By Len Strazewski

Pre-Civil War historical buildings, jazz music from the last century and  cuisine laced with old French traditions are part of the charm of New Orleans, but the employee benefit challenges are straight from the 21st century.

Rising costs, shrinking markets and the thorny issues of state and federal compliance plague Louisiana employers and demand the best advice and counsel from local agents and brokers as they assist their customers in navigating an evolving employee benefits environment.

Eustis Insurance and Benefits in Metairie, Louisiana, a New Orleans suburb, is one of the state´s top comprehensive brokers with plenty of roots in the area´s rich past, founded in 1946 as a commercial property/casualty insurance firm. But when it comes to employee benefits and related human resources and management issues, the agency has its vision on the future.

Eustis Benefits LLC, the separately incorporated partnership that is responsible for employee benefit services, was founded in 1995 by President Cynthia Villemarette and Executive Vice President W. Michael Mann.

In the 1970s, Villemarette and Mann worked for two of the largest national brokerage companies of the day, Alexander & Alexander and Frank B. Hall. They later joined forces and formed their own benefits consulting company. Their firm partnered with Eustis Insurance, a risk management specialist, to create Eustis Insurance and Benefits.

Since 1995, the benefits company has grown from two employees and about $250,000 in revenues to 15 employees and $3 million in revenue. Employee benefits generates about 15% of the agency´s total revenues but has been increasing annually and is likely to reach 25% of the total within three years, executives say.

“As we monitored health care cost increases … it became clear that the qualified high deductible health plan and an HSA was the right decision for many of our clients.’ —Cynthia Villemarette

The agency also has offices in Mandeville and Baton Rouge, Louisiana.

“Mike was the visionary of our partnership,’ recalls Villemarette. ‘When we left the national brokerages and formed our own company, we knew we wanted to be associated with a risk management and property/casualty insurance leader.

“Mike also had the idea that the future of benefits was about providing consultation and advice, not just selling products and shopping for prices. He made the decision to partner with Eustis easy for us all.’

Mann says the first years of the partnership were about cross-selling the agency´s existing property/casualty insurance customers, reaching out to them to identify their growing needs for employee benefits expertise and focusing on their human resource-related strategies.

There were plenty of issues, as health care inflation drove annual group health insurance costs up more than 10% each year.

“Our approach was to ask the property/casualty producers what their clients needed in the areas of our expertise and to take more of a consultative approach than our competition at the time,’ Mann says. “We wanted to do more than just place group medical coverage. We were looking to meet the broad base of their needs with a strategic plan.’

In the first years of the partnership, about three quarters of the employee benefits business was generated in this way, from property/casualty insurance customers; but today about half of the partnership revenues are from new benefits customers, many of whom have been cultivated by the property/casualty insurance side of the agency.

The agency has been on the cutting edge of new approaches to benefits management and design, executives say. Many employers have  adopted a defined contribution approach to benefits budgeting, identifying the level of contributions they can afford and providing options to employees that accommodate the costs they need to bear.

About 90% of clients now offer high deductible health plans that include Health Savings Accounts (HSAs) to provide a tax advantaged structure to employee contributions or Health Reimbursement Accounts (HRAs) to structure employer contributions.

“As we monitored health care cost increases, which were about 7% to 8% in 2012 and 9% in 2013, it became clear that the qualified high deductible health plan and an HSA was the right decision for many of our clients,’ notes Villemarette.

“As costs increase, it is important to have employees have some responsibility—some skin in the game—for their health care choices. It makes sense that if employees are using money for their own accounts to pay for medical services, they will be more committed to making more economical choices for non-emergency services,’ she says.

However, the shift to more sophisticated approaches creates demands on the agency, as well. Communications become critical, the executives say, as employees need to learn the details of these responsibilities.

The services have also needed to expand, Mann says, to include benefits plan design consultations, employee benefits communications, enrollment services and payroll systems. In the past five years, Mann says the firm has become more technology driven, providing benefits administrative systems that integrate with payroll operations.

