Wednesday, November 12, 2008

Update


I have been busy the last few months spending time with my Mom who has cancer.

Monday, September 15, 2008

Hurricane Ike: Houston We Have A Problem


My family was blessed with no loss of life and no major damage from Hurricane Ike. Many of my neighbors and fellow Texans were not so blessed. The magnitude of the damage is mindboggling.
If you are trying to reach someone in Greater Houston there is currently a 75% chance they have no power. There is a high probability their cell service is sporadic and their internet access is limited. The best way to communicate is by text message. Ask any teenager for help in this department.
Our community is coming together to face this crisis and we are a resilient bunch who will bounce back.
If you need to reach me please text me. More when I can get to an internet connection.
In the interim here is a site who can provide a window into what we are dealing with here in South Texas.

Friday, September 5, 2008

Mandates for Autism Coverage Coming to Your State Soon


It was refreshing to hear from Sarah Palin that the parents of special needs children would have an advocate in The White House Wednesday night.
Arizona, Florida and Pennsylvania have enacted legislation mandating coverage for Autism and Michigan Blues are facing certification of a class action suit;

On July 1, the father of a 7-year-old with autism filed a lawsuit
against Blue Cross Blue Shield of Michigan to force the insurer to reimburse
about $8,000 paid for therapy, according to one of the family's attorneys, John
J. Conway of Detroit. Another suit over autism therapy coverage was filed in
April against WellPoint, Inc. subsidiary Anthem Blue Cross and Kaiser Permanente
in California.
Autism is a baffling and costly developmental disability that
affects about 1.5 million Americans, according to the Autism Society of America
(ASA). The disorder is marked by impaired social interaction and communication,
and engagement in repetitive behaviors. The condition is on a continuum of
"autism spectrum disorders" that includes Asperger syndrome. Autism has become a
hot-button issue as its prevalence has increased dramatically in recent years
and as some critics have linked childhood vaccines to the condition. According
to the federal Centers for Disease Control and Prevention (CDC) in Atlanta, the
incidence of autism has almost doubled since 2000, now affecting about 1 in 150
American children. Autism cases in Michigan have skyrocketed from 4,700 in 2002 to 11,000 in 2006, according to CDC.
Treatment of autism can be expensive.
The ASA estimates that the lifetime cost of caring for a child with autism ranges from $3 to $5 million.
During a hearing scheduled for Oct. 22 in the
U.S. District Court for the Eastern Division of Michigan, Southern Division, the
court will consider a motion to certify the Michigan Blues suit for class-action
status. Certification as a class would broaden the suit "to represent other
potential claimants in the same situation" as his client, explains Conway.
At issue in the lawsuits against the Blues plans is an intensive one-on-one therapy
called applied behavioral analysis (ABA). A full course of ABA therapy costs
upwards of $90,000, according to Conway.Conway says the Michigan Blues plan
sent hisclient's family "a pretty bare-bones, perfunctory denial that says, 'Our
in-house people think [ABA] is experimental.'"Michigan Blues spokesperson
Helen Stojic declines to comment on the specifics of the lawsuit filed against
the plan. But, she says, "Blue Cross Blue Shield of Michigan understands the
concern and is very sympathetic to the challenges of families dealing with
autism. However, the push to expand employer insurance coverage — through the
courts or legislation — comes at a time when many employers are seriously
struggling to pay for their existing coverage."
Conway says that ABA is endorsed by the American Academy of Pediatrics, the U.S. Surgeon General, the Association for the Science of Autism Treatment and the New York State Department of Health, among other authorities, and notes that ABA therapy is covered by Blue Cross and Blue Shield of Minnesota.
"Applied behavioral analysis isn't experimental to Blue Cross and Blue Shield of Minnesota," he says. "They pay for the treatment in Minnesota, so we don't know why kids covered in Michigan don't get it, even though they're both covered by Blue Cross entities — same therapy, same medical cases."

Its interesting to me that as a nation we can relate poor education to higher crime rates yet we seem incapable of treating a disabilty that effects over 1.5M American children which if untreated will result in the need for lifetime care at an average cost of $3M-$5M. An autistic childs mind works differently an in integrating them into society as a whole we may find a whole host of creative thinkers and productive adults if we act. How can we not act in good conscience on this subject?

