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HR entrepreneur Mike Coffey, SPHR, SHRM-SCP engages business thought leaders about the strategic, psychological, legal, and practical implications of bringing people together to create value for shareholders, customers, and the community. As an HR consultant, mentor to first-stage businesses through EO’s Accelerator program, and owner of Imperative—Bulletproof Background Screening, Mike is passionate about helping other professionals improve how they recruit, select, and manage their people. Most thirty-minute episodes of Good Morning, HR will be eligible for half a recertification credit for both HRCI and SHRM-certified professionals. Mike is a member of Entrepreneurs Organization (EO) Fort Worth and active with the Texas Association of Business, the Fort Worth Chamber, and Texas SHRM.
The problem is that's what employers that understand the game like you do. They're funding that plan, most or all of that plan, and you need to because otherwise, you get what we call the death spiral. Like, I could tell stories for an hour about groups you've walked into, and they have 150 employees and 12 on the plan, and they're wondering why the rates go up every year. And that you don't ever wanna be in that situation. So our consultants that, in this office and across Texas, they're really good at advising and helping employers on that.
Matt Morris:You've gotta keep a plan with good participation, which usually means, to your point, paying the lion's share of some base plan and then give multiple options. But that doesn't necessarily mean most employees love and just you know, carry around the HSA flag in the back of their truck every day.
Mike Coffey:Good morning, HR. I'm Mike Coffey, president of Imperative, premium background checks with fast and friendly service. And this is the podcast where I talk to business leaders about bringing people together to create value for shareholders, customers, and the community. Please follow rate and review Good Morning HR wherever you get your podcast. You can also find us on Facebook, Instagram, YouTube, or at goodmorninghr.com.
Mike Coffey:We're approaching the beginning of Q3, which for many organizations means the dreaded open enrollment period is just around the corner. My guest today is Matt Morris. Matt is the area president of Hub International in North Texas. He has over 20 years experience in insurance and investments, and we've known each other for a long time. I watched as he helped build Guspase Insurance and Investments into a North Texas powerhouse.
Mike Coffey:And then after Hub International bought GuestSpates, managed to keep the firm's community and relationship based focus despite being part of a much larger organization. Welcome to Good Morning HR, Matt.
Matt Morris:Thanks, Mike. Appreciate you having me, man. We're excited to be here.
Mike Coffey:Well, I'm glad you made it. So we're in the dog days of August. This episode is being released on August 8th For health insurance plans that renew on January 1st, is it too late for an employer to start evaluating changes to their health care plan this late in the year?
Matt Morris:You know, good question. For most of them, no, sir. It's not. There's a lot of them in the middle of it right now. Depending on the group size, depending on the market segment that they're in, the real large jumbo accounts are obviously well, down the road on that and probably making some final decisions.
Matt Morris:But if you're under 500 employees, which the vast majority of employers in Texas are, I would say it's not too late for most of them.
Mike Coffey:So I I you know, we have a an an an employer provided plan at Imperative, and we had cost increases last year. What were the average cost increases you saw from in y'all's clients at least in coming into 2024?
Matt Morris:That's a great question. It's it's, really all over the board, and I I would argue that's all over the board every year. There's some trends we see, like 2, 3 renewal 3 falls ago, 3 renewal seasons ago. You know, Blue Cross had a really bad run, which was which was, not the norm for them on the fully insured side, but it some of the fully insured stuff is just roller coaster. On the self funded side and on the alternative funding piece, which we're going to talk a lot about today, I think, it's it's really all over the board depending on the client and what their strategy looks like, what their plan looks like.
Matt Morris:We have groups every year that get passes, get decreases. We have some that get huge increases and have to work, you know, angles depending on what levers they can pull with the strategy they've chosen with us or their broker, what what their plan looks like.
Mike Coffey:And is that mostly because of experiences they've had in the prior year?
Matt Morris:It is experience and then the product that they're on. Yes, sir. The whether they're on a, you know, a pool product or a captive or a partially self funded arrangement or fully insured. Fully insured, you have the least amount of control as you probably know. So it's more of a pooled, you know, product with some tweaks to your plan design.
Matt Morris:But the game's changed a lot since I started in 2002, and we now have a quiver with 7 or 8 arrows, and it's growing every year, especially with the hub world and the tools we have to help them with that. So it's it's a good thing that we have more options now than we did, 20 years ago.
