption of alcohol and use of tobacco products.
• Follow good daily oral health habits, including brushing teeth after meals, flossing teeth at least once daily and using a non-alcohol mouthwash to remove food particles left in the mouth
• Schedule regular appointments with your dental professional for teeth cleaning and an oral checkup to detect symptoms of oral, head and neck cancer in the early stages.
• Participate in an annual screening for oral, head and neck cancer.

The Value of Dental Insurance

Employers and employees place high value on dental insurance benefits. While many people are aware of the importance of good oral care, they need to understand the significance of regular dental appointments for cleanings and oral checkups to detect dental concerns and early signs of oral, head, and neck cancer. Since the disease is highly curable if caught in the early stages, people need to be aware of the signs and symptoms and contributing risk factors. Employers should consider incorporating education on oral, head, and neck cancer into existing wellness programs and encourage employees to follow good oral health habits and participate in a preventive screening to detect this disease in the earliest stage possible.
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Karen M. Gustin, LLIF, is senior vice president – group marketing, national accounts and block acquisitions for Ameritas Group, a division of Ameritas Life Insurance Corp. (a UNIFI Company), with headquarters in Lincoln, Neb. A leading provider of dental and eye care products and services, Ameritas Group added hearing care to its product portfolio in 2008. Gustin joined Ameritas Group in 1983. She is vice chair of the National Association of Dental Plans’ board of directors and its statistical task force, and also serves on NADP’s executive committee.
Ameritas Group has established an endowment for Oral, Head and Neck Cancer Programs at the University of Nebraska Medical Center College of Dentistry to assist in the research and treatment of this disease.

Reducing Costs and Boosting Productivity with Absence Management Programs

by Rick Shube
The insurance industry observed disability insurance awareness last month, but it’s an important subject year round since containing benefit cost is an everyday challenge. Establishing a strong absence management program should always be a primary business objective because of the steep costs of employee absences. In fact, an average of 35% of payroll goes toward covering the direct and indirect costs of unscheduled absences, according to research by Mercer.

A wide range of programs helps employees remain productive and stay on the job by improving their health, well being, and work/life balance. Brokers can play an important role by helping employers evaluate the options and choose programs that are right for their business.

Americans Work For More Than Just A Paycheck

In 2009, CIGNA commissioned a study examining American attitudes toward work. It revealed that Americans live to work rather than work to live. Simply put, people want to work and be productive, which suggests that employees can be greater allies in a comprehensive stay-at-work and return-to-work program than they may realize.

A follow-up study in 2010 showed that employees don’t see a link between preventing disability and participating in health and wellness programs, even though these programs are a common component of an integrated absence management program. Employers can improve health and reduce costs by establishing incentives to encourage greater use of preventive programs and educating employees about healthy choices and behavior. Benefit programs that incorporate preventive services can help employees avoid missing time at work. According to Hewitt Associates, nearly two-thirds of employers invest in long-term solutions to improve the overall health and productivity of their workforce. The study also reveals an emerging interest in absence management programs.

Employee Assistance Programs Can Make a Difference

An employee assistance program (EAP) is an important tool available to employers. These programs provide short-term counseling for stress, substance abuse, and other issues that can affect productivity or result in a disability absence. EAPs also refer employees to services, such as childcare and elder care, as well as financial and legal services. CIGNA’s internal research shows that the average employee saved more than 11 hours using its EAP to find services. That goes a long way toward improving the work/life balance. In 2010, CIGNA surveyed users of its employee assistance programs. More than nine in 10 employees reported increased work attendance and productivity.

Family Medical Leave

Claims related to the Family and Medical Leave Act (FMLA) increased nearly 20% from 2008 to 2009, according to a survey of large and mid-sized companies by Employer Measure of Productivity, Absence and Quality (EMPAQ). The firm, which is run by the National Business Group on Health, helps employers benchmark their health and productivity management programs. The report also revealed that larger employers are particularly vulnerable to increasing FMLA claims because of how absences can affect productivity and a company’s bottom line.

Absences can also affect an employee’s financial security because FMLA leave is unpaid. The employee’s income and job security may be at risk when that time is used up. On the other hand, a comprehensive absence management program can help foster personal accountability and encourage employees to take actions that can help them remain productive and at work.

Brokers can be a valuable resource by helping educate employers about how a family medical leave program can work along with medical and disability benefits. Brokers can also help employers understand the components of an absence management program, such as vocational counseling, for example.

Comprehensive Absence Management at Work

When an employee takes intermittent leave for a serious health condition, having a vocational rehabilitation counselor can help them remain productive and on the job. A vocational counselor may suggest improvements to the workplace or workstation to alleviate physical barriers and help the employee return to health. It’s important for the employee to be engaged in managing their condition. Having a referral to disease management or health promotion programs in combination with EAP can help some employees manage their health.

A common factor in employee absence is having a chronic condition, such as back pain or a serious illness, such as cancer. With a team approach, specialists can assess health related limitations to the workplace and collaborate with the employee, the healthcare professional, and the employer to secure workplace accommodations and help the employee remain productive. A vocational rehabilitation counselor can help decrease the likelihood of future absences by addressing the issues before they become a disability event.

Chronic Care Programs Help People Stay on the Job

Your clients may already be looking for a solution to the economic impact of poor health. The annual cost of poor health in the workplace is estimated to be $1.8 trillion, according to the Journal of Occupational and Environmental Medicine. While not every illness is preventable, CIGNA’s research shows that chronic care programs can slow disease progression and reduce absences. A four-year CIGNA study revealed that people who were in a chronic care program when they experienced a disability missed nearly four fewer days of work than did people with chronic a condition who didn’t participate in the program.

Chronic care programs are designed to help improve health and avoid extended absences by identifying barriers to returning to work. These programs also provide supportive coaching to help employees take their medications as prescribed, follow medical advice, adopt healthier lifestyles, and get follow-up screenings and tests. For example, diabetes patient who fails to exercise, maintain a healthy diet, and take prescribed medications on a consistent basis could develop high blood pressure or other complications that a routine check up would identify. Left unaddressed, these symptoms could lead to heart disease, stroke, or worse.