Friday, August 29, 2008

Have a Great Labor Day











In honor of the holiday weekend here are a few fishing pictures from this summer for the outdoor lovers. Above is my son Brian and nephew Joseph.






Here are few of the results as well.






Wednesday, August 6, 2008

Nice Press

Some nice press in Employee Benefit News is here

Ironic that answering your phone and returning your calls can be considered high tech but such is the current state of service in the era of the iphone.

Thursday, June 26, 2008

MetLife Vs Glenn- "Clear As Mud"

The US Supreme Court has issued its opinion in the MetLife vs Glenn case. Roy Harmon III has done a nice job summarizing the opinions of various ERISA attorneys which are well worth a review http://healthplanlaw.com/?p=650.

Not being an attorney(thank God!) I can nevertheless offer some observations as a disability professional which can not be considered legal advice but certainly offer insight into a decision which is about as clear as mud upon first reading;

  1. Firestone has certainly been breached
  2. If you doubt conclusion #1 see Brian King's take here, I happen to agree with Brian on where the trial lawyers will go to prove a conflict.
  3. I have already commented here on the poor argument set forth by Metlife's counsel in oral arguments which got Justice Alito to join the majority

Thursday, June 12, 2008

Failure To Communicate


I'm a big movie fan and Cool Hand Luke is a classic. Its amazing to me how frequently communication between vendors and their clients is hindered by a genuine failure to effectively communicate but the results are very predictable--the vendor gets slapped back to reality and reminded who is really in charge of the relationship. In many cases account managers are put in impossible positions by the service models that are setup to support their customer base with discrete levels of face time. Big Mistake.
In an age when many vendors and carriers have most of their interaction with a client via email and phone calls while trapped in service models which often do do not support frequent and regular face to face contact and effective communication as a matter of routine a reckoning eventually comes from a client that has other options. While the vendor may be stunned and feel slapped around when the inevitable termination letter winds up getting faxxed or emailed in it should come as no surprise. I always think about the Strother Martin as The Captain in Cool Hand Luke; "Some Men You Just Can't Reach". Indeed. Some vendors as well Captain.

video

Monday, May 19, 2008

Sick Leave Entitlement

Here is an interesting story from the Washington Post on Sick Leave and the problems its creating at the IRS. Like most federal employees, IRS employees receive 13 sick days annually and use an average of 11. Since they cannot be cashed out at and can be carried forward the average IRS employee had 43 sick days at the end of 2006. Naturally, employees have an incentive to burn them all before retiring--hence the average 85% annual utilization rate.

At the Internal Revenue Service, one employee over a two-year period took sick leave on 13 of the 14 Tuesdays after a Monday holiday


Pretty sweet huh?Sick Days are an entitlement. There is no way to manage an entitlement except to limit its scope while incenting the behavior you seek. Too many private sector firms have sick leave programs with similar charactersistics as the federal sick leave program

Wednesday, May 7, 2008

How does that work? I don't understand


In an announcement May 5, 2008 The Tennessee Department of Commerce and Insurance released a report documenting the results of a multi-state settlement concerning disability claim practices by Unum and its subsidiaries since 2004 and the results are fascinating; 45.1% of group LTD claim decisions were reversed resulting in an additional $558.6M of additional benefits either paid or reserved for future benefit payment.


When you reverse 45.1% of your group LTD claim decisions on appeal you have a fundamentally flawed claim process. Keep in mind the majority of these contracts were likely to be ERISA plans.


Just for fun lets take a look at a portion of the transcript from the oral arguments in the Metlife vs Glenn case argued recently before The US Supreme Court as the justices attempt to discern the standards required to trigger a de novo review when an insurers behavior stemmed from its own self interest creating a conflict in exercising its discretionary authority as both decisionmaker and financial payor under the group LTD policy.




JUSTICE KENNEDY: Does it have to be just 12 the specific decisions? Suppose that
the company does 13 not have clear rules of, what do you call them, 14 firewalls
between the profit side and the claims
processing side. Would that be enough
to cause a 16 greater, more searching standard of review, say de novo? 17 MS. POSNER: I don't think it
would ever 18 result in a de novo review. I think what it is is a 19 factor that
should be weighed with all the other factors
that go to the actual benefits
decision. 21 JUSTICE KENNEDY: So then you're saying, A, 22 the fact that there
is a potential conflict is not 23 enough; B, the fact that there are no
procedures in the 24 company to ensure that the conflict doesn't affect the
judgment, that is not enough either.

