Competing to be The Biggest Loser;Got EAP?

Ever spend any time on itunes looking at random app's? I admit I do. I look at the free ones because I'm cheap. Anyhow I run across one called FML and its very popular. I click and look at it to find;

If you’ve never been the website FMyLife, it’s kind of like Twitter for losers who just can’t get a break… people post very short anecdotes about how F’d their lives are, always ending with the abbreviated mantra “FML”, and then the rest of the world votes on whether the person’s life is truly F’d or if they got what they deserved. Here are a few:

There is something sad about a culture that competes to demonstrate how terrible their life is, not too mention how shallow is the individual who lifts himself by tearing down another in the comments section of a website or blog? But we have all seen such individuals. The web has coarsened our national rhetoric. Just another reminder why you need to communicate the access to your EAP.

I am Taking a bow

For my 100th post let me just take a bow and point out that I noticed a major consulting firm just made a press release pointing out the potential impact of proposed changes to COBRA that I detailed on January 26, 2009 on these pages. Now that Harry Reid claims to have the votes it may be too late to call your Senator so just remind yourself again you selected them because they are big, not speedy. Just saying...

Pay No Attention To That Man Behind The Curtain II

Last year I wrote about my own personal encounters with anti-competitive behavior that was being exhibited by brokers who placed business with carriers purely based on their compensation, which was frequently not disclosed on an ERISA 5500 schedule A. Such payments whether referred to as overrides or contingency commissions had a common characteristic--the customer who hired the broker usually did not know. It simply was not disclosed.

An old friend who worked at an alphabet house called me up and advised my blog post had made the morning read at his firm and people were quite upset and surely I had exaggerated. i assured him I had not written 10% of what I personally witnessed. So lets compare what I said then with this weeks news Marsh has settled charges with 9 states.

I wrote;

1. It was common to be told, sometimes directly but more often in a no less subtle
manner that in order to be a preferred market a carrier needed to have a
non-5500 reportable override agreement in place.

2 .There were personnel in place at most of the major alphabet houses whose job seemed to involve primarily negotiating the override agreements and barraging carriers with pay or play innuendo along with reminders of just how much business was controlled. In short there was the A list and the B list. Guess who earned most of the business?

3. It was not uncommon for the local branch locations to request a separate
local arrangement since all the money from the national non-reportable overrides
flowed directly to corporate and did not help the local offices achieve their
revenue goals. "Can you help us, so we can help you with your goals?"

Here is what the above article said;

Marsh was involved with a "pay-to-play" arrangement centered on its receipt
of contingent commissions, in addition to standard commissions and fees, from
certain insurance companies. Contingent commissions, also known as profit
sharing commissions, are incentive-based compensation programs offered to
brokers by insurance companies. These arrangements were often undisclosed to
consumers, and provided an incentive for brokers to steer business to the
insurer that offered the most lucrative contingent commissions, often in
violation of their clients' interests, according to the officials.

Disability Challenges Ahead in 2009

Employers in planning cycles have good cause to strongly consider both their plan design along with the competency of the vendors who administer their FMLA, short and long term disability programs given the current business and compliance environment.

With reduced employment the incidence of disability will increase as people who work with a disability seek disability benefits out of fears their job may be eliminated. There are many Americans with Disabilities who get up and go to work everyday with conditions which could disable them. Take away their job and they pursue disability benefits.

Those on disability will also find it difficult to find employment which is consistent with their functional capacity leading to longer claim durations. Many Long Term Disability contracts contain provisions where the definition of disability changes from the inability to perform your own occupation to the inability to perform any occupation for which you are suited by education training or experience which would pay 60-80% of pre-disability earnings. A 24 month own occupation period is the most common point for the change in definition. Insurers use a transferable skills analysis and a local labor market assessment and when they find a position which meets the earnings requirement, 60% or 80% being the most common earnings thresholds, they terminate LTD benefits. Of course with skilled jobs being scarce it is more difficult to find positions which meet the earnings requirement so claims remain open that would have closed in a better economy.

Employers also need to consider that The Americans With Disabilities Act (ADA) has been expanded as of January 1, 2009 (Nice summary is available here form Chicago Tribune ) to consider episodic chronic conditions covered disabilities. To qualify as a covered disability the ADA has also expanded the definition of a major life activity to include such tasks as concentrating, thinking, communicating, working, bending, lifting, standing, reading, performing manual tasks and caring for oneself.

Amended FMLA Regs become effective 1/16/2009 and there is a nice summary located on Ohio Employers Law Blog. It is now an even better idea to have an independent 3rd party handle the medical certification of an FMLA Leave.

Insurance markets for disability harden in a recession and acquisition pricing strategys go away.

Now would be an opportune time to evaluate the plan design and disability claim capabilities of existing disability vendors in order mitigate the harsh reality employers face from the economy along with FMLA & ADA compliance.

1. More Disability Claims will Occur
2. Claims will last longer
3. ADA has been expanded and increased litigation will result.
4. FMLA regulations have been amended but your FMLA process must be ready to combat fraud.
5. If your claims experience factors into your rates are you ready?

Add this to the agenda for planning this year and be sure to retain a qualified consultant, like me for instance, who has deep experience in these matters to assist you as you will need the right plan design and the right vendors. Employers who act now will not be facing massive premium and claim increases two to three years down the road or answering hard questions from management.

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.

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?

A Tale of Two Business Models

Human Resource Executive recently announced its best of the web including Blog's. HR & Benefits professionals working for employers routinely go to the web for rich content.

In contrast EmployeeBenefitAdvisor.com recently posted a poll on its website concerning blogs as a customer interaction/attraction tool with the following results.

• 97% of respondents do not read any blogs regularly.
• Only 3% of respondents write a blog and 5% were thinking about it.
• 19% of respondents indicated writing a blog had never crossed their mind

Now technology always out pace's pure science but in the era of Google and You Tube it is truly amazing to me so few purportedly independent benefit advisers can go about their business oblivious to all the rich content which is out there in the blogosphere just waiting to be surfed. Yet it does not really surprise me.

Several close friends have asked me why would you want to write a blog and let everyone else know what you think. Well thats easy--most competitors do not even read blogs as evidenced by the poll above.

Several consultants have asked me if the blog has brought in any new business and in that question lies some useful insight into the fundamental problems associated with many consulting and broker business models; There is simply no time for anything but billable hours or achieving revenue growth objectives at too many firms. To focus any energy on ideas with application for employers is the role of the firms thought leaders and the employees job is to sell or bill hours, or spend face time with your key accounts. The firm can produce powerpoint presentations and practice leaders on any number of technical subjects but the average employee interfacing with an employer is often incapable of thought leadership in many fields related to benefits. The firms thought leaders speak to the employees in the same outdated manner Judge Smails used in Caddyshack--"The world needs ditchdiggers too". When top talent is needed at executive levels they buy it or acquire it externally.This business model has outlived its usefulness.

Yet there is a new business model better suited to the information age which can be characterized by the values which guide our interactions with employer clients.

1. Client relationships rooted in performance over time are primary and revenue is simply a product of a job well done. It is secondary.
   
2. Seeking out best in class professionals precludes using just a single firm for all advice.
3. Providing opinions and counsel in real-time via access to Principals.
4. Putting ideas rooted in practical experience into the Blogosphere for employers seeking answers.
5. Aligning specific employer objectives with plan designs and vendors capable of achieving measurable results.

For the life of me I do not see how any professional intermediary could ignore the blogosphere and remain current on the best ideas available. But hey, thats just me and Judge Smails always struck me as a comic figure.