“We have been working to take benefits and its related processes into as much of a paper-free environment as possible,’ he says.

However, the biggest challenges of the near future relate to compliance with expanding regulation, particularly health care reform. Chris Delamain, an employee benefits consultant and producer, says employers are struggling with the regulatory pressures on their employee benefit decisions.

“For many employers, the single biggest issue is the uncertainty and volatility of our environment. People are confused about what they are being force-fed in the marketplace,’ he says. “They feel they are being forced to make changes, and the reasons for the changes are not strategic to their businesses. They are compliance-driven.’

“We have been working to take benefits and its related processes into as much of a paper-free environment as possible.’ —W. Michael Mann

Employers are grappling with decisions that could lead them to pay more for employee benefits, reduce benefits or abandon medical benefits completely. Most employers don´t want to omit group medical benefits from their employee benefits program, Delamain says, but are concerned that the regulations may increase their costs.

“‘What do I do if I cannot offer health benefits to all employees?  Do I make more employees part-time? Do I lay them off? What does this do to my business?´ As a consultant and a trusted advisor to our clients, we have to provide education and solutions.’

The marketplace for coverage is also changing, executives say. Villemarette and Mann note that the number of competing health plans has been shrinking since they began their company and the ability to achieve cost savings by shopping carriers is almost gone.

Under health care reform, with mandated plan designs and individual requirements, health insurance “is becoming more of a commodity,’ Villemarette says, making strategic benefit decisions more difficult.

The largest health plans in the area include Blue Cross and Blue Shield of Louisiana—which has more than half of the local market share, United Healthcare, Humana and Coventry Health, recently acquired by Aetna Health. As a result, service is a key differentiator, notes Villemarette. From its inception, the benefits division developed an account management service system that provides clients immediate contacts within the agency.

“We were among the first to develop and organize an account services team. Today everybody does it, but we always stay ahead of the competition,’ she says.

Account Manager Jodi Yuspeh describes the Eustis approach as “very hands on, very customer-service oriented.’

The account management team works with both employers and employees, providing a wide range of personal contact, she explains. “We deal directly with employees on a daily basis, responding to any of their bills or claims problems or just their questions on their coverage. They can get in touch with us anytime.’

For employers, Eustis serves as an extension of the human resources department, providing much more than benefits administration. “So many human resource departments have been cut back, just at the time when there are so many more compliance challenges,’ Yuspeh says.

Open enrollment periods are non-stop service events, she says. “We are very involved with the enrollment process, even before the period begins. We start in September for the December enrollment, preparing benefits deliverables for employees—communications documents and multimedia—that can help them with their choices.’

The agency has made extensive use of video communication to help educate employees about coverage changes, she notes. Many of the videos are available on the agency Web site at www.eustis.com.

Chris Delamain, Producer, and Jodi Yuspeh, PHR, Account Manager.

When open enrollment begins, “we do everything,’ Yuspeh says. “Group medical, voluntary benefits, and 401(k) sign-up. Whatever they need.’
Wellness programs are also part of the agency services. Yuspeh says growing numbers of clients are exploring various levels of wellness services and incentives, following the lead of their advisers, who have adopted a wellness strategy within the agency.

“We practice what we preach,’ she explains. “Before we promote a program or service, we try it ourselves so we can explain it effectively to our customers.’

Through a series of strategic partnerships with local experts, the agency also has access to voluntary enrollment specialists, a medical director to support employer wellness programs, actuarial services and an ERISA specialist attorney. The agency is also a member of the Benefit Advisors Network, a national network of employee benefits experts founded in 2002. Through its membership, the network provides additional consulting on benefits captive insurers, regulatory compliance and wellness programs, among other services.

The author
Len Strazewski is a Chicago-based writer, editor and educator specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, Risk & Insurance, the Chicago Tribune and Human Resource Executive, among other publications.