1 MS. POSNER: No. I'm not saying that. I'm 2 saying that
if -3 JUSTICE KENNEDY: I'm positing. Does the 4 fiduciary at least have the, the
burden of production to
show that it has established clear lines of
demarcation, 6 firewalls, whatever you call them, within the company? 7 Does it
have at least that obligation going forward? 8 MS. POSNER: No, Your Honor, it
does not, 9 and as the United States -
JUSTICE KENNEDY: Well then, I don't
know 11 what effect you're giving to the fact, as the earlier 12 questions have
indicated, that there is a structural 13 conflict. 14 MS. POSNER: That's a
structural conflict
that ERISA anticipates and, as the United States said in
16 its brief to this court in Pegram v. Herdrich, that 17 ERISA tolerates this dual role and this level of 18
conflict in order to keep these plans that are so vital 19 in our country's
economic interests in underlying the
employee's well-being -21 JUSTICE
KENNEDY: You want us to write an 22 opinion to say that it's irrelevant that a
company does 23 not have procedures to insulate the profit section from 24 the
claims processing section? I'll use those terms.
MS. POSNER: No, Justice
Kennedy, absolutely
7
1 not. But what we are saying is that if there were
such
2 a fiduciary that factor must be weighed, but it doesn't
3 change
the abuse of discretion standard.
4 CHIEF JUSTICE ROBERTS: How does that
work?
I don't understand. You go through, you've got a
6 decision,
whatever, it's a health insurance decision
7 that this procedure -- to
determine that this procedure
8 is not covered under the, the plan, that the
fiduciary
9 has the discretion to make that determination. But you
say,
aha, he's got a conflict of interest, so that's a 11 factor we take into
account. Well, how does -- what 12 does that mean? 13 MS. POSNER: It means again,
remembering 14 that these are claims under 29 U.S.C. 1132(a)(1)(B) for
benefits due under the terms of the plan, it's very 16 important that the
courts remember to look at the terms 17 of those plans -18 CHIEF JUSTICE
ROBERTS: All right, you've 19 got two cases, one where the person does not have
a
conflict of interest under a particular plan, the other 21 where he does.
It's the same decision: We're not going 22 to cover this procedure. How is the
review different in 23 each of those cases as a practical matter?

Of course it is relevant that a company have procedures to insulate the profit section from the claims processing section. That was the impetus behind Unum reorganizing its claims department as a condition of its multi-state settlement. One should keep in mind Unum reversed 45% of its claim decisions while operating under the deferential arbitrary and capricious standard of Firestone
Somehow in these oral arguments Metlife's counsel manages to baffle each and every Justice asking a question and the central issue before the court is Whether an ERISA plan administrator that both evaluates and pays claims operates under a conflict of interest that must be weighed on judicial review of benefit determinations. Metlife showed up with a knife at a gunfight.


Tuesday, May 6, 2008

MetLife Vs Glenn- "That Smells Bad"


A careful reading of the transcript of the US Supreme Court Oral arguments in the MetLife vs Glenn case provides both an entertaining and and an insightful look at the strange world of long term disability claim practices where ERISA case law theoretically intersects actual claim practices. Sausage manufacturing is by comparison a deliberate and sterile procedure that still produces the odd case of e-coli but alas I digress and the core issue before the court is;



Whether an ERISA plan administrator that both evaluates and pays claims
operates under a conflict of interest that must be weighed on judicial review of
benefit determinations.


Most insured LTD plans contain a discretionary clause where state law permits which allows insurers to make claim decisions that are enforceable providing the actions are neither arbitrary or capricious--the standard set down in Firestone Vs Bruch for ERISA plans by The Supreme Court. Trial Lawyers have been seeking to crack ERISA for years and desire a "de novo standard of review". In English we are talking about the difference between a deferential standard--arbitrary and capricious and a much lower bar--de novo. The former requires the claimant to prove an administrators actions were arbitrary and capricious to win and the latter allows a completely new and complete review of the case where a claimant is much more likely to prevail. At stake for employers is significantly higher costs should Firestone v Bruch be modified or should the NAIC prevail in its attempt to remove discretionary clauses from LTD policies( see brief for NAIC in Metlife Vs Glenn). You attorneys should consider that a gross simplification and not legal advice.