Integrating Medical and Disability Makes a Difference

Implementing Family Medical Leave Act, employee assistance, and chronic care programs are just three ways for employers to have a positive impact on employee health and help -employees stay on the job or return to work. However, brokers can help employers understand that integrating medical and disability benefits leads to the best outcomes for employee health. Combined programs give employers a proactive return-to-work approach and a stay-at-work strategy to minimize absences, improve productivity, and control benefits costs over time.

CIGNA’s 2010 Integration Value Study revealed how combined medical and disability programs can reduce absences. Employers with integrated medical and disability programs saw a 20% reduction in non-maternity disability absences, which could represent a savings of about $397,500 in direct costs and productivity for an employer with 5,000 employees.

The study looked at employees with an integrated program who needed a non-maternity short-term disability leave. They needed an average of 13 fewer days of disability absence than did those who did not have access to an integrated program. Employees with an integrated program also had 11% better success in returning to work. The bottom line was a 20% reduction in non-maternity short-term disability absence, so an employer with 5,000 employees could see nearly 2,500 fewer days of disability absence per year.

Bringing it together makes sense

As much as a third of payroll can cover planned and unplanned absences. A year-round attitude toward health and wellness can make a big difference. By merging clinical health and wellness programs with disability management, employers can help their employees prevent absences. It can also help employees who need to take a leave of absence to find a quicker and safer path back to work to facilitate a faster recovery.

Brokers play a significant role in bringing this expertise to their clients. A comprehensive absence management program can make a measurable impact in fewer absences, greater productivity and bottom line cost saving over the long term. Employees will be happier and healthier; employers will have more control over their benefit costs; and brokers will be the strategic counselors who helped make it possible.
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Rick Shube is vice president of sales for the Western Region for CIGNA’s disability, life, and accident insurance business based in California.

Hospital Confinement Indemnity – A Creative Solution to Rising Premiums

by Joe Willingham
What business out there isn’t struggling with the constant rise in medical insurance premiums? Nationwide, health insurance premiums have increased 8.8% for 2011 – the highest in the past five years, according to a 2010 study by Hewitt Associates. Not only is the cost of medical premiums rising rapidly, but deductibles, co-pays, and out-of-pocket expenses are also rising. In fact, the percentage of employees enrolled in a health plan with at least a $1,000 deductible has more than doubled since 2006, according to a study by the Henry J. Kaiser Family Foundation.

Employers generally take one of two roads in response to the rising cost of providing health insurance. They pass along increases to employees, which is not a popular option. Or they raise their deductibles or coinsurance, which is equally unpopular. But your clients may not know about another option – hospital confinement insurance.

Hospital confinement indemnity plans help relieve some of the financial pressure that employers face with providing quality employee benefits. These plans offset the cost of hospitalization as well as some of the most common out-of-pocket expenses associated with a hospital stay. Here are a couple of situations in which this coverage works well:

1. 
When an employer can no longer shoulder the premiums for employee healthcare coverage. Increasing the deductible or coinsurance allows employers to lower their cost for major medical coverage. They can then offer a voluntary plan to help employees with increased out-of-pocket expenses. Employees can also use the benefits for non-medical expenses, such as mortgages and car payments. Employers can pay the premium for this new coverage themselves or allow employees to pay the premium. Target clients that are considering increasing their deductibles. By being proactive, you can offer a solution they may never have considered.

2. 
 When an employer has already raised the deductibles or coinsurance amount for their health plan. By offering employees a soft landing with a voluntary product, employers can take the edge off the change in coverage and improve morale.

Choose A Plan That’s Flexible Enough To Meet Your Clients’ Needs

It’s important to choose hospital confinement indemnity plan that’s flexible enough to meet a variety of needs. The following are some key features:
• 
A variety of rate options. Look for discounted and composite ratings.
• 
Higher benefit levels. Choose a plan with benefit levels that can keep up with out-of-pocket medical and non-medical expenses.
• 
Flexibility. Can you tailor the plan to meet your clients’ needs? Some plans offer other additional coverage for health screenings, outpatient surgery, and diagnostic procedures, on top of hospital confinement benefits.
• 
Healthcare reform exemption. Most hospital confinement indemnity plans are exempt from healthcare reform legislation because they’re not considered health insurance.
• 
Flexible underwriting. Check to see if the plan is offered on a guaranteed issue basis and whether pre-existing conditions can be waived when participation requirements are met.
• 
Benefits aren’t tied to major medical claims. Most plans allow employees to use the plan’s benefits any way they choose including paying for non-medical expenses, such as day care, groceries, and utility bills. And there’s no coordination of benefits with any other plans that employees may own. This means that employees don’t have to wait for any other insurance to first adjudicate a claim
• 
Employer-paid or employee-paid. Can your client choose to pay all or part of the premiums or allow employees to pay the premiums?
• 
No lifetime maximum. Look for a plan that offers no lifetime limit on payments made to employees.
• 
Situs state issue. This feature provides consistency in plans sold in accounts with locations in multiple states.
• 
Benefits are paid regardless of any other coverage employees may have. Voluntary plans pay in addition to any existing coverage the employee may already own.

What’s In It For You?

Hospital confinement indemnity plans offer a solution to one of your clients’ most pressing concerns, but they can also provide you with a ready-made income stream. You can offset any loss in commissions from health insurance with the money you’ll make from selling this new voluntary product. And your clients will love you for bringing them a creative solution that they’ve never considered.

How to Choose A Voluntary Benefits Partner

A hospital confinement indemnity plan is just one of many valuable voluntary products available to brokers. You can quickly ramp up your own voluntary benefits practice and begin maximizing your revenue by partnering with a carrier that specializes in voluntary insurance. Evaluate partners by looking at the following capabilities:

• 
One-to-one benefit counseling. A one-size-fits-all benefit counseling no longer works. Since insurance is so complex, relying on self-education or technology isn’t realistic. You can create real satisfaction for your clients by giving them access to benefit counselors who personalize the decision-making experience for employees. Employees appreciate having someone help them understand all of the terminology and choices.

