By Len Strazewski

From left: TG Nulty, CIC, President; Sandy Vroegop, Employee Benefits Account Executive; Chip Schelb, Employee Benefits; Susan Culhane, PHR, Employee Benefits Manager; Dawn Scamazzo, Individual Health Advisor; Douglas Nagel, Employee Benefits Advisor; Tenneil Shaffer, CBC, ACBC, CPhT, Employee Benefits Marketing Manager; Katie Kubasiak, Employee Benefits Account Executive.

Evolving rules, regulations and public and private programs engendered by health care reform can be a confusing conundrum for employers as they bring their organizations into compliance and design their plans for the future.

Day after day, there’s plenty new to learn, says TG Nulty, president of Michigan-based Nulty Insurance, and the agency works hard to stay on the forefront of employee benefits education.

Education is the lens that focuses the agency’s approach to marketing, he explains, and employee benefits is the fastest growing line in a rapidly expanding commercial lines agency. Employee benefits sales and consulting accounts for about 23.5% of total revenue, up from about 15% in early 2013.

While the agency has maintained an employee benefits division for more than 15 years, commercial property/casualty insurance has dominated the operation for most of that time. Commercial P/C still accounts for 43% of total revenue, Nulty says, and continues to grow, up 20% in the past two years. But in the past three years, employee benefits business has grown 65%, with new business increasing nearly 50%.

The agency, which has offices in Otsego, Kalamazoo and Iron Mountain, has 40 employees, including seven in the employee benefits operations. In the past year the agency has also added a specialist in personal individual health insurance to accommodate people who are planning to purchase health insurance through exchanges created under the new law.

“In 2010 when the Affordable Care Act was passed, we didn’t even know if we would continue to have an employee benefits department,” Nulty says. “Many agencies expected that employers would stop offering group health insurance to their employees and eliminate the need for our services.”

“Employers need to know how to make the right choices and also how to analyze their return on investment and manage their plans into the future.” —Susan Culhane Manager Employee Benefits and Human Resources

“We decided that we could learn the new regulations as well as or better than anyone in the industry and could teach employers what they needed to know not just to comply but to take best advantage of what the law offers,” Nulty says.

As a result, education became the new focus of the firm’s employee benefits marketing strategy, says Susan Culhane, manager of both employee benefits and human resources. The agency sponsors regular seminars for clients and prospective clients on legal and plan design issues, self-funding approaches and human resource issues such as developing an employee handbook.

“People appreciate being educated and prepared for their responsibilities under the law and how to make plan design choices that not only comply with the law but can contribute to the well-being of their employees,” she says.

“They need to know how to make the right choices and also how to analyze their return on investment and manage their plans into the future.”
The agency also takes responsibility for educating clients’ employees, Culhane adds. “It’s important to educate plan participants to make the right choices for themselves under the new plan designs.”

Health Savings Accounts (HSAs), for example, can be valuable to employees who can use the accounts to accumulate assets, “but they have to be prepared to make the right choices to take the best advantage of the plan provisions,” she says.

As more employers move toward defined contribution models that provide several employee choices offered by private health insurance exchanges, employees will also need guidance in finding the best options for themselves and their families, she says.

As the agency’s human resources manager, Culhane is an expert in related compliance issues, such as the FMLA, COBRA and HIPAA. She provides support for employers who do not have their own HR department. “We view ourselves as an extension of our clients’ human resources departments,” she says.

Nulty clients range in size from very small businesses to those with several thousand employees, but executives agree that the agency does its best for employers with 50 to 1,000 employees. TG Nulty says the agency has been successful in taking business away from large national brokers that cannot provide the customized personal service Nulty Insurance offers.