Jannell Grenier at Benefits Blog covers these matters very well from a legal perspective as do each of the bloggers linked to her thread.

Without question there are disability insurers who utilize the arbitrary and capricious standard to support claim decisions that would be suspect at best under a de novo review. It was interesting to read the exchange between MetLife's counsel and the justices below concerning how it is conceivable a claimant could be awarded Social Security Disability Benefits and denied benefits following the change in definition to inability to perform any occupation;



JUSTICE GINSBURG: But then you come to the
end of the line. You have to
prove that the authority
6 was misused. And as I understand the Sixth
Circuit's
7 decision, what those judges were doing, they say we're
8
going to look at this with some skepticism because of
9 the conflict. And
let me give you a concrete example.
This woman got Social Security
disability benefits and 11 she did it at the suggestion of MetLife is; that so?
12 MS. POSNER: She actually applied herself. 13 JUSTICE GINSBURG: But she got a
lawyer that 14 they recommended that she have.
MS. POSNER: MetLife
recommended a lawyer to 16 her and also said she could use her own lawyer, which
17 was consistent with the plan design. 18 JUSTICE GINSBURG: But the point is
they 19 came to her and said: Get Social Security disability
benefits. Now,
to get those she would have to show that 21 she is totally and permanently
disabled. 22 MS. POSNER: Correct. 23 JUSTICE GINSBURG: So here is a company that
24 says: Tell the U.S. government that you are totally and
permanently
disabled, but -- and then we'll recoup all
11 Alderson Reporting Company 5
10 15 20 25 Official - Subject to Final Review
1 that money that we paid out
to you; but then when we get 2 a chance to look, look it over, we'll say you're
not 3 disabled. Why isn't it appropriate to regard just that 4 set of
circumstances with suspicion?
MS. POSNER: Because, Your Honor, at the 6 time
that that letter was written to the Respondent here 7 in October of 2000, in
fact MetLife had granted her 8 benefits. And the action of helping an employee
perfect 9 their entitlement to Social Security is in fact not a
conflict at
all. It's a fiduciary obligation under the 11 terms of a plan and it helps the
employee as well. 12 JUSTICE GINSBURG: Yes, I'm not questioning 13 that at all.
14 MS. POSNER: When -
JUSTICE GINSBURG: That sounds fine. It's a 16 question
of why, after helping her tell the government 17 that she was totally disabled,
they, after the initial 18 two-year period, turned around and said she's not. 19
MS. POSNER: The -- the reason is -- and
it's unfortunate that often Social
Security makes the 21 same decision that the plan fiduciary has made two years
22 earlier, and the government is looking backwards at 23 certain evidence that
may not be before the ERISA plan 24 fiduciary. The ERISA plan fiduciary at that
two-year
point is looking at that evidence at that time and at a
12
Alderson Reporting Company 5 10 15 20 25 Official - Subject to Final Review
1 change in the terms of the plan. 2 JUSTICE SCALIA: Ms. Posner, it seems to
me 3 that that ought to be looked at with suspicion, whether 4 or not the person
making the decision has a conflict. I
mean that smells bad or doesn't smell
bad, as you say, 6 either way. 7 MS.

Monday, May 5, 2008

Wal-Mart Expands $4 Generics Program


Wal-Mart has expanded its $4 prescription drug program it include a 90 day supply for $10 and OTC drugs have been added. Lot of drugs are included here folks.

I wonder when PBM's are going to figure out their business model is in trouble?

Saturday, May 3, 2008

Fire Up That BBQ Pit


So fire up that smoker and pop a top. Its all good.
By the way ground corn fed brisket makes the best burgers as well.