In fact, surveys of employees who meet with benefit counselors individually during enrollment prove the effectiveness of the one-to-one method. Ninety-seven percent of employees surveyed by Colonial Life said that personal benefits counseling improved their understanding of their benefits and 98% said that this type of communication is important, according to a 2010 survey by Colonial Life.

Personal benefits counseling can also increase employee participation during enrollment. The average participation rate for face-to-face enrollments is 46% higher than for self-enrollment, according to a 2010 study by the Eastbridge Consulting Group. That means 46% higher commissions for you.

• 
 Local enrollers. Using an enrollment firm that relies on per-diem enrollers who travel from other locations can add expense and create a lack of continuity in your accounts. Encourage long-term client relationships by using a national team of local, established professional benefit counselors who can conduct enrollments and are available for new hire and re-enrollments year after year. You’ll increase client satisfaction and persistency, which will increase your income. You’ll also reap the rewards of a consistent benefits message within your accounts.

• 
Strong benefit communication and education. Don’t underestimate the importance of a good education, especially in today’s marketplace. Companies worry about how to communicate the many benefit changes and options. By offering benefit communications services, you can help employees better understand and value their benefits and understand their employer’s investment in them. Partnering with a carrier that offers this service, at no cost to your clients, can differentiate you within the marketplace.

Try Something New

Don’t be afraid to offer your clients a solution that they may not have considered. Show them how a hospital confinement plan can offer a powerful and immediate solution to their concern about rising medical premiums.
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Joe Willingham is vice president of sales for the western region of Colonial Life & Accident Insurance Company. Colonial Life & Accident Insurance Company provides insurance benefits for employees and their families through their workplace, along with individual benefits education, advanced yet simple-to-use enrollment technology and quality personal service. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states and the District of Columbia. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company, Worcester, Mass. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group, one of the world’s leading providers of employee benefits. For more information, visit www.ColonialLife.com.

Get Well, Stay Well, Be Well Your Guide to Wellness

by Mark Roberts
When was the last time you discussed wellness products with your clients? If you are active in the employer market, it should be one of the top subjects of conversation. Your plan design should include wellness options along with the client’s major medical plan and other voluntary benefits. If you want to score points with business owners and CEOs who are interested in having healthy employees and healthy profits, be their guide to wellness.

Wellness is the big buzz in today’s workplace. At HR conventions and executive healthcare briefings, managers and HR directors say they are zeroing in on wellness to keep employees from getting sick, reduce healthcare costs, prevent lost workdays due to sickness, and increase workforce profitability. When employees get sick, it’s often due to their overall health, but also to the strength of the company’s wellness focus. Wellness products and services have received huge acclaim with companies for driving down healthcare costs and promoting healthy living. Employees who constantly miss work because of health reasons are unprofitable due to lower production of goods and services, less time to serve the business and customers, higher costs to pay sick time, and much more. Employees need to stay healthy to keep the doors open.

According to the Small Business Wellness Initiative, businesses that invest $1 in workplace wellness often reap $3 to $5 in savings through lower healthcare costs, absenteeism, and workers’ compensation claims. Workplace wellness programs can significantly affect the bottom line, particularly in small businesses where employee well being significantly affects on overall productivity. If you haven’t considered how workplace wellness can benefit your clients’ business, now is the time to start. Corporate wellness programs are found in factories, corporate offices, large corporations, and small companies alike.

Granted, many employers push a wellness plan at work. But, too often, the messaging is lost on employees who are more concerned about their hours, their paycheck, and their weekend plans. If your clients have started an employee wellness program, how do they get workers to participate? A good way to start is to offer a variety of wellness options with certain initiatives tied to specific goals. Here are a few questions to ask clients to consider when promoting a wellness program:
1. 
Do you offer employees physical activity options in the workplace?
2. 
Do you promote a wellness culture in the workplace?
3. 
What services are included in your wellness plan?
4. 
Are there measurable outcomes related to workplace wellness?
5. 
Have you increased healthy eating options at the worksite?
6. 
Is a qualified EAP part of your strategy for mental wellness and counseling?
7. 
Are certified coaches part of the plan?
8. 
Do you have a long-term strategy to encourage total employee participation?
9. 
What are the cost factors for the overall plan design and what is the cost share per employee?
10. 
Should you use an outside vendor to manage your wellness program?

Many wellness plans include weight loss regimes, smoking cessation, stress management, and exercise as well as advice on diet and fitness. Some go further with cafeterias that serve only healthy foods, campus bicycles, onsite classes for yoga and martial arts, and more. Here are some major reasons why it makes sense to have an employee wellness program:

1. 
Decreased Health Insurance Costs: Wellness programs have shown incredible returns and remarkable results in reducing healthcare costs.

2. 
Increased Performance: Employees who participate in wellness programs have noted a substantial improvement in work performance. Healthy employees are a lot happier, which means maximized performance. Being healthy increases concentration, energy levels, and consistent performance.

3. 
Workplace Morale and Company Loyalty: Company loyalty not only means reduced costs in recruitment and turnover, but also a more harmonious working environment. Employees who see that their employer cares about their health and well being take more of an interest in performing to the best of their abilities and are more loyal to the company.

4. 
Reduced Absenteeism and Sick Leave: Wellness programs considerably reduce sick leave and associated costs through education, training, and lifestyle management. Less time off means greater opportunity for improved performance. Employees take time off from work for anything from a simple cold to a major health issue, such as heart problems or obesity. With a wellness program, this time may be reduced significantly or avoided all together. A wellness program identifies small lifestyle changes that can influence health and well being. A wellness program also helps employees implement these changes. A wellness program can greatly reduce absenteeism through education, training, and professional healthcare. That means lower costs and higher productivity when employees can accomplish more.

