Game Changer!

Almost every Human Resource Benefit Professional would rejoice if their organization purchased a new state-of-the-art Benefit Admin system, which would reduce time consuming benefit admin tasks, better engage their workforce, and provide real-time API connections with benefit providers. Right?!

Not so fast!

Employers rely on HRIS and Benefits Administration platforms to assist with complicated and time-consuming processes, including:

• Onboarding new hires

• Open enrollment and plan selection

• Benefits communication and education

• Absence management tracking and reporting

• Day-to-day administrative tasks

It’s true, employers in the mid-to-large size segment are updating to new, modernized HRIS/Ben Admin platforms such as Workday, UKG, and ADP's Workforce Now, at a rapid pace.  For a good reason.

So, what’s the problem?

You’ve installed your new Ben Admin platform and are excited for your employees to experience their first Open Enrollment on say, Workday, or UKG.  Even with a new, top-of-the-line platform with the latest features, there may still be gaps your HRIS/Ben Admin system is not able to address.

Let’s look at some potential gaps:

• 30% of your workforce doesn’t have access to a computer at work.  How will they enroll?

• You assumed that your employees could figure out how to enroll on the new system.  But now your phone is ringing off the hook with employees asking you how to use the new system to enroll.  And yep, the Benefit Admin provider offers IT support, but not actual enrollment support.

• The new Ben Admin platform provides an improved benefit enrollment experience compared to the old.  But truthfully, self-serve Ben Admin solutions provide a minimal level of effective employee benefit education.

• Your company is in a growth mode, and you are onboarding 50+ employees/month.  New hire orientation is a challenge, and time consuming; but leaving a new hire to figure out how to use the new Ben Admin system doesn’t make for a great onboarding experience. 

There’s help!

Employees are much more likely to report satisfaction with their employer and participate in benefits offerings if they understand what is being offered to them.  Especially, if they understand how to use the Ben Admin system. 

While the Ben Admin decision support resources provide some level of employee education, technology can be complemented with human assistance. 

Human assistance via a benefit counselor, during the Open Enrollment or New Hire Orientation, can be a great way to introduce a new benefit admin/enrollment platform to your employees. Licensed employee benefit counselors can assist employees via face to face or virtual meetings, or through an on-demand call center.  Benefit counselors can help employees learn to navigate and use a new enrollment platform. Counselors educate employees on the benefits program and provide decision-making support and can enroll employees directly on the new Ben Admin platform.  For those employees that do not have access to a computer, the counselor can capture enrollment elections telephonically on the new Ben Admin platform.

There are many professional firms that offer benefit counselor services.  Some firms charge a PEPM; others will leverage commissions generated from a voluntary benefit to fund the expense of counselors.  Choosing a highly qualified firm that best identifies with your corporate goals, culture, and provides Grade A service can be a complex process.  Partnering with a Voluntary Benefit Specialist can assist in the vetting process.

The final word:

A modernized Ben Admin platform coupled with human assistance via licensed benefit counselors, can be a game changer.   As a result, your employees will feel confident in their benefit decisions, have an improved understanding on how to navigate the new benefits enrollment platform, become better consumers of insurance, and acquire a heightened sense of value and loyalty to their employer. 

If you want to learn more about this topic and benefit counselor options, please reach out to us here at Navis Benefits Group.

Navis Benefits Group, LLC is a specialty benefit firm, partnering with employee benefit consultants and employers, to design, market, install, and administer new, creative, and exciting benefit programs.  We help employee benefit Firms focus on what they do best – health insurance – by serving as their outsourced, turn-key specialty benefits partner.

Something New!

It’s old news that Employers are competing for top talent.  It’s also old news that a strong benefits program is a good tool to better position an employer in securing or retaining that talented employee.  Old news, but both very true.

Let’s be honest, everyone is talking about the same “new” wellness program, initiative, or benefit that virtually everyone else is adding. Boring!

To stand out from the pack, it’s time to talk about something new!  Here are five affordable new ideas for you:

1.       Protection for student loan debt, in the event of a disability.  Does your disability insurance plan provide an additional benefit specifically aimed at helping employees pay student debt when disabled?  Disability insurance plans, such as Group LTD, do not provide full income replacement when disabled, making it difficult to pay off student loan debt in the event of a disability.  This feature resonates would resonate with most employees and be a crucial feature for occupations that carry heavy student loan debt, such as physicians.

2.       Employer-paid Critical Illness Protection for your Executives and valued employees, with amounts up to $100,000 per occurrence.  Critical Illnesses such as heart attack, stroke, or even cancer, are some of the leading causes of disability, and can lead to substantial out-of-pocket medical expenses.  The traditional critical illness plans offered on a “voluntary” basis typically only provide $10,000 - $30,000 of coverage, depending on the size of the employer.  These voluntary plans with small coverage amounts don’t appeal to the highly compensated.  However, a plan with $100,000 of benefit, would appeal.

3.       Removal of the 24-month Mental, Nervous, Drug and Alcohol (MNDA) limitation from Group LTD and Supplemental IDI plans.  Most Group LTD and Supplemental IDI plans limit benefits payments to a maximum of 24-months duration for disabilities caused by mental health conditions (depression, anxiety, bi-polar, schizophrenia as examples), or drug and alcohol related conditions.  However, a disability caused by “any other condition” would be eligible to receive benefits payments to age 65 or age 67. Mental health conditions are becoming increasingly prevalent in the US with 1 in 5 adults in the US experiences mental illness in any given year, according to the National Institute of Mental Health. Mental health conditions can significantly affect an individual’s ability to work. 

Healthcare professionals and Attorneys are two segments of the workforce particularly at risk for mental health-related disability, including Drug and Alcohol abuse. A study by the American Medical Association (AMA) found that nearly 1 in 3 physicians experience symptoms of burnout and clinical depression.  Drug and Alcohol abuse is the top cause of disability claims in the Healthcare and Law Firm segments, accounting for over 17% of claims in these respected industries, according to Unum’s benchmarking data.

With the rising prevalence of mental health conditions, it is more important than ever for Employers to provide Group LTD and Supplemental IDI cover that covers mental, nervous, drug and alcohol (MNDA) related conditions like “any other disability” with full benefit duration protection.