Friday, May 2, 2008

Stepping Over The Line


Yesterday evening I met an individual who works in management at a local ford dealership who gave me a business card and invited me to call him if he could ever be of assistance. He was a very gracious individual until told the following; I drive a Ford F-150 today but I informed him my next truck was likely to be a Toyota Tundra. Over the next few minutes I listened to a discussion of the myriad quality problems Toyota is experiencing. This is not particularly surprising. We expect car salesmen to talk up their own products and talk down the competition.


In the vendor selection and contracting for employee benefit service providers an employer however has the expectation they will receive unbiased and objective guidance from a consultant. I mean none of us would be stupid enough to hire the Ford Salesman to guide a selection of a new truck and expect objective opinions about the Chevy, Dodge, Nissan and Toyota alternatives, right?
Consider the curious case then of Hewitt Associates which guides employers in the selection of vendors and carriers for their employee benefit programs in addition to providing HR and Benefit Outsourcing Services. Hewitt has announced the acquisition of LCG Consulting a provider of total absence management solutions.
Does this mean Hewitt will cease vendor selection consulting jobs in the field of absence management? Did I miss that press release? How will they maintain any objectivity in evaluating absence management capabilities of companies and vendors who compete with Hewitt and why on earth would these companies ever want to allow Hewitt Consultants to obtain an insiders perspective of the systems, services and processes they utilize to deliver absence management solutions?
Is it not interesting how what is a clear conflict of interest for the car salesman is somehow justifiable in the world of consulting?

Thursday, May 1, 2008

Houston We Have A Problem




Yesterday, The Houston Comical ran an editorial chastising insurance companies for being unwilling to sell health insurance policies that did not provide the margins they desired. I guess that makes sense if your business model is in decline or you're a closet Marxist out of touch with the news reported in your own paper.


For instance

Here we learn the following from Elena Marks who is Houston Mayor Bill Whites Director of Health and Environmental Policy;



...the swelling ranks of the uninsured are severely stressing local hospital emergency rooms and driving up medical costs for those with insurance.


The census bureau reported yesterday that Texas leads the nation in the growth in its Hispanic Population.


This blog reported last year on some key facts about the uninsured in TX as noted below;


The Texas Health Institute, a nonpartisan health advocacy group, described them this way in a report that was released in January:
• They work. At least 72 percent live in households where one or more family members work full time.
• They are young. Twenty-three percent are children, and an additional 36 percent are between 18 and 34.
• They are not all poor. Forty percent of families without coverage have incomes of $40,000 a year or more.
• Geography matters. Almost half of the uninsured live in Texas' five largest urban centers, and Harris County leads the pack with about 1.1 million, according to state estimates.
• Ethnicity matters. Hispanics are three times more likely to be uninsured than whites; blacks are twice as likely.


So lets break this down for the Marxists at The Houston Comical Editorial board who could not even wait for May Day to bring us that observant editorial yesterday.



  1. We have a growing population of uninsured Houstonians.

  2. Our uninsured population has learned they can access free care at Houston Hospitals. Why pay a premium for health insurance when you get services for free at the ER?

  3. The number of Hispanics in Houston is growing and they are three times more likely to be uninsured.

Insurance carriers have been offering low cost limited medical benefit policies for several years to allow for basic health coverage for a premium equal to two hours of weekly wages. Many employees still do not enroll. Why? See #2 above

Thursday, April 24, 2008

Disruptive Discoveries: BPA and your Health


Caught the National Geographic Strange Days Program last night on PBS and it was very interesting. It seems that the ubiqiutous plastic water bottle contains bisphenol A, which in very small trace amounts has been linked to endocrine problems.



A 2005 U.S. Center for Disease Control study reported that 95 percent of tested Americans contained bisphenol A at levels known to cause abnormalities in lab animals. This compound, which mimics the female hormone estrogen, can disrupt an animal’s endocrine system and, even in tiny amounts, scramble early cell development in mice and other lab animals. “Too much of any hormone at the wrong moment can be risky,” explains vom Saal. Lacing any animal system with it can have consequences. As vom Saal relates, “You have essentially set a time bomb in the genes of that animal.”

It seems the USA now has its first lawsuit over BPA according to Reuters. Here is the portion that caught my eye. I would not be using plastic bottles or liners to feed an infant formula or milk as the PBS program tested the impact of a dishwasher on baby bottles and the leaching accelerated.