Here is a list of services that your sales plan should suggest as part of a corporate wellness plan by your clients to make available to their workers:
• 
Ergonomic evaluations and training classes
• Lactation rooms and classes
• Prenatal education
• Quiet rooms for relaxation
• Stress management programs
• Fitness facilities
• Massage therapy
• Nutrition education
• Onsite primary healthcare services
• 
Childcare facility or resources and referral service
• Smoking cessation programs
• Parenting classes
• Elder care resource and referral service
• 
Cholesterol, blood pressure and glucose screening programs
• Flu vaccination
• 
Weight loss and weight management programs
• Healthcare consumerism programs
• Employee assistance program
• Lifestyle coaching
• Mobile mammography
• Holistic health education sessions
• 
Complementary alternative medicine—Yoga, Tai Chi, diet education, etc
• Financial counseling
• Dental
Employers can find these offerings in some insurance programs as riders or add-ons to their plan design. The costs can be shared by employees through payroll deduction. The healthcare reform law makes it more important than ever for employers to motivate workers to adopt healthy lifestyles. Effective January 1, 2014, employers will be able to use employee wellness program rewards or penalties of up to 30% of the cost of individual health coverage, up from the current limit of 20%.

Consider suggesting an incentive program that awards employees and reduces insurance premiums when employees achieve measurable results when participating in various programs. Another solution is to include dependents to make wellness work beyond the workplace. Employees are more likely to get healthier when the family participates as a unit. There are a number of ways to engage dependents in their health and wellness initiatives. Perhaps the most important is to include dependents in various offerings designed to support the five dimensions of health: physical, intellectual, social, emotional, and spiritual.

Taking a holistic approach to wellness ensures success. Your goal should be to help your client be the employer of choice not only for employees, but also for potential candidates. It’s just good business!
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Mark Roberts’ professional sales background includes 30 years of sales and marketing in the tax, insurance, and investment markets. Mark is a licensed life, health and accident insurance agent in all 50 states and DC, for insurance products, and discount health plans. He serves as Manager of National Accounts at Careington International ( www.careington.com). Additionally, Mark has been writing a healthcare blog for the past 3 years, found at www.yourbesthealthcare.blogspot.com, which is a topical weblog about various healthcare issues. He also regularly contributes articles to magazines for both medical and dental topics both in the US and the UK. You can reach Mark at markr@careington.com.

A Gap Plan That Works–The Secret to Pairing Worksite Benefits With High Deductible Health Plans

by Toney Chimienti and Sheryl Hunsinger
There has never been a more important time for brokers to have solutions for their clients. Health renewals are coming out and health premiums are on the rise again. But, for most of our clients, their revenues and profits are not on the rise and they are looking to their insurance professional for answers on how to maintain affordable health insurance for their employees. Most employers cannot afford to spend one more dollar on health insurance for their employees. Their bottom lines are already stretched as far as they can go. But you can bring a comprehensive and well thought-out, multi-year answer to their premium crisis using something that a few brokers have found to work incredibly well.

Many brokers have heard of gap plans, but this word is used to describe many very different types of plans. The gap plan, referred to here, is not just any type of wrap plan that has been offered in the insurance market in the past. It does not encourage excessive plan utilization or eliminate all financial risk to an employee. What it does do is assist the employee with large-out-of-pocket expenses for hospitalization or surgeries that the health carrier has already pre-approved. This gap plan will not pay if the health plan provider has not approved the procedure.

Brokers are showing their clients how to save substantial premium at renewal by moving the client to a much higher deductible health plan and adding the proper gap plan that addresses hospitalization, surgeries, MRIs, and emergency room treatment, which is where the employee has substantial out-of-pocket exposure. Clients normally have annual savings of anywhere from 6% to 12% and sometimes even higher.

But for a multi-year savings strategy, brokers need to think ahead to annually rising health costs and how to contain those increases for the employer. Again, the worksite market has the answer, with many brokers already utilizing this cost saving strategy.

The key is a multi-product approach, coupled with a high deductible health plan. A package that enhances an employee’s core benefit package includes an employer-paid gap, guarantee issue critical illness for the entire family, and a quality accident plan. The critical illness plan addresses many of the major illnesses that could cause an employee to have a large out-of-pocket expense and the accident plan covers expenses for the employee if a family member has a serious accident. All of these plans are available at competitive premiums and can be added to the new health premium while saving an employer substantial dollars each year. All these benefits can be census-enrolled by the broker with easy issue due to the guarantee issue features of the products. The employee often ends up with more health coverage, with the employer paying less in annual premium, and having a richer benefit offering for employees.

If you haven’t embraced worksite products, now is a very good time to get serious about this part of the industry. This strategy allows the broker to offer a true cost containment solution to their client, along with the ability to enroll all of these products by census. The broker can also control and service all these benefits themselves for their client. A large majority of health brokers have ignored the worksite market for years. But they really are putting their book of business at risk from competitors by doing so.
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Toney Chimienti is president and founder of Chimienti & Associates Insurance Services, a Managing General Agency and has been in the worksite market for over 30 years.
Sheryl Hunsinger is the Agency Director of Chimienti & Associates, holding this position with the Agency since 1998. Sheryl has been in the worksite industry for over 15 years, and holds a BS degree in Business Administration from CSUF.
Toney & Sheryl can be reached at info@chimienti.com. The Agency phone number is 559-733-1670. The website is www.chimienti.com.

HSAs–Why Consumer-Directed Healthcare Continues to Attract Members

by Martin Trussell
Three recently published studies show the growing popularity of consumer-directed healthcare plans that use health savings accounts (HSAs) and health reimbursement arrangements (HRAs) to reimburse participants for qualified medical expenses. They are saving employers money and may be providing better care to members.

A study conducted by Devenir, an investment firm that specializes in providing investment options for HSAs, found that deposits in HSAs had surpassed $10 billion at year-end 2010. The survey data was collected in January 2011 and consisted primarily of top 30 custodians in the health savings account market. All data was requested for the calendar 2010 year, ending on Dec 31st, 2010. “The survey was conducted in order to help shed light on the rapidly growing and evolving health savings account market,” says Eric Remjeske, president and co-founder of Devenir.