4.       Long-Term Care Insurance coverage is the newest “old” hot button.  During the mid-1990s thru 2010, the long-term care insurance industry was booming, with the introduction of the Kennedy-Kassebaum federal LTC legislation of 1996.  Employers were offering this benefit back then, as the cutting-edge benefit.  Insurance carriers, however, underpriced the policies, which led to virtually every major carrier leaving the market due to financial losses.  Policies that were sold remained in place, and still honored as required. 

The need for long-term care coverage didn’t decrease; but rather has significantly increased since then.  Long-term care is the type of care required when an individual is unable to perform 2 of 6 Activities of Daily Living, also known as ADLs (bathing, dressing, transferring, eating, toileting, continence); or suffers from severe cognitive impairment (Alzheimer’s; dementia).  Over 50% of Americans will need long-term care services in their lifetime; and 40% of those that need care will do so before age 65.  America is aging, and the need for long-term care services will only increase.

Why is long-term care insurance important?  The cost of care can easily create financial hardship, if not financially devastate a household. 

The cost of care isn’t covered by medical insurance.  Medicaid will pay for care but requires that the recipient be essentially impoverished.  Medicare will only pay for a short duration and under limited circumstances (3 consecutive days of hospitalization required, followed by long-term care provided in a facility.  That leaves the cost of care up to the individual needing care, and leaves savings accounts, investments, retirement savings, and assets such as the home, exposed.  Considering the average monthly cost of care in a facility in the Northeast, reaching $12,000/month, and the average claim exceeding 2.5 years, an individual can easily spend $360,000 out-of-pocket on long-term care services in the absence of having a long-term care policy.   

To address the long-term care “crisis” and the financial burden being placed on Medicaid as a result, states are introducing “long-term care payroll tax” legislation.  Washington State was the first state to enact legislation, effective July 1, 2023, and 19 other states are in the process of exploring, designing, or introducing legislation.  The legislation taxes residents who do not own private long-term care coverage.  In Washington’s case, the payroll tax is .58/$100.  For a person earning $100,000, he/she would pay $580 annual payroll tax.  In return, Washington will provide $36,000 of lifetime benefits; insufficient enough to cover the exposure, would be an understatement.

Washington State’s legislation provided an exemption from the payroll tax to residents that own long-term care coverage prior to the legislation’s original intended effective date (November 1, 2021) and filed the appropriate application for exception prior to the deadline. This was a limited time provision, which is no longer available.  Today’s long-term care hybrid policies as described below, provide stronger benefits and often at a lower cost compared to the payroll tax.

The good news is that new, more affordable long-term care hybrid insurance protection is available today.  Hybrid plans leverage a life insurance policy chassis, with a long-term care benefit feature.  These plans provide long-term care benefits; and in the event the long-term care benefit is not needed, will still pay the death benefit.  Coverage is offered on a voluntary basis, with guaranteed issue, and is payroll deducted.

With Employers in impacted states being responsible for administering the payroll tax, a long-term care insurance program will be well received by employees as an alternative to the payroll tax, if 1990 – 2010 was any indication of how popular this benefit was.

5.       75% Income Protection of Total Compensation, in the event of a long-term disability (LTD).  Most Group LTD plans intend to replace 60% of base salary only.  Sixty percent is a superficial percentage adopted by actuaries, insurance companies, employers, and employee benefit consultants years ago. 

The original idea behind 60% replacement was to minimize the LTD plan risk by removing any “financial incentive” to file a disability claim.  It also minimizes the likelihood of malingering (staying on claim once recovered).  The logic does make sense.

But considering that most Americans live paycheck to paycheck when working, a 40% pay cut when disabled is frightening.  And it gets worse….

Add to the 40% pay cut, several other common deficiencies in Group LTD plans, and a disabled employee expecting to see 60% of income replaced by the LTD, might only see 20% to 30% replacement.  Here’s why:

·       Employers typically pay the premium for the Group LTD.  While this is great, this results in the benefit being taxed as income, at time of claim.  Essentially, an employee expecting to receive 60%, after taxes, would receive 43% assuming a 28% tax bracket.

·       Group LTD plans have benefit maximums, capping the monthly amount payable.  Highly compensated employees, including Executives, Physicians, Attorneys, or Investment Bankers, might only receive 10-30% replacement due to the plan maximum.  This is before taxes being taken out.

·       Bonus compensation is not covered by Group LTD plans, 78% of the time.  Bonus compensation is becoming a growing part of the American workers compensation package.  Protecting bonus compensation in the event of a disability, should be a priority for every Employee Benefit Consultant and Human Resource Benefit Professional.

Are you still not convinced that the Group LTD 60% target replacement threshold provides insufficient protection?  The benchmarking data, or peer analysis, is convincing.  Over 50% of Fortune 500 Companies, and 68 of the largest law firms (AM Top 100) offer Supplemental Disability Insurance plans, layered on top of the LTD.  These plans can provide 75% income protection, protect bonus compensation, increase the monthly benefit maximum, and can be employer-paid, or employee paid.  

In the benefits world, the large employers tend to be the “pioneers” and early adopters.  Insurance companies first introduce new benefits, technology platforms, or initiatives to employers with over 2,000 employees.  With the strong and growing presence of Supplemental Plans in the larger employer space, this benefit offering is becoming a new and popular benefit in mid to small employer space as well.

Navis Benefits Group, LLC is a specialty benefit firm, partnering with employee benefit consultants and employers, to design, market, install, and administer new, creative, and exciting benefit programs.  We help employee benefit firm focus on what they do best – health insurance – by serving as their outsourced, turn-key specialty benefits partner.

Overcoming a Financial Wellness Barrier

Financial Wellness can mean MANY things…  The term “financial wellness” has been on the mind of Employers and Working Americans for quite some time.  However, the term hasn’t been a top subject of conversation in the Employee Benefits space, until recent years. 

Taking center stage in the financial wellness conversation, by no surprise, is the paycheck.  Said simple: income.  The ability to generate an income is the foundation of all things financial.  This includes the ability to pay bills, provide for the household, generate savings, save for retirement, pay for medical expenses, save for school, and live a rewarding lifestyle.

Protecting the ability to generate an income, can take on many forms.  Preserving your health with good medical coverage and healthy habits; replacing lost income in the event of death; and replacing lost income due to a disability, are three primary pillars to achieving financial wellness.

Most employers offer good medical insurance and employ wellness programs designed to help employees make healthier decisions and live healthier lifestyles.  By doing so, employees are less likely to die prematurely, or become disabled.  But - health insurance does not protect or replace lost income due to death or disability.