“We decided that we could learn the new regulations as well as or better than anyone in the industry and could teach employers what they needed to know not just to comply but to take best advantage of what the law offers.” —TG Nulty President, Nulty Insurance

“Everyone is talking about defined contribution plans but only a handful is considering them right now.” —Tenneil Shaffer Employee Benefits Marketing Manager

“Claims analytics is a lot of what we do, assisting employers to analyze utilization and identify the drivers of their expenses.” —Douglas Nagel Employee Benefits Advisor

Tenneil Shaffer, employee benefits marketing manager, has been a Nulty employee for 10 years and is the resident expert on insurance company relations. She says she attends about 90% of client meetings, teaming with benefits producers to explain the range of options for plan design. “We ask a lot of questions. What are they doing now? What are they willing to change?”

For many employers, “offering benefits is almost an afterthought,” she says, but employers are becoming increasingly aware of the role of benefits in the human resources strategy: helping companies recruit and retain the best employees.

The agency works hard to fit clients with a plan design that meets their goals and the needs of the workforce, she says. She notes, however, that Michigan is an unusual marketplace.

“Michigan is unique,” she says. BlueCross/Blue Shield of Michigan dominates the health plan competition but is far from alone. The state also hosts a local health plan, Priority Health, which is the second largest in the state, as well as United Healthcare, IHC Group, Trustmark and Liberty Union.
National leaders like CIGNA Health, Aetna Health and Humana are not active in the area.

The agency sells coverage across the range of health plans, but Shaffer notes that carriers vary in rates, plan designs and claims management. BC/BS may be the largest plan with the broadest networks, but falls short of Priority Health in managing and reporting claims data. Others are better at supporting account-based plans such as HSAs and Health Reimbursement Accounts (HRAs) and administrative services for self-funded employers.
Services also vary regionally. Kalamazoo is conservative, she explains, sticking to traditional health plan designs. Grand Rapids is more experimental, exploring wellness programs, health incentives and other motivational approaches.

Douglas Nagel, an employee benefits advisor, joined the agency about a year ago after 15 years in the insurance industry, working for insurers and wellness consulting firms. Nulty is his first agency position, and he brings the firm a wealth of claims and self-funding expertise.

Many employers need help navigating employee benefits management issues such as plan design, claims and benefit communications, he says. “We see a lack of understanding about the whole benefits process,” he says. “The first question we hear from employers is ‘How did we even get here?’”

Nagel says that to many employers, health insurance seems like a “shell game,” with hard-to-pin-down trends and costs going up all the time. “Most employers have not been able to take a hard look at the factors that contribute to their costs and really don’t know how their company arrived at their situation.”

Once they start to explore their claims history, however, they ask a deeper question: “Is there something else we can do?”

“This is a real educational opportunity to show employers that there is indeed something else they can do to influence their costs. Claims analytics is a lot of what we do, assisting employers to analyze utilization and identify the drivers of their expenses.

“Most people realize that 20% of their population is 80% of their costs. If you can reduce or eliminate those claims, you can reduce your costs.”

Nagel says more and more employers are exploring full or partial self-funding, using stop-loss insurance over a retention or new plan designs that create the same opportunities to analyze claims over a longer period of time and build in responses such as wellness and disease management programs.

Self-funding was once limited to large employers, but insurer innovation and a responsive stop-loss and reinsurance market have made self-insurance designs available to smaller employers—even those with fewer than 100 employees, Nagel explains.

These employers are moving their benefit plans away from fully insured structures and into fee-for service arrangements with third-party administrators or insurers providing administrative services only.

Health care reform has also created new opportunities, he says. While the ACA allows employers to withdraw from offering health benefits, few employers are abandoning their role. Employers still need to recruit and retain key employees, and employee benefits are critical.

The next wave may be defined contribution plan models. The ACA exchanges allow individuals to purchase their own insurance at affordable rates, and private exchanges allow employers to design a range of plans and contribute to their cost.

“Everyone is talking about defined contribution plans but only a handful is considering them right now,” Shaffer observes. “The idea isn’t really all that new. We had cafeteria-style benefits (Section 125 plans) in the 1980s.”

The key issue is administration, she says. BC/BS of Michigan and other insurers are developing defined contribution administrative platforms that will make the transition easier and help employers manage employee choices. Some insurers and large brokers are creating their own private exchanges to host choices.

That means there’s more to learn about every day, Nulty executives say.

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.