Here are some key findings from the Devenir 2010 survey and research report:

HSAs continue to see dramatic growth as the total number of HSA accounts rose to 6.2 million with assets totaling almost $10.1 billion, a year-over-year increase of 27% for accounts and a 41% increase in assets. The average account balance grew almost 11% in 2010 to $1,627. HSA investment assets reached an estimated $725 million in 2010 (a 102% year-over-year increase) and they are projected to reach $10.3 billion by end of 2015.

A second study conducted by Aetna found that employers that replaced their traditional health benefits plans with consumer-directed plans saved $21.5 million over a five-year period for every 10,000 members. Members of consumer-directed plans accessed more preventive care and screenings than did people with traditional PPO plans. In addition, Aetna HealthFund plan members were more engaged healthcare consumers and continued to get the care they need.

The study, which is the longest-running review of consumer-directed health plans in the industry, included more than 2 million Aetna members. The study compared people with PPOs and those with Aetna HealthFund plans, which consist of HSAs and HRAs.

Consumer-Directed Health Care

HSA members used online tools to look up cost information nearly three times as often as did PPO members and took a health assessment twice as often. Members in the Aetna HealthFund plans also did the following:
• 
Spent 12% more on preventive care and accessed higher levels of screenings for breast and cervical cancer compared to members in PPO plans. In particular, diabetics in the Aetna HealthFund plans accessed screenings at higher rates than diabetic members in PPO plans.

• 
Visited the emergency room for non-urgent care 5% less than members in a PPO plan; and
• 
Used the prescription drugs to treat chronic conditions, such as diabetes, heart failure, high blood pressure and high cholesterol, at rates similar to PPO members.
HSAs continue to demonstrate more dramatic savings than HRAs. HSA members had 15% lower primary care physician utilization for non-routine visits, which may include a cold or sore throat, 11% lower specialist utilization, and 9% lower overall medical costs in 2009.
The study looked at nearly 2.3 million members. That includes 1.8 million members whose employer offered an Aetna HealthFund product but chose another product and 498,000 Aetna HealthFund members. The study extended from January 1, 2002 to December 31, 2009.

These findings were somewhat disputed by yet another study released earlier this year by the nonpartisan Employee Benefit Research Institute (EBRI). The EBRI/MGA 2010 Consumer Engagement in Health Care Survey was published in the January 2011 EBRI Issue Brief, and is available online at www.ebri.org. The survey did not find a relationship between account balance or rollover amounts and cost-conscious behaviors, such as checking prices before getting services or asking for generic drugs instead of brand names, among other things.

Paul Fronstin, of EBRI and author of the report said, “It is expected that individuals who are given more control over funds allocated for healthcare services will become more cost conscious, especially once they become more educated about the actual price of health services. However, no evidence was found to support this with respect to some of the measures used in this study of cost-conscious behavior.”

Consumer-Directed Health Care

However, the EBRI/MGA survey did confirm that the number of HSAs and HRAs are showing steady growth, increasing to 5.7 million in 2010, up from 1.2 million in 2006.
While the report found the average account balance dropped slightly in 2010 to $1,355, down from $1,419 in 2009, the amount of money rolled over to year-to-year increased with $4.2 billion rolled over in 2010, up from $4 billion in 2009.

The survey also produced some interesting data about how race, household income, and education may affect the use of account-based plans. Minorities with HRAs or HSAs have higher account balances than do Whites. On average, minorities have an account balance of $1,531 while Whites have an account balance of $1,387.
Balances increased with household income. The average account balance was $1,166 among individuals with less than $50,000 in household income, $1,303 among individuals with $50,000 to $99,999, and $1,742 among individuals with $100,000 or more. Account balances increased for those with less than $50,000 in household income; account balances fell for those with $50,000 to $99,999 in income, and account balances stayed the same for those with $100,000 or more in income.

Lastly, education was found to affect account balances independent of income and other variables. Individuals with a high school degree or less have an average of $1,219 in their account while those with a college degree have $1,519, and those with a graduate degree have $1,558. Only individuals with a graduate degree experienced a decline in their average account balance in 2010.
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Martin Trussell is senior vice president, Business Development For First Horizon Msaver. For more information, call 913-317-2085 or visit www.firsthorizonmsaver.com.

LAAHU Event Examines the Broker’s
Role in Healthcare Reform

by Leila Morris
Though the health insurance market has become more challenging, brokers will have an important role in the post-healthcare reform world, stressed industry and government experts who spoke at LAAHU University Day in April in Woodland Hills, Calif.

Pam Kehaly, president Anthem Blue Cross CA said that medical loss ratio (MLR) requirements are forcing insurers to monitor their profit margins carefully; in the past, profits fluctuated quite a bit from year to year. MLR requirements in the Patient’s Bill of Rights require carriers to spend at least 80% of their premium dollars on medical care and efforts to improve the quality of care; large group insurers must spend at least 85%. Kehaly stressed that Anthem is spreading the pain around by reducing compensation packages for executives and other employees as well as making the cuts to agent’s commissions.

Joe Smith, Kaiser, vice president of Small Group Sales said that, at 92.8%, Kaiser already far exceeds MLR requirements. “We are the original accountable care organization.” Smith added that Kaiser views healthcare reform as an opportunity for the company. Kaiser certainly seems to be in a growth mode if the presentation by senior vice president, Jodie Lesh, is any indication. Kaiser is opening innovative hospitals and offering the latest in electronic medicine. What Lesh didn’t say is how brokers fit into Kaiser’s plans. In fact, she did not say the words “agent” or “broker” once in her talk and didn’t take questions from the audience, which left a bad impression with some agents we talked to.