Employees generally accept the fact that there’s a 100% chance of death.  As such, the idea of buying life insurance – or supplementing basic employer-paid life insurance – is an easy concept to grasp. 

As it relates to protecting or replacing lost income during the working years, Americans have a 4 times greater chance of becoming disabled for over 90 days, than dying. During the working years, an American has a 25% chance of being disabled for over 90 days.  And, when a disability last more than 90 days, the average duration of a disability is 2.5 years for the rank and file employee, and over 4.5 years for the highly compensated employee.  The exposure to lost income when disabled is significant, and perhaps the greatest threat to achieving financial wellness.

Yes, Employers most employers offer Group Long Term Disability Insurance (LTD) to help employees replace lost income in the event a disability lasts longer than 90 days. 

But - 100% of the time, the Group LTD plan is deficient in protecting all employees, at a high enough level of coverage.  Guaranteed.

An income replacement audit will paint a very clear picture of the Group LTD plan’s deficiencies.

To start, most Group LTD plans provide an income replacement percentage of 60% or less.  Most plans are employer-paid, resulting in a taxable benefit.  This means that a 60% benefit, after taxes, results in about 43% of income replaced (using a 28% tax bracket).  Using the same tax bracket, this employee would expect to take home 72% of gross pay, when health.  That’s almost a 30% shortfall!

Next, Group LTD plans have monthly benefit maximums, limiting the amount of monthly disability benefit an employee receives.  Typical Group LTD benefit maximums are limited to $5,000/month, and $10,000/month.  With a $5,000/monthly Group LTD benefit maximum, employees earning over $100,000 would receive LESS than 60% replacement.  This is before any taxation of benefits.

Let’s not forget about bonus or incentive compensation.  Bonus and other forms of incentive compensation have become increasingly common and a larger portion of the total compensation figure.  Yet, by design, almost 78% of Group LTD plans do not cover bonus compensation.

What can Employers do, to address this overlooked barrier to employees achieving Financial Wellness? 

Employers can offer a Supplemental Income Protection (IDI), also known as Supplemental LTD benefit.  These plans can be employer-paid, and offered at a cost less than 1% of payroll. Or can be offered on an employee-paid basis, via payroll deduction.

Equally as important, as a part of an employer-sponsored Supplemental Disability Insurance (IDI) program, employees will have access to an educational platform, providing a personalized income assessment, and tools to help employees assess their own financial situation.  These are unique and separate tools from a Benefit Enrollment or Benefit Administration platform, which generally fail to provide any sort of education or tools as relates to income protection.

The income protection focused site is an interactive, responsive, and engaging tool that helps individuals better understand how Supplemental Disability Insurance (IDI) can work to provide more income replacement during a disability — and allows them to easily enroll in a few short steps.

Supplemental Disability Insurance should be a focus of every Employer’s Financial Wellness strategy, and include interactive decision support tools, to include a personalized income assessment.

Navis Benefits Group specializes in Supplemental Disability Insurance programs, and partners with Employee Benefit Firms and Employers to design, install, and administer these programs.  Navis is here to help!

The 60% Replacement Dilemma

The 60% Replacement Dilemma:

Do you have highly compensated Employees or Executives? Most likely they are not receiving 60% replacement that the Group LTD plan provides, due to the plan benefit maximum or uncovered compensation.

You have some options:

1.       Do nothing.  Think about how this impacts your ability to attract and retain.  More importantly, the impact to employee moral when a well-respected colleague becomes disabled and receives 20-30% income replacement.

2.       Self-insure income not protected due to the Group LTD benefit maximum or uncovered forms of compensation, such as bonus income.  Be sure to formal written salary continuation plan establishing under what criteria the company will pay, how much, and for how long.  Understand the impact self-insuring/self-funding even a portion of a claim will have on the Company’s balance sheet.  There are accounting rules that must be followed (FASB 112).

3.       Increase the Group LTD maximum.  This is not always an option, and often, not the best option.  Insurance carriers typically underwrite for modest plan maximums, to minimize the plans risk and help keep premium down.  The higher the benefit max, the riskier the plan; and the higher maximum can come with a big price tag.  Most insurance companies will limit the maximum to $10,000/month, exceeding this amount by exception or reserve higher maximums for larger employers.  Larger employers that might have a higher benefit maximum, should be cognizant of how their claims experience and higher reserves because of the higher maximums, impact future renewal pricing. Regardless of the Group LTD maximum, there’s still a good chance that some highly compensated employees still won’t be adequately protected by the LTD plan.

4.       Insure the coverage gaps, with a Supplemental Income Protection plan.  Coverage can be employer-paid or voluntary, and generally costs less than 1% of payroll.  Insuring the gaps in coverage minimizes the Company’s financial and legal risk, improves employee morale in the event of a disability, and helps attract and retain top talent.  For larger employers where claims experience and reserve exposure impacts future plan pricing, Supplemental Income Protection plans can help spread the risk.  Supplemental Income Protection plans generally leverage a fixed premium, and the claims experience (and therefore reserves), do not impact the Group LTD plan experience. 

Supplemental IDI plans can address the gaps in Group LTD coverage levels, and typically cost less than 1% of compensation.

Employer Alert: Avoiding Repercussions of FASB 112

Disability Insurance Gaps and Employer Balance Sheet Liability

CFOs and HR Benefit Managers might ask what a disability has to do with accounting and balance sheet liabilities.

Most Employers provide Group Long Term Disability (LTD) insurance as an Employee Benefit.  Group LTD plans target 60% income replacement for the disabled employee.  These plans most often do not adequately protect highly compensated employees or Executives due to plan design limits, such as benefit maximums, uncovered forms of compensation, and taxation of benefits.   

The Employer has several options to help improve the income replacement levels of their highly compensated employees while disabled.  The option the Employer chooses may create a significant balance sheet liability due to their legal obligations to the Financial Accounting Standards Board’s statement 112, also known as FASB 112.

FASB 112 requires Employers to hold any post-employment benefits, such as self-funded disability benefit payments or salary continuation, as a liability on the balance sheet.   The liability on the balance sheet is not limited to the current benefit paid, but on the total estimated amount to be paid on the liability for the duration of the disability “claim”.  Essentially, the Employer’s liability includes the amount of future benefits to be paid (or reserves) for the disability “claim”.