Wal-Mart Stores Inc also said on Friday it will pull baby bottles and other products made with BPA from its Canada stores immediately and phase the items out of its U.S. stores next year.




Wednesday, April 23, 2008

The price of year around baseball


It's spring time in America and acrooss our nation many families are spending evenings at the baseball fields. For many kids in the greater Houston area baseball is a 12 month sport involving spring, fall, summer and select teams. Houston is a mecca for baseball talent due primarily to a temperate climate and the abundance of talent that develops with good coaching. Yet this comes at a cost.
The Houston Comical has reported one of the consequences of year around baseball has been a seven fold increase in Tommy John surgery since 1996. Kudos to Sam Khan on a well written piece that needs more scrutiny as kids are pressured to play ball year around.
While rates on UCL surgery are not tracked nationally, some of the area's and country's top surgeons said they've seen a significant increase in the number of high-school-aged players having the procedure.
"I would say over the last five to seven years, (the rate) has doubled," said David Lintner, an orthopedic sports medicine specialist who is Eovaldi's doctor and also serves as the Astros' team medical director. "And it goes up steadily every year."
Dr. James Andrews, one of the nation's most respected orthopedic surgeons, has also seen a spike in the number ofhigh school pitchers he has performed the procedure on.
In a three-year span from 1996-99, Andrews performed Tommy John surgery on 164 pitchers, 19 of whom were high school aged or younger. From 2004-07, that number had jumped to 588 pitchers, 146 of whom were high school or youth league players — a seven-fold increase.
"Without a doubt, it's an issue," said Glenn Fleisig, the Smith and Nephew Chair of Research at the American Sports Medicine Institute, which was founded by Andrews. "The numbers are staggering in adolescents. More and more high-school-aged kids are having the surgery."
The big question: Why is a procedure once used mostly on college and professional players becoming more prevalent in kids who can't legally vote?
There are many factors, including how much a pitcher throws, what type of pitches he throws and whether he has good mechanics. But one factor stands out as the main culprit.
"Without a doubt, the No. 1 statistical cause (of UCL injuries) is overuse," Fleisig said. "In our studies, when a pitcher regularly threw with arm fatigue, he was 36 times more likely to be in the surgery group as opposed to the non-surgery group. That's the strongest statistical correlation in any study we've ever done."

Let's keep in mind Tommy John was 39 years old and had been pitching in the major leagues for 19 years when he had his UCL surgery.

Friday, April 18, 2008

We Want You To Know


It must be ok for me to post this true story on the web since AETNA wants us to know. A small group client selects AETNA to insure their health for 3/1/08. AETNA approves the group on 3/10/2008. The group hires a new employee and submits an enrollment form to AETNA on 3/25/2008 for the employee to be covered on 4/1/2008. AETNA informs me that since a new employee was added in the 1st 30 days they are increasing the rates by 67% retroactive to 3/1/2008 as this is their long established policy when enrollment changes in the 1st 30 days. If AETNA really wanted us to know would not their proposals reference such a rule?
So now I understand the AETNA logo. The human figure is a business owner throwing his AETNA policy in the air in utter frustration upon learning his raes were not locked in for a full year. I want you to know.

Friday, March 28, 2008

Rat Race



Commuting to work on crowded roadways is a daily task I do not miss. Working a short distance from home has added two productive hours to my workday. Working for myself affords me the ability to set appointments to avoid peak traffic congestion most of the time.

Yet driving around a major city provides the opportunity to observe far too much road rage.
  • The evening news is full of traffic fatalities.
  • Tailgaters are everywhere.
  • Why some drivers seem to accelerate to a stop is beyond me but I see cars speed up to get to the redlight where traffic is clearly stopped.

It can be very reasonable for employers to consider a business travel accident policy that offer coverage for commuting to and from the office. The daily commute is the most dangerous task many workers undertake. Perhaps the hours I have spent with my teeenage daughter and her learning permit recently have made me appreciate the danger of a sressed out driver in traffic. The risk increases with annoyance and other distractions.

Friday, March 14, 2008

Save The Baby When You Toss The Bathwater


Its amazing to observe how often companies will decide to replace a vendor without considering an existing carriers capability to provide similar services or products much less the flexibility in pricing a long term relationship affords an insurance carrier.