Other carrier reps said that they were already meeting the MLR requirements before the health reform law when into effect. In 2006, the American Medical Assn. looked at company 10-K, year-end SEC filings and found that most carriers had MLR figures that met or were close to meeting 80% to 85%:
• 
83.9% – Health Net
• 
83.2% – Humana
• 
82.3% – Cigna
• 
80.6% – WellPoint
• 
78.6% – UnitedHealth Group
• 
76.9% – Aetna

AMA noted that, 10 years earlier, many plans had medical-loss ratios in the high 80s or 90s. Executives from Anthem Blue Cross, Blue Shield of Calif., Health Net, Kaiser, and United Healthcare all stressed that they are not rushing into cutting commissions and that any cuts will not affect existing business. Aetna recently reversed a new commission structure, which created uproar among brokers because it reduced commissions on new as well as existing business. In a letter to brokers, Aetna said, Based on your feedback, and after a review of the competitive marketplace, we have decided to change our commission structure for existing business…for Aetna Advantage plans for individuals, families, and the self employed for 2011. Policies with effective dates prior to September 1, 2011 will not be moving to new compensation structure. New commissions only apply to new business effective on or after January 1, 2011.

Brent Hitchings, Blue Shield vice president of Small Group Sales said, “Blue Shield will not be changing our small group commissions–not for all business sold this year.” He said that the company is waiting to make a decision. “Whether commissions will be excluded [from MLR calculations] is still a key issue; We have decided not to rush into it.” Scott St. Clair, Health Net’s Chief sales officer said, “We have not changed broker commissions. We will look at broker support in September.” Neil Crosby, Warner Pacific’s director of Sales commented that, “Most carriers are already meeting MLR requirements. If a carrier lowers commissions and you keep selling, you are telling them that it’s O.K. for them to do that.”

So are MLR requirements a problem or not? A recent NAIFA survey sounds the alarm about “the devastating effects of medical loss ratio on health insurance agents and consumers.” Seventy-five percent of agents have seen their commissions decrease since the MLR requirements went into effect. An additional 13% have been informed that commissions will be cut in the near future. Fifty-three percent say their commissions have been lowered by 25% or more, which includes 17% who’ve seen their commissions cut by 50% or more.

Twenty-three percent of agents whose commissions have been reduced have cut services to clients; 11% stopped selling and servicing policies for individuals; and 4 % left the health insurance market altogether. If commissions remain depressed, 29% of agents say they will stop serving individual health insurance clients and 18% will stop selling health insurance altogether. Forty-four percent say that, if allowed, they will begin charging fees for services.

Thirteen percent of the agents whose commissions have been reduced have laid off support staff or reduced their hours, affecting an average of two employees per agency. Twenty-seven percent say they will be forced to reduce staff if commissions remain depressed. NAIFA supports bipartisan legislation proposed by Rep. Mike Rogers (R-MI) and John Barrow (D-GA) to exclude agent compensation from the MLR calculation.
Healthcare Exchanges Need Brokers

Another issue that worries brokers is whether they will be replaced by facilitators in state healthcare exchanges. Executives from Blue Cross, Blue Shield, and Warner Pacific all said that brokers will be vital part of the healthcare exchange system. Healthcare exchanges will need the expertise of brokers who can respond to the volume of people signing up.

When speaking about healthcare exchanges, Herb Schultz, regional director of the Dept. of Health and Human Services (HHS) said, “I cannot imagine them not using brokers.” Additionally, he stressed that the federal government’s direction on healthcare exchanges, accountable care organizations, and many other details of health reform are far from being set in stone. In fact, the government has already reversed course based on feedback from the business community. President Obama signed into law H.R. 4, which repealed a provision that would have required all businesses to file a 1099 form to report any transaction over $600.

Ruthann Laswick, vice president of marketing for Black, Gould & Assoc. predicted that healthcare exchanges will generally appeal to individuals and very small businesses, but not to groups of 10 employers or more.
One thing was clear from the LAAHU show – brokers can make a difference when they voice disagreement over what carriers or the government is doing – whether it’s a carrier reversing its commission structure or the federal government going back on 1099 requirements.
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Leila Morris is editor of California Broker Magazine and founding editor of the weekly Insurance Insider Newsletter. She has been a business and technology editor and writer for more than 16 years. Previously, she produced custom newsletters for life insurance agents and provided insurance industry Website content for Insurance Marketing and Management Services. Back in Washington, D.C., she worked for defense, environmental, and physics publications where she covered Congressional hearings; interviewed members of Congress, federal officials, and industry leaders; and visited military bases around the country. Morris has a B.A. in Political Science from St. Mary’s College of Md. and was a Congressional intern. For more information, e-mail editor@calbrokermag.com.

Employee Retirement Plans–412i, 419, Captive Insurance and Section 79 Plans; Buyer Beware

by Lance Wallach
The IRS has been attacking all 419 welfare benefit plans, many 412i retirement plans, captive insurance plans with life insurance in them, and Section 79 plans. IRS is aggressively auditing various plans and calling them “listed transactions,” “abusive tax shelters,” or “reportable transactions,” participation in any of which must be disclosed to the Service. The result has been IRS audits, disallowances, and huge fines for not properly reporting under IRC 6707A.

In a recent Tax Court Case, Curcio v. Commissioner (TC Memo 2010-115), the Tax Court ruled that an investment in an employee welfare benefit plan marketed under the name “Benistar” was a listed transaction. It was substantially similar to the transaction described in IRS Notice 95-34. A subsequent case, McGehee Family Clinic, largely followed Curcio, though it was technically decided on other grounds. The parties stipulated to be bound by Curcio regarding whether the amounts paid by McGehee in connection with the Benistar 419 Plan and Trust were deductible. Curcio did not appear to have been decided yet at the time McGehee was argued. The McGehee opinion (Case No. 10-102) (United States Tax Court, September 15, 2010) does contain an exhaustive analysis and discussion of virtually all of the relevant issues.

Taxpayers and their representatives should be aware that the Service has disallowed deductions for contributions to these arrangements. The IRS is cracking down on small business owners who participate in tax reduction insurance plans and the brokers who sold them. Some of these plans include defined benefit retirement plans, IRAs, or even 401(k) plans with life insurance.