What are the Employer’s options, and when does FASB 112 come into play?

1.        Do nothing.  This means that the Employer will only provide protection under the Group LTD plan – even if it means their highly valued employee will face significant hardship while disabled.  The Employer is not subject to FASB 112.  An income replacement “gap analysis” commonly shows Group LTD plans replacing as little as 10 – 25% of a highly compensated employees income.  This is a tough message to deliver to your valued employees, Executives, and even Officers. Seeing a colleague face unnecessary financial hardship during a difficult time, isn’t good for employee moral; never mind attracting and retaining top talent.

2.      Self-fund income replacement amounts not protected by the Group LTD plan, via a written qualified sick or salary continuation plan.  Self-funded amounts are subject to accounting under FASB 112.  We’ll look at some examples of FASB 112s impact on the balance sheet further below. A written plan identifies the amount, and the duration for which benefit payments will be guaranteed for. By doing so, the written plan could potentially limit the number of years that payments need to be accounted for under FASB 112.  However, if the Employer limits the amount and duration of self-funded benefit payments, the Employer still leaves highly compensated employees financially exposed during a disability.

 The Employer’s liability on the balance sheet decreases each year, as the benefits are paid.  The liability from the balance sheet is removed the sooner of once the Executive has returned to work full-time, or when the benefits cease.

3.       Offer an additional fully insured disability insurance protection, such as a Supplemental Disability Insurance (IDI) or Supplemental LTD plan.  The insurance company assumes the liability.  Since the Employer is no longer self-funding benefit payments, the Employer avoids the obligations and impact of FASB 112.  Highly compensated employees can be fully insured with a supplemental and/or excess risk disability insurance plan, often at a very modest cost.  This is the best option for attracting and retaining top talent, while protecting the Employer’s balance sheet.

Assuming the Employer selected Option 2 - Let’s look at some numbers:

An Executive earns $500,000 of base salary annually, or $41,666/month.  We will leave bonus compensation out of the conversation for mathematical simplicity.  However, keep in mind that 78% of Group LTD plans do not cover bonus compensation – and most Executives earn bonus income!   

Let’s imagine this Executive becomes disabled due to sickness and can’t work.  Based on the type of sickness, the Executive is expected to miss work for 5 years (60 months).

The Employer’s Group LTD protects up to 60% of base salary, to a monthly benefit maximum of $10,000/month.   This Executive is only receiving 24% income replacement of BASE salary ($10,000 /$41,666).  Keep in mind that the under-insurance situation is much worse than 24%, since we are ignoring bonus, which isn’t normally covered by LTD).  Since 60% of this Executives base salary in $25,000 month ($41,666 x .6), this Executive requires a supplement of $15,000 month to achieve 60% replacement.

Example A: The Employer choses to “self-fund” the additional $15,000 monthly benefit the Executive needs to achieve 60% replacement.

FASB 112 requires the Employer to hold as a liability on the balance sheet, the total estimated amount to be paid on the liability for the duration of the “claim”.   To put numbers to this, the Employer would need to hold $15,000/month for 5 years (60 months), or $900,000, as the liability on the balance sheet.

Example B: The Employer choses to protect 100% of base salary ($41,666/month).  Since the Group LTD provides $15,000/month, the Employer would self-fund $26,666/month to achieve 100% protection.  FASB 112 requires the Employer to hold $1,599,960 (60 months of disability) as a total estimated liability on the balance sheet.

Remember, the Employer’s liability on the balance sheet decreases each year, as the benefits are paid.  The liability from the balance sheet is removed the sooner of once the Executive has returned to work full-time, or when the benefits cease.

The Final Word:

The Employer has several options to help improve the income replacement levels of their highly compensated employees while disabled.  The option the Employer chooses may create a significant balance sheet liability due to their legal obligations to FASB 112.  A Supplemental Disability Insurance (IDI) Plan, also known as Supplemental LTD, can eliminate the Employer’s obligation to FASB 112 and liability to the balance sheet, reduces the Employer’s financial exposure, improves income protection levels, helps attract and retain top talent, and is very affordable.

Navis Benefits Group, LLC is a “specialty benefits” Firm, and works with Employee Benefit Firms and their Employer clients to provide state-of-the-art Supplemental Disability Benefit Plans, Executive Benefit Plans, Long-Term Care Plans, and Voluntary Worksite Benefit Solutions.

The Great Investment - 1%

Would you spend less than 1% of your paycheck to protect it, if you had a 25% chance of losing 40% or more of your paycheck for 4.5 years?

The average duration of a long-term disability (LTD) claim for a highly compensated employee is 4.5 years; compared to 2.5 years for a rank-and-file employee.  Working Americans have a 25% chance of suffering from a disability during their working years, lasting over 90 days (with an average duration ranging from 2.5 to 4.5 years).  

Employer’s Group Long-Term Disability (LTD) plans typically replace 60% of base salary at best.  Many highly compensated employees are not fully protected by the Group LTD plan, due to plan benefit maximums, uncovered compensation such as bonus income, and the benefit being taxable in most situations. This can easily leave highly compensated employees with 10-30% income protection.

Employer-sponsored Supplemental LTD plans – often called Supplemental IDI - can enhance coverage levels in the event of a disability, at a modest cost to the employer – typically costing less than 1% of compensation.

IMAGINE….

Imagine. You’re a hard-working Executive earning $400,000/year.  At age 55, you become disabled.

You learn your Employer’s Group LTD plan will only pay you $120,000/year. Over the 10 years of your disability, you “lose” $2,800,000 in potential income.

Your retirement goals and dreams go unrealized.

This can be avoided.  How? 

Your Human Resource Benefit Professional should request an income protection gap analysis and an audit of the LTD plan, to identify the plan’s gaps and contractual flaws.  Benchmarking data will demonstrate the plans competitiveness.  And a Supplemental Income Protection plan can address the gaps and shortfalls. 

Supplemental Income Protection plans can be offered on an employer-paid basis at a minimal cost; or offered to employees on a voluntary basis. 

Navis Benefits Group can help!

Is this you, or your Employee Benefit Consultant?

“Specialization” is important - and rare in the Employee Benefits space! It’s easy to say that “you do it all”.

It’s easy to say that “you do it all”. Being the “Jack of ALL Trades” and the Master of None, brings no value to the Employer, Human Resources, and ultimately to their valued employees. Yes, one-stop shopping is convenient. The BIG National Firms have figured out how to hold an Employer “captive” with one-stop shopping. Convenience and scale don’t equate to better - or the best.

Navis Benefits Group, LLC is truly a specialist. We excel at what we do - “specialty benefits”.

Navis Benefits Group partners with Employee Benefit Consultant Firms that deliver high caliber results in what they do best: health/dental/ancillary; and brings in the specialty resources for what they have not mastered. Firms that have the best interest of their Employer and Employee clients in mind.

Let us know how Navis Benefits Group can help.

“Got Long-Term Care Insurance?”

Learnings from the Washington Care Act: 

Staying ahead of the pending New York Long-Term Care Payroll Tax

There’s a good chance the Long-Term Care Payroll Tax will be approved in New York in the foreseeable future.  

Perhaps the greatest lesson learned from the Washington LTC Payroll Tax roll out - is that trying to design, market, communicate, educate, enroll, and administer a new LTC/Life Hybrid Employee Benefit within a constricted timeframe - is highly challenging.

To be exempt from the Washington LTC Payroll Tax, residents must have LTC coverage in place prior to the payroll tax effective date.  This led to a blitz amongst employers to act fast, and the insurance industry scrambling to meet the last-second demand. 

To avoid the blitz and ensuing chaos that Washington employers faced, New York employers should begin to explore and consider LTC/Life Hybrid benefit programs in advanced of the pending legislation’s approval. 

With the roll-out of PFL/PMFL across the early adopting states, Insurance Carriers’, Employers’, and Employee Benefit Brokers’ time was greatly consumed with learning the requirements, pricing, and implementing PFL/PMFL programs.  And many lessons were learned.

Like the PFL/PMFL roll-out, Washington State’s roll-out of its Washington Cares Act – a new LTC Payroll Tax program – was confusing and chaotic for all parties: employees, employers, brokers, and carriers alike. The Washington Cares Act goes into effect in 2023 after a delayed “start” and is the first of many potential state payroll tax programs for residents or employees that do not own long-term care coverage. 

The Washington Cares Act provides residents with an exemption from the payroll tax, provided that long-term care coverage is in place and an application for exception was submitted, prior to the payroll tax’s initial intended effective date (November 1, 2021).  Long-term care is the type of care and assistance an individual needs when unable to perform two of the Activities of Daily Living (ADLs): bathing, dressing, transferring, eating, toileting, continence; or when suffering from Severe Cognitive Impairment.  Approximately 50% of Americans will needs long-term care services in their lifetime.  With the average stay in a Nursing Home lasting 2.5 years at $12,500/month, the financial impact of $375,000 on average, to an individual’s savings and assets can be devastating.

Unfortunately, long-term care services are not covered by Health Insurance or Medicare, in most circumstances.  That leaves Medicaid - a State/Federal partnership program – which requires an individual be impoverished to receive funding for care, as the only option for many.  Medicaid is the largest funding source for long-term care services.  Therefore states, such as Washington, are looking to implement new long-term care payroll taxes to help fund the cost of long-term care and reduce the financial pressure on Medicaid.  The taxes are imposed on residents that do not own long-term care insurance, and payroll tax can be significant.

Long-term care insurance can be secured through a traditional long-term care policy, which can be expensive; or a more affordable and comprehensive Life/LTC Hybrid Employee Benefit program.  Given the administrative requirements employers face with the new payroll tax, employers are pro-actively offering their employees the option to secure more affordable and comprehensive Life/LTC hybrid coverage as an employee benefit program.  This gives employees the opportunity to secure the exemption from the payroll tax.

To be exempt from the Washington payroll tax, the LTC coverage must be in place and application for exemption filed, prior to the payroll tax’s initial intended effective date (November 1, 2021).   This led to a blitz amongst employers to act fast, and the insurance industry scrambling to meet the last-second demand.  Not able to keep up with the demand, high volume, and time constraints, some carriers turned-off the tap and opted-out of writing more business.  Many Employee Benefit Consultants, Employers, and Human Resource Benefit Professionals were left out in the cold. While the legislation’s effective date was delayed to July 1, 2023, the deadline of November 1, 2021 remained.

Perhaps the greatest lesson learned from the Washington LTC Payroll Tax roll out - is that trying to design, market, communicate, educate, enroll, and administer a new LTC/Life Hybrid Employee Benefit within a constricted timeframe - is highly challenging.

There’s a good chance the Long-term Care Payroll Tax will be approved in New York in the foreseeable future.  Further, a dozen other states are exploring or already have introduced legislation.  The LTC Payroll Tax state roll-out is expected to follow a similar path to that of PFL/PMFL.  Based upon insurance industry feedback on the roll-out of the Washington Cares Act, the hope and expectation is that future state regulations will allow for grandfathering of existing coverage.

To avoid the blitz and ensuing chaos that Washington employers faced, New York employers should begin to explore and consider LTC/Life Hybrid benefit programs in advanced of the pending legislation’s approval. 

This would allow employers to design and install the benefit program in a more relaxed environment, help ensure that the enrollment goes smoothly, and increase employee appreciation with an effective benefit education strategy.

Benefits Alert: Be on the Lookout for the LTC Payroll Tax

How Employers can stay ahead of the LTC Crisis with a New Benefit

Are you a Human Resource Employee Benefit Manager, or Employee Benefit Consultant?  Remember how PFL/PMFL expanded across the country so quickly and consumed so much of your team’s time and energy?  Still having nightmares?

Multiple States Considering Implementing Long-Term Care Payroll Tax

Thirteen states are considering following Washington State’s lead in taxing those who do not own Long Term Care Insurance, including the State of New York. 

Washington State’s legislation aims to help address the challenge of Long-Term Care.  Washington State employees will now pay a .58% payroll tax (per $100) unless they could provide proof of qualifying long term care coverage.  As a result, Employers across the State of Washington scrambled to find a LTC solution to help employees avoid the payroll tax and receive better coverage from the insurance industry.

Washington residents were given a short period of time to secure a qualified long-term care policy in place, as permitted to avoid the payroll tax of 58 cents on every $100 earned. The exception application deadline aligned with the initial programs effective date, on November 1, 2021. Washington State’s legislation implementation was delayed 18 months, to July 1, 2023. The application deadline remained November 1, 2021.

Said another way, an employee earning $100,000 can expect to pay a payroll tax of $580.  

What does the Washington LTC payroll tax program provide for a long-term care benefit?  Those that do not own a long-term care policy and therefore subject to the payroll tax, will be eligible for a state-supplied lifetime benefit maximum of $36,000 to pay for long-term care services need.  Considering the high cost of long-term care services in most states, the Washington plan is barely adequate to cover the cost of care.

New York State Proposes Long-Term Care Payroll Tax

Now that Washington has taken this action, other states are in the process of proposing or implementing their own LTC tax programs.  Like the path of PFL/PMFL, New York and California are the states that appear to be closest to add a tax if individuals don’t own a long-term care policy.

New York Senate Bill S9082 would establish a Long-Term Care Trust Program to provide New York workers with state-run long-term care insurance coverage, funded through a payroll tax on New York workers.  The purpose of S9082 is to create another method of financing the cost of long-term care expenses, for residents that do not own or can’t afford private long-term care insurance, in the event they are unable to care for themselves due to a loss of Activities of Daily Living (ADLs) or Cognitive Impairment.  Essentially, the bill purpose is in part to help alleviate the pressure that long-term care expenses places on the state’s Medicaid program.

The proposed NY Senate Bill S9082 does not provide a large window for individuals to purchase LTC insurance.  The bill requires that private LTC coverage be in place prior to the law going into effect, to be exempt from the LTC payroll tax.  The NY LTC payroll tax could be as high as 99 cents on every $100 earned; that equates to a $990 payroll tax for an employee earning $100,000.

Why are States Considering Implementing a Long-Term Care Payroll Tax?

The stress on Medicaid is tremendous and expected to increase.  Medicaid is funded on a federal and state partnership basis and is the country’s primary payor of long-term care expenses.  To qualify for Medicaid benefits, the individual needing care must have little to no income or assets; essentially impoverished.  Americans who may otherwise be financially “well”, but fail to purchase long-term care insurance, must pay for their own care (or have family members provide care), which often is a recipe for financial ruin. 

A state long-term care program funded via the payroll tax, would relieve some pressure on Medicaid, and provide a minimal level of protection for those that do not own a long-term care policy.

Long-Term Care services are expensive, and the cost is increasing every year.  Health Insurance and Medicare to not cover the costs associated with long-term care services.

Considering that the cost of care in a Nursing Home is on average $12,000/month in the Northeast/Mid-Atlantic states, with the average stay in a home of 2.5, the financial impact to a household for one LTC claim can easily exceed $375,000.

The Washington State long-term care tax, which provides up to $36,000 of benefit, doesn’t “scratch the surface” and leaves its residents financially vulnerable.

The Odds of Needing Long Term Care Services:

The risk is significant.  50% of Americans will need long term care services.  Further, 40% of those that need care, will need care before turning age 65.  Americans are financially exposed to the risk and costs associated with long-term care services.

How Employers Can Help Their Employees:

Affordable long-term care insurance coverage is available as an option to the payroll tax.  Comprehensive coverage can be offered as an Employee Benefit leveraging Life/LTC hybrid products.  These “hybrid” products are offered on a Guarantee Issue basis, via payroll deduct, customized at the employee level, and are individually owned and portable. As an Employee Benefit, the coverage can be offered on either an Employer-paid or a 100% Employee-paid basis. 

These plans meet the need for life insurance protection, in addition to the qualified long-term care benefit exempting employees from the payroll tax. If the employee doesn’t need to use the LTC portion of the plan, the employee would still be eligible to receive the life insurance benefit.  And, in many circumstances and depending on an employee’s age, a Life/LTC hybrid plan can provide the same or higher level of protection, for much less than the payroll tax. 

The Good News:

The good news for Benefit Managers and Human Resource professionals is that installation of Life/LTC plans is simple with a firm that specializes in these plans.  The plan can be installed as a part of Open Enrollment, but more often and best enrolled as a stand-alone enrollment.  Coverage can be enrolled leveraging enrollment technology, and/or via one-on-one sessions with a benefit counselor – virtual or in person.

The Final Word:

The Aging of America, high demand for long-term care services, pressure on Medicaid, and new State legislation have all culminated in what can be called a “long-term care crisis”.  Resembling a similar path as PFL/PMFL, an expanding number of states are drafting and introducing legislation like the State of Washington’s program.  While these programs are designed to alleviate the pressure placed on Medicaid (a state/federal partnership program) by rising long-term care expenditures, the resulting payroll tax is expensive, and another administrative burden for Employers.  Further, the coverage amounts provided under the state programs, are insufficient. 

Employers can help Employees avoid the payroll tax and secure more comprehensive benefits, by offering an affordable Life/LTC Hybrid Employee Benefit Program.  Washington and New York’s programs provide a small one-time window for employees to secure private long-term care coverage to be exempt from the payroll tax.  Employers can avoid the blitz and frenzy that Washington Employer’s faced, by pro-actively introducing a Life/LTC Hybrid program.  Done right and in advance, Human Resource Employee Benefit Managers and Employee Benefit Consultants can minimize the pain felt with the roll-out and expansion of PFL/PMFL.

Navis Benefits Group, LLC offers Life/LTC Hybrid programs that’s a proven solution for our Employee Benefit Consultant partners, Employers, and Employees.

The Employee Benefits “New Year’s Resolution”: HR Benefit Priorities

It is “priority” meeting season for human resource professionals; the time of year when HR teams reevaluate their current benefit offerings, enrollment technology platforms, employee communication processes, carrier relationships, and initiatives. Said short: it is time to identify their 2023 HR and Benefit Priorities.

Since medical insurance is a core benefit for every employer, and one of an employer’s biggest expenses, it is no surprise that medical insurance will continue to be a focus in the New Year “priority” conversation.

However, the focus on medical insurance and the status quo with “ancillary benefits” is proving to be a broken solution. Ancillary benefits are most commonly Group LTD, Group STD, Group Life Insurance, Dental and Vision. Overshadowed by the focus on medical insurance, ancillary benefits become stagnant, old, and broken. Plan features and definitions become outdated, growing benefit gaps go unnoticed or unresolved, employee’s knowledge and sincere appreciation of the benefits wither, and employers lose the competitive advantage to attract and retain that they once had with innovative benefits.

Adding salt to the wound: most employers have not seen the rate decrease that they deserve and should expect with ancillary benefits. HR Teams and Employee Benefit Consultants have grown so accustomed to receiving medical insurance premium increases, that a “no change” ancillary benefit renewal is a blessing. It also justifies the rubber stamping of the ancillary benefits, so the conversation can move to the all-important medical insurance.

This is where things go wrong, and the opportunity to design a better benefits program missed by HR Teams and Employee Benefit Consultants. The ancillary renewal goes unchallenged leaving savings on the table. HR Teams and Consultants neglect to benchmark ancillary benefit plans against peers, and gap analyses not performed. Open enrollments with Guarantee Issue not negotiated; low plan participation rates not rectified; and new innovative enrollment and communication tools are not employed.

If given the attention they deserve and with help, HR Teams can update old ancillary plans to a state-of-the art offering, often with savings, plan enhancements, guarantee issue, and an improved enrollment and employee education approach. This helps lay the foundation for a truly competitive benefits program.

With the “gaps” in ancillary coverage identified, “supplemental” or “specialty” benefits can truly help an employer design an employee centric benefit program, which allows the employer to better compete with its peer group for top talent. These benefits include Supplemental Executive Disability Insurance, Voluntary Supplemental Disability Insurance, Voluntary Worksite Benefits, Executive Life, and Long-Term Care coverage. While ancillary benefits provide a great foundation, by design gaps in coverage will remain even after a plan review and update. Supplemental and specialty benefits help fill the remaining gaps and can be employer-paid or voluntary.

An overhauled and updated benefit plan will resonate with employees, when packaged and gift wrapped the right way. A new employee education approach, using state of the art tools; an updated enrollment platform using artificial intelligence to help with the education and decision-making process; and human assistance via face-to-face or virtual benefit counselor support, are ways to appropriately package and gift wrap the new benefit program.

As we begin the New Year and identify our 2023 resolutions, I challenge HR Teams and Employee Benefit Consultants to re-think the attention ancillary and specialty benefits receive this year. Make your 2023 resolution one which will give greater priority to the non-medical benefits and will allow you to truly upgrade your benefit program.

Check the Health of a Group LTD plan with a Gap Analysis

A simple "gap analysis" of an Employer's Group LTD plan, can help identify coverage gaps, and minimize the financial burden a disabled employee might experience.

Imagine the emotion and distress a disabled employee experiences, when he/she expects to receive 60% income replacement from the employer’s Group LTD plan - but receives 30% of pay or less.  And consider the impact to employee moral witnessing their co-worker dealing with the disability, and the significant financial dilemma.

Employer’s Group LTD plans provide great “basic” protection, but inherently have plan limits and shortfalls which are often overlooked.  A gap analysis can identify the Group LTD plan shortfalls and determine if a Supplemental Income Protection plan can help address the shortfalls before it’s too late.

Happy 1st Birthday!!!

I am both thrilled and humbled to share that today we celebrate Navis Benefits Group’s 1st Birthday!

After a successful 25-year career working for one of the industry’s best, making the move to start my own firm was a risky, and frightful proposition to say the least. But it was a dream that I had long wanted to pursue.

Without the support, encouragement, guidance and advice of my former colleagues, business partners, employee benefit consultants, human resource professionals, friends, and my family, I would not have had the courage to pursue my dream. You have helped make the dream a reality!

I am forever grateful to those employee benefit firms and employers that gave Navis Benefits Group an opportunity to partner during this first and vitally important year in business. The business results were stronger than anticipated, and Navis Benefits Group is proud to celebrate this milestone achievement with you.

A very special thanks to my wife Christina, and my three growing boys, who have been my inspiration and motivation to make this dream a successful reality. The sacrifices you’ve made this past year run deep, and your support and love has been unwavering.

Navis Benefits Group is a “specialty benefits” focused Firm, focusing exclusively on non-medical benefits to include Executive Disability Insurance, Voluntary Supplemental Disability Insurance, Executive Life Insurance, Long Term Care Insurance, Voluntary Worksite Benefits, and Benefits Enrollment/Communication solutions. We partner with Employee Benefit Firms as their outsourced specialty benefit consultants.

I look forward to the excitement and continued growth this next year, and on-boarding new Employee Benefit Firm and Employer partners.

Happy 1st Birthday, Navis Benefits Group!

Best,

Jamie Reidy

Managing Partner & Founder

Partnership

How one Employee Benefit Firm solved income replacement gaps for their Employer clients, while generating $235,800 of additional revenue:

The two biggest challenges most Employee Benefit Firms face when it comes to providing a full suite of benefit solutions are shelf space, and specialization. And we have all heard the phrase “Jack of all trades; Master of none” …

Most Employee Benefit Firms dedicate their focus to and specialize in health insurance. Incidentally, ancillary benefits such as Group Disability and Group Life, do not get the complete attention they deserve at time of renewal. Gaps in definitions, plan design, and coverage limits over time can go unchecked. And rightfully so. Health Insurance is both one of the biggest budgetary items for Employers, and one of the highest revenue generators for the Employee Benefit Firm.

Then comes the “specialty benefit” programs. With ancillary benefits already falling in the shadow of health insurance, the “specialty benefits” are often not even on the radar. Specialty Benefits include Executive Supplemental Disability Insurance, Voluntary Supplemental Disability Insurance, Executive Supplemental Life Insurance, Voluntary Worksite Benefits, and Long-Term Care Insurance. These specialty benefits are the products that can truly enhance an employer’s benefit package, while addressing real shortfalls and gaps that exist in ancillary benefits.

Further, the specialty benefits can be an excellent source of additional revenue for an Employee Benefit Firm.

This Employee Benefit Firm recognized the importance of providing best in class solutions for their clients; but also acknowledged the lack of shelf-space to focus on anything other than Health Insurance and ancillary benefits. In the past, this Firm had experimented with offering Executive Supplemental Disability Insurance on their own, unsuccessfully. The Firm’s close ratio was not particularly good, to say the least. The combination of shelf-space challenges, and more importantly the lack of expertise - or specialization - in Executive Supplemental Disability Insurance, were the culprits. It certainly was not the lack of effort or desire to do their best for their Employer clients…

This Firm also recognized the need to find new sources of revenue but was not able to invest in creating a “Executive Benefits Division.”  To do so would be an expensive proposition, with no guarantee of a solid ROI.

Recognizing the power of partnership, the need to better serve their employer clients, and the opportunity to generate additional revenue, the Firm partnered with Navis Benefits Group, LLC, on a revenue sharing basis.

Early results have shown a strong close ratio, with the Firm generating $76,800 of new first year revenue in 2022 from Executive Supplemental Disability Insurance sales. This business will also produce a revenue stream via vested renewal commissions, of $159,000, over the following 9 years. The total projected commissions earned over the 10-year period for this new business is at $235,800.

The Firm was able to generate this additional revenue stream with no out-of-pocket expenses, and with minimal effort.

The Executive Supplemental Disability Insurance allowed the Firm to address income replacement gaps that existed for their Employer clients’ highly compensated Executives, which Group LTD alone could not protect.

This Firm’s willingness to bring alternative and creative solutions to their customers, their humbleness in recognizing they had not been successful trying it alone; and the recognition that there is power in partnership has resulted in a solid source of additional revenue, with minimal time and no financial investment.

Consider partnering with Navis Benefits Group, to provide better benefit solutions with Specialty Benefits, generate additional revenue, with minimal effort or investment. Navis Benefits Group, LLC helps the “Jack of all Trades” provide “masterful solutions” to their clients.

Words Mean Everything

Words Mean Everything

The word-choice we use in ever-day life can have a powerful effect on an action, outcome, perspective, or reality.   

This is holds true in the world of Employee Benefits

Consider that many employee benefits are provided via an insurance contract, word choice – commonly referred to as “contractual language” - can greatly impact the outcome or reality of a claim.

Some Words to Consider: “And” vs “Or”

As an example, let’s consider the words “And” vs “Or”. Group Long-Term Disability (LTD) Insurance contracts define a Total Disability in varying ways.  Employee Benefit Consultants and Employers, elect the appropriate language to meet the occupational and earnings scenarios of their employee population.   A definition of total disability that requires a “loss of earnings and a loss of time/duties” will be treated very differently from a definition that requires a “loss of earnings or a loss of time/duties”. 

The prior definition with the “and” requirement is well suited for a salaried or hourly employee, that will experience an income loss if he/she is not able to work or at the same capacity (loss of duties). 

However, this same word punishes employees that have trailing income/accounts receivables. As an example, an Attorney that is paid while physically disabled (loss of duties) years later from a big lawsuit he/she won’t while healthy, would not meet the requirement of the “and” definition. Such attorney would likely not receive a disability benefit while earnings are received, even if the income resulted from duties performed prior to being disabled.  The “or” definition of disability would have resulted in a disability benefit payment to the attorney, since the definition requires a loss of time/duties OR a loss of income, but not both.  This same “or” definition, however, does not have an application for a salaried employee who does not have “trailing income”.

The Final Word

Words and definitions have a powerful ability to shape outcome, particularly in the insurance or employee benefit space. Try to pay attention to the phrases and ask yourself what they imply. Last, be sure to choose words more carefully. Words mean everything.

Benchmarking: Common Characteristics of Employers Offering Supplemental Disability Insurance Plans

While over 50% of Fortune 500 Companies, across all industries, offer Supplemental Disability Insurance (IDI) plans, there are several industries that most commonly offer this benefit program to their employees. Supplemental IDI plans can be employer-paid, employee-paid, or shared contribution.

Employers in these industries share common characteristics:

• Incentive compensation is – or becoming - more prevalent in these industries and represents a sizable portion of employees income. Pharma/Biotech, Sales Organizations, Financial Services are examples.

  •   Most Group Long Term Disability (LTD) insurance plans only cover base salary by intent and design. In fact, 78% of Group LTD plans do not cover bonus compensation

• Employees in these industries have a considerable proportion of highly compensated employees.

  • Group LTD monthly benefit maximums may only protect a small percentage of income, much less than the intended 60% replacement target.

• Recruitment and retention of top talent is a central focus; and Employers in these industries are in a competitive environment with their peers for talent.

•  Employees, Executives and Partners in these industries have a strong understanding of the importance of disability insurance.  Notable industries include healthcare/physicians, law firms, and financial.

•  Employers offering Executive Employer-paid Supplemental Disability Insurance, already have a culture of rewarding top Executives with strong Executive Benefits in place, such as with Executive Life Insurance

•  Financial Wellness, including income protection, is a central focus of the Employer’s benefit package and messaging. 

Who are they?

·       Law Firms

·       Healthcare

·       Financial Services

·       Pharmaceutical & Bio Technologies

·       Manufacturing

·       Engineering

·       Accounting

·       Sales Organizations

Does your Open Enrollment feel like the benefits experience of the past? Or do you offer the modern benefits experience your employees deserve?

Human Resource Professionals, by re-thinking the open enrollment process and changing your approach to the way benefits are enrolled, you can have a positive impact on your employees benefit experience and their feeling towards the employer.

The Great Resignation has created a heightened awareness around employee appreciation, recognition, and ultimately retention.  Now is the time to showcase both your new benefit offerings, and better communicate what you already offer, to attract new talent and retain your current valued employees.

Embracing modern technology and digital solutions to better engage your workforce, will allow you to focus more on your people and support your business objectives, while reducing time consuming benefits administration tasks. Technology can be complemented with face to face or virtual benefit counselors, or a call center, to provide a more human touch to the open enrollment process.  Human assistance during the Open Enrollment process can also be a way to introduce a new benefits enrollment or benefits administration platform to your employees.  Benefit counselors can help employees learn to navigate and use a new enrollment platform, while educating and enrolling employees on the benefits program.

Digital solutions that can also be leveraged to better communicate the enrollment event, process, and benefits program; and may include a company benefit landing page, text messaging notifications, personalized emails, auto-scheduling tools, silent voicemail drops from Human Resources, and a benefit video library.  Most digital solutions are smart phone ready, meeting the employee literally “where they are”.

A well-designed digital communication campaign, coupled with a modernized benefit enrollment platform and human assistance via counselors or call center, can be a game changer.  As a result, your employees will feel confident in their benefit decisions, have an improved understanding on how to navigate the new benefits enrollment platform, become better consumers of insurance, and acquire a heightened sense of value and loyalty to their employer.

As a Human Resource Professional, employing modern technology for communication, enrollment, and administration will help reduce time consuming benefits administration tasks, streamline, and minimize your open enrollment distractions, and change the way you feel about the Open Enrollment season.