Often brokers and consultants who are revenue and acquisition driven pursue make recommendations to change vendors when it serves their interest not their clients. Where service or problem solving skills fall short at a brokers firm the path of least resistance is often to change carriers or vendors.

Here are a few key points for employers to consider before changing carriers;



  1. Ask who benefits from the sales pitch as its detected. You need consultative problem-solving skills from an intermediary not pitches.

  2. Meet with your incumbent and price the same alternatives.

  3. If you have built up a track record with a health insurer and matured your run out changing insurers will result in another first year renewal where you are again facing both trend and a mature adjustment. It will be tough to negotiate that down with a new carrier but with your incumbent its far easier.

  4. Continuing to change carriers will limit the markets who will consider you in the future and limit your options. Carriers just decline companies that shop and change annually.

  5. Try to resolve issues directly with the incumbent before leaving them. Counseling is always cheaper than divorce. If your broker cannot or will not setup a meeting with the people who can resolve a problem that should be a telling signal to you that perhaps you need a new intermediary.

I spoke this morning with a client who had entertained a pitch from a competing broker suggesting a carrier change. The client has been with their health insurer for 4 years and has been treated very well and we were successful in negotiating a 13% renewal down to 4.5%. All of the plans being suggested are available through the incumbent without a carrier change. Yet that did not prevent a recommendation that the baby be tossed with the bath water which is never a good idea.

Wednesday, March 12, 2008

Ask for Lower Rates 12 months after Quitting Tobacco



Many Texans buy life insurance and file the policy away without an annual review. Those who have quit tobacco who were issued smoker rates can reapply for a safer risk classification and receive a lower premium.

John and Melissa are clients in their mid 20's who quit smoking 6 months ago. Since they smoked cigarettes within the last 12 months they qualify for preferred tobacco rates and their monthly premium outlay is $155. In 6 months they will be tobacco free for a year and can apply for standard non-tobacco rates which would drop their monthly premium outlay to $95. A 39% reduction in premium will save this young couple $720 annually. Over the remaining period of their 30 year term policy the savings totals $21,240.

It pays to re-evaluate your life insurance policy annually.

Mr Clean Loses His Shine


Sometimes a picture is worth a thousand words.
Mr Spitzer painted insurance brokers with a broad brush several years ago. Pride cometh before the fall Elliot.

Friday, March 7, 2008

Lose or Limit Sickdays to Boost Productivity


Yesterday I met with a bright CFO who was considering how to balance being the employer of choice to attract and retain the very best professionals via benefits with a slowing economy reeling from sub prime woes that is slowing new contracts as financing gets squeezed. This firm gave employees 7 sick days annually. Sick days used to be use them or lose them but this led to a very unproductive November and December as employees used them all up during the holiday season. This led to a policy which allowed sick days to accumulate up to 14 days maximum along with a carryover.


When times get tough look closely at the design of your sick pay plan and ask some hard questions. Here are yesterdays questions and answers for a group with 250 employees and an average salary of $60,000



  1. What did the sick days/personal days cost in 2006 and 2007? What was the year to year trend? Not sure of the cost but the trend went from 7 days used to an average of 6 days.

  2. How many sick days/personal days do employees receive and how many do they use on average? 6 days was average use.

  3. What type of return on labor is targeted in your industry? 3-1 is goal.

A $60,000 annual salary equates to $5,000 monthly.


There are 21 working days in the average month excluding weekends and 2 weeks vacation.


$5,000/21 working days = $238.10 as the direct cost of a sick day.


Since the company is seeking a 3-1 return on labor they are actually out the $238.10 in direct costs plus the value of a days pay to the firm which is 3 times the daily wage or $714.30


So the actual cost of a sick day to the firm is $238.10+$714.30 or $952.40.

250 employees using an average of 6 sick days generates an annual cost of $1,428,600
$1,428,600 is 9.5% of payroll.

A reduction for this firm of one sick day represents $238,100 annually or $952.40 per employee. Folks that's enough to buy major medical for an entire family in my market.

What is truly sad is that this employer like many believed they had insured the real risk which was long term disability which has a cost of less than 1% of payroll. Not to mention there is a gap between day 14 when sick days end and day 90 when LTD benefits begin.