In order to fully grasp the severity of the situation, you have to understand Notice 95-34. It was issued in response to trust arrangements that were sold to companies designed to provide deductible benefits, such as life insurance, disability and severance pay benefits. The promoters of these arrangements claimed that all employer contributions were tax-deductible when paid. They relied on the 10-or-more-employer exemption from the IRC § 419 limits. They claimed that that permissible tax deductions were unlimited in amount.

In general, contributions to a welfare benefit fund are not fully deductible when paid. Sections 419 and 419A impose strict limits on the amount of tax-deductible prefunding permitted for contributions to a welfare benefit fund. Section 419A(F)(6) provides an exemption from Section 419 and Section 419A for certain “10-or-more employers” welfare benefit funds. In general, for this exemption to apply, the fund must have more than one contributing employer, of which no single employer can contribute more than 10% of the total contributions. Also, the plan must not be experience-rated with respect to individual employers.

According to the Notice, these arrangements typically involve an investment in variable life or universal life insurance contracts on the lives of the covered employees. The problem is that the employer contributions are large relative to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement. Also, the trust administrator can cash in or withdraw the cash value of the insurance policies to get cash to pay benefits other than death benefits. The plans are often designed to determine an employer’s contributions or its employees’ benefits based on a way that insulates the employer to a significant extent from the experience of other subscribing employers. In general, the contributions and claimed tax deductions tend to be disproportionate to the economic realities of the arrangements.
Benistar advertised that enrollees should expect the same type of tax benefits as listed in the transaction described in Notice 95-34. The advertising packet listed the following benefits of enrollment:

• 
Virtually unlimited deductions for the employer.
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Contributions could vary from year to year.
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Benefits could be provided to one or more key executives on a selective basis.
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No need to provide benefits to rank-and-file employees.
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Contributions to the plan were not limited by qualified plan rules and would not interfere with pension, profit sharing or 401(k) plans.
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Funds inside the plan would accumulate tax-free.
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Beneficiaries could receive death proceeds free of both income tax and estate tax.
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The program could be arranged for tax-free distribution at a later date.
• 
Funds in the plan were secure from the hands of creditors.

The Court said that the Benistar Plan was factually similar to the plans described in Notice 95-34 at all relevant times. In rendering its decision, the court heavily cited Curcio, in which the court also ruled in favor of the IRS. As noted in Curcio, the insurance policies, which were overwhelmingly variable or universal life policies, required large contributions compared to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement. The Benistar Plan owned the insurance contracts.

Following Curcio, the Court held that the contributions to Benistar were not deductible under section 162(a) because participants could receive the value reflected in the underlying insurance policies purchased by Benistar. This is despite the fact that payment of benefits by Benistar seemed to be contingent upon an unanticipated event (the death of the insured while employed). As long as plan participants were willing to abide by Benistar’s distribution policies, there was never a reason to forfeit a policy to the plan. In fact, in estimating life insurance rates, the taxpayers’ expert in Curcio assumed that there would be no forfeitures, even though he admitted that an insurance company would generally assume a reasonable rate of policy lapses.

The McGehee Family Clinic had enrolled in the Benistar Plan in May 2001 and claimed deductions for contributions to it in 2002 and 2005. The returns did not include a Form 8886, Reportable Transaction Disclosure Statement, or similar disclosure.

The IRS disallowed the latter deduction and adjusted the 2004 return of shareholder Robert Prosser and his wife to include the $50,000 payment to the plan. The IRS also assessed tax deficiencies and the enhanced 30% penalty totaling almost $21,000 against the clinic and $21,000 against the Prossers. The court ruled that the Prossers failed to prove a reasonable cause or good faith exception.

More You Should Know

• 
In recent years, some section 412(i) plans have been funded with life insurance using face amounts in excess of the maximum death benefit a qualified plan is permitted to pay. Ideally, the plan should limit the proceeds that could be paid as a death benefit in the event of a participant’s death. Excess amounts would revert to the plan. Effective February 13, 2004, the purchase of excessive life insurance in any plan is considered a listed transaction if the face amount of the insurance exceeds the amount that can be issued by $100,000 or more and the employer has deducted the premiums for the insurance.

• 
By itself, A 412(i) plan is not a listed transaction; however, the IRS has a task force auditing 412i plans.
• 
An employer has not engaged in a listed transaction simply because it is a 412(i) plan.
• 
Just because a 412(i) plan was audited and sanctioned for certain items, does not necessarily mean the plan engaged in a listed transaction. Some 412(i) plans have been audited and sanctioned for issues not related to listed transactions.

Companies should carefully evaluate proposed investments in plans, such as the Benistar Plan. The claimed deductions will not be available and penalties will be assessed for lack of disclosure if the investment is similar to the investments described in Notice 95-34. In addition, under IRC 6707A, IRS fines participants a large amount of money for not properly disclosing their participation in listed, reportable or similar transactions; an issue that was not before the Tax Court in either Curcio or McGehee. The disclosure needs to be made for every year the participant is in a plan. The forms need to be filed properly even for years that no contributions are made. I have received numerous calls from participants who did disclose and still got fined because the forms were not filled in properly. A plan administrator told me that he helps hundreds of his participants file forms and they all still received very large IRS fines for not filling in the forms properly. q
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Lance Wallach, is National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals He does expert witness testimony and has never lost a case. Contact him at 516-938-5007, wallachinc@gmail.com or visit www.taxaudit419.com or www.lancewallach.com.
The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.

Life Insurance–How Technology Makes Producers More Successful

by Jeff Watkins
Life insurance producers are independents at heart. Whatever their particular business situation, most enjoy working alone and taking responsiblity for their own destiny. As salespeople, they focus on getting cases closed. At the same time, many are well known for what can be called a rather abusive attitude toward dealing with paper work and details, all of which are key components of life insurance sales. Even so, some producers are giving themselves a competitive edge. They gather, analyze, and make better use of information faster and more accurately than their peers. They respond faster and more effectively; they move cases through the pipeline faster. Producers who are harnessing technology to manage their practice have the advantage.