Mike Coffey:So smaller groups like mine, you know, 20 employees, you know, traditionally have just gone to the fully, you know, a fully funded, fully insured plan. And we just shop our you know, every 2 or 3 years, make sure you shop around. You can find find out whoever's gonna give you the best rate for whatever your your plans are. But you mentioned, you know, all these other alternatives, and I'm gonna get into a lot of those today, but at what point do those alternatives start making sense for smaller organizations?
Matt Morris:That's a great question. So when I started in 2002, Gus senior and Gus junior and about 5 other employees, it was, you know, it was fully insured or fully insured unless you were several 100 employees. You closer to, I would argue, to 500 to a 1000 is where the self funding discussion started. And backing it before some of the stuff we'll talk about, you know, the the fully insured dynamic still exists today. A lot of our clients are fully insured, especially in that smaller segment.
Matt Morris:So to answer your question a little better, in Texas, under 50 lives, as you probably know, is really a product of your demographics. It's, with the underwriting changes through Obamacare and different things. It's, you know, your gender and your a your, gender and your and your census, your ZIP code mix that spits out the rate under 50. So there's some things, like, we have a a Hub Texas private exchange that's really nice and gained some steam for those smaller groups that works well. That's a carrier that most brokers don't have access to, and we can kinda do some some different things there.
Matt Morris:But for the BUCA, as we call it BUCA in the industry, Blue Cross United, Cigna Aetna, there's a few others in the under 50 space. You're really dealing with, kind of canned products and what you can do within that, which the the hard part for those employers, as you know, is that most most groups have already gone and ran the gamut of HSA, HRA, how you know, multiple options, different things within your plan, and that's when you're down to an your base plan, the plan you fund off of as an employer being a high deductible, you kind of add some options on some of that, which is why thankfully the alternative funding, market level funded, self funded captives, etcetera, has really come downstream. I would say that we have cases now that are that are below a 100 lives, which did not not did not exist 10 years ago, They're looking at all those different things. So it's really changed a lot.
Mike Coffey:I think a lot of employers my size under 50 have some sort of depending on how much I mean, and we pay 95% of our employees' contribution of our employees' premium. They've got a very small contribution because, quite honestly, my employees are young. And I just found I couldn't get them to pay for insurance if if they if they you know, and then, you know, I was always worried something that you know, and it's a little paternalism on my part, but I was worried if something goes wrong for them, you know, they're not gonna have the ability to to cover, you know, to cover it. So we we cover about 95% of their premium. And and we're you know, we've got, you know, high deductible plan with an HSA.
Mike Coffey:Is that where you see most employer most employers that that smaller size doing? And then what then what are most popular things as they get up in that medium employer size?
Matt Morris:Yeah. No. So in that smaller employer segment, which some carriers define it under 50, some under a 100, right, depending on who you're talking to and and how you define small employer. Yes. A lot of them have a base level plan that the employer is funding off of.
Matt Morris:It's the lower cost plan. It might be a high deductible with co pays, it might be an HSA option, or both. The problem is that's what employers that understand the game like you do. They're funding that plan, most or all of that plan, and you need to because otherwise you get what we call the death spiral. I could tell stories for an hour about groups you've walked into, and they have a 150 employees and 12 on the plan, and they're wondering why the rates go up every year.
Matt Morris:And that you don't ever wanna be in that situation. So our consultants that, in this office and across Texas, they're really good at advising and helping employers on that. You've got to keep a plan with good participation, which usually means, to your point, paying the lion's share of some base plan and then give multiple options. But that doesn't necessarily mean most employees love and are and just, you know, carry around the HSA flag in the back of their trucks every day because it's a it's a high deductible plan with no co pays, and there are some newer things out to the market you've probably heard of with Surest and Curative and some other things these carriers are launching or have launched They kinda run a different play against that for the for 10 years or more. That was the thing to do is put in an HSA, have the employer try to fund a little bit of that or match a piece of that, like a 401 k max to help consumerism.
Matt Morris:And then the the reality of it is you've gotta be able to open the bank account, and you've gotta be disciplined enough to put money in the bank account every paycheck, or those things don't work very well whenever something happens because we all get older and things break, and none of it's under $500. Right? So, these other, newer plans that you will see a lot about if you haven't already from your current broker are catching steam. They're popular because they're not an HSA chassis. They