Some may say there is no way to get a reduction of one sick day without taking away benefits or the cost of sick days is not a real expense since its buried in payroll anyway. Really? This is the black hole of STD I have previously written about. I would point such naysayers to what innovative and truly lean companies do to reward perfect attendance. Did you know Toyota employees with perfect attendance can win a free car?

The reality is that sick days are an entitlement. You do not manage entitlements. You do limit their scope and put into place incentives to drive the behavior you are seeking. It helps to have a benefit design aligned with your business objectives and that's precisely where our firm assists employers. We will assist this employer with a design that not only lowers costs but eliminates benefits gaps.



Wednesday, March 5, 2008

Could Have Should Have, Would Have...Too late

I had a call recently from a client I recently acquired. In reviewing their benefits package I had proposed $50,000 of employer paid group term life insurance and also pointed out the exposure the business had relative to several key people. Like many closely held businesse's this client stays very busy and procrastinated on a decision despite costs that looked very reasonable.

The sudden death of a key employee last week leaves a family with no life insurance and the company scrambling to fill the shoes of a key employee. Most life lessons are tough but life insurance lessons can be brutal.

Tuesday, February 12, 2008

Men who hold high places must be the ones to start


2008 will mark the 18th year anniversary of the passage of The Americans With Disabilities Act yet yesterdays ABC News Broadcast with Charlie Gibson shows how newsworthy it is for a corporation to actually comply with the spirit and intent of the law. Walgreens has a distribution center in Anderson, SC staffed with a workforce which is 40% disabled.

The quiet revolution happening in Anderson is the brainchild of Walgreens executive Randy Lewis, who has a 19-year-old son with autism.

"As a parent, I saw the future and so the question is, given our position, what do we do about it? Maybe we could be an example, maybe we could use our position of leadership to try to change the work environment."


NBC News Brian Williams covered the story as well last July.

Evidently, what was news last July is still news today. Randy Lewis deserves credit for focusing attention on functionality, choosing to see what people can do versus what they cannot. A stable workforce that is 20% more productive than other distribution centers

As our workforce ages and the baby boomers gray it will become important for many companies to consider functionality and ability both in hiring as well as stay at work and return to work programs for existing employees.

Lewis says the distribution center in Anderson is no less productive than others. In fact, Anderson is more productive. The training and technologies that help disabled workers do their jobs better help all employees do their jobs better, he said.

"People come to me and say, will this work in my environment? Yes, it will. This is not just a good thing to do, the right thing to do. This is better," Lewis said.
Mr Lewis is correct and on point IMHO both in hiring as well as stay at work and return to work programs for existing employees. Too often companies take an all or nothing view of work in regard to the disabled which prevents them from equally obtaining talent as well as retaining it. In their disability programs such assumptions manifest in higher than average disability costs to the company as well. This phenomenom has been apparent to me on multiple occasions while analyzing diability loss experience in Fortune 1000 business'.

One of the most profitable studies an executive could commission at their company would be to consider the ROI possible from re-examining the impact of attitudes in hiring and retaining the disabled. This is not just a good thing to do, the right thing to do. This is better. Indeed. As we approach Valentines day this week Mr Lewis reminds us having a heart is better than the right thing to do.

Friday, January 11, 2008

Fundamentals for Sales Professionals


I just received a proposal for a well qualified prospect from a major big 4 health insurer. The prospect is buying and I have a several questions for my group rep. While I have a name and an email address for my group rep all my emails from her lack a phone number.

It is truly amazing to me that any sales person can send out an email and exclude a signature line missing their direct phone line, cell phone or fax on their corporate email as well as PDA. Yet it happens.

So young group reps if you want a call back here are several tips. If you are not going to actually call on me in person and provide a business card at a bare minimum you should know what I am thinking.

  1. Make sure your PDA and email contains a signature with your phone number and cell phone.
  2. Its nice to have your fax # and address as well so we will know where to send those apps and checks.
  3. Make it easy on me to click on your phone number and reach you directly in the office or on your cell without reaching your voicemail or pbx without entering an extension. I am after all out selling your product and if I die in a car wreck who will sell your product?
How many sales are missed because the broker did not know how to reach you for lack of a phone number?