Technology remains baffling, confusing, awkward, and even threatening for some.

Even so, the benefits can be enormous – everything from having all your data at your finger tips wherever you happen to be at the moment to having your information organized automatically so it is always ready when and how you need it.

How many times have you thought about placing prospects into A, B and C categories and how many times have you started, but never finished the task, let alone put it into practice? Now, you can do it instantly.
How often have you thought about staying in closer touch with clients, but found it was just too much trouble? How many times have you wanted to send birthday or anniversary cards, but gave up before the first one went into the mail?

Even more to the point, producers want the data on clients, such as their favorite sports, vacations, or wines, as well policy information, notes, and follow up triggers. And what about tracking referrals? Worse yet, as new information comes along, the older data is lost.

As Peter Kaplan of the Financial Productivity Group of Sharon, MA, says, “The issue today for producers is having a competitive advantage and that means not only having all relevant data instantly available, but also using it to meet your objectives.”

Careful tracking and follow up of existing clients and prospects are two critical tasks for life insurance producers who want to grow their practices. Yet, as Kaplan points out, far too many fail to achieve their potential. It isn’t just having the proper software, he notes. It’s learning a regimen that allows you to maximize the software’s performance.

The problem isn’t that there is too much information, it’s not having it available when you need it and knowing how to use it. So often, producers spend money on so called “productivity” technology, but never spend time learning how to make it work for them.

Here’s how important all this is to producers. You’re meeting with a client or prospect and you’re well prepared. But the client starts talking about a need. It wasn’t on your agenda and you don’t have it with you.
You can tell your client, “Let me pull the information together and get back to you.” There are times when this is an acceptable response, but less and less often. Customers want it now. With cloud computing, your smart phone, laptop or iPad, you can answer the question instantly. There’s nothing that leads to a sale quicker than a highly motivated client.

With cloud computing, users can access information and software through the web. This type of system allows employees to work remotely. There are significant advantages to cloud computing or web-based technology including no software to buy and update, no back up issues, no hard drive crashes, and better security than your desktop computer. Plus, you can work wherever there’s an Internet connection.
That’s only the beginning. With all your data residing in one place (the cloud), you have access to a broad range of Internet-based tools, such as one application login to view a complete client profile, automatic importing of client data into a host of planning applications and automatic exporting of data to insurance carrier applications. And the cost is only about $40 a month.

Adam M. Sachs, CFP, ChFC, CLU and CLTC, of Centinel Financial Group, LLC in Needham Heights, MA, is another example of an advisor who has embraced, technology. “We can always do better,” says Sachs, who is constantly on the prowl for new ways to make himself more effective for his clients.

In many ways, his Web-based practice management system gives him that opportunity. It’s the repository of all his client and prospect data. “Beyond the normal client history, I use it for follow up, various types of anniversaries, and even what someone likes to drink when we have a meeting. If it’s Diet Coke, we have it ready.”

For Sachs, information is crucial for relationship building. “The anniversary of a spouse’s death is always a difficult time and I want to acknowledge that,” he says.

Centers of influence receive careful attention, too. “When I receive a referral, I want to make sure I have a record of who sent it,” Sachs says.

When it comes to compliance, Sachs relies on his practice management system to maintain a detailed correspondence log. For example, he uses an automated dictation service to record the details of client meetings. “While everything is fresh in my mind, I dictate right after the meeting, much of the time in the car.” He then enters it into his system.

“The notes are particularly helpful in case design, for compliance, and giving direction to my assistant. It’s particularly valuable for capturing ideas. If you don’t get them down when you think of them, we all know what happens,” says Sachs.

How valuable is all this to Adam Sachs? “I could not run my business without this type of system,” he says. “It means I can manage more work easier.”

There’s more to the technology story. Sandeep Varma of San Diego-based AST Financial Services, Inc. uses it to push the producer productivity to new limits. One of the top 100 financial advisors (as recognized by Barron’s and Registered Rep), Varma has not only harnessed technology to grow his business, but has also made it possible for it even to exist.

He has wedded technology to a sophisticated business model. It starts with the target prospects of couples in their mid-seventies with assets from $3.8 to $5.6 million, who are attracted to a three-hour advertised seminar. “Starting with their RSVP, everything is entered into our system. From then on until the seminar takes place, they receive a friendly e-mail every Friday. The drop off rate is 5%, which is more than made up by those who appear at the door,” says Varma.

What follows is a 90-minute phone interview when all their financial and life story information is obtained and analyzed electronically. Based on the analysis, they are placed in one of three groups. “Group three are those we cannot help because of inadequate assets,” he says.

Group two are those with assets of $1 to $5 million, who are prospects for asset management services and annuities. Those in group one have assets of $5 million or more and are candidates for life insurance and charitable trusts.

Those in groups one and two are invited to a two-day seminar. This is when we give them a meal. Up to 80 participants show up. This is an educational experience. We do away with all the industry terminology. A charitable trust, for example, is called a capital gains bypass trust. And an ILIT is described as a children’s trust. Life insurance, annuities and IRAs are also covered,” Varma says.

After the seminar, meetings with individual attendees are held. “By this time, they have been so well informed that they know exactly what they want. There’s no selling; it’s taking the order,” Varma says. As of 2007, Varma had conducted 500 seminars. “That’s when I stopped counting,” he says.

These three producers have found valuable ways to enhance client service and grow their business growth through technology. At the same time, it’s worth remembering that each was successful before technology began to play such a prominent role in their practices. All three were entrepreneurial, knowledgeable, and highly disciplined. Each in his own way can relate to what Adams Sachs says, “We can always do better.”
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Jeff Watkins is a Brokerage Manager at First American Insurance Underwriters, Inc., Needham, MA. Along with his life insurance knowledge and working with producers, he has an extensive background in advisor management systems. He can be contacted at 800-444-8715 or jwatkins@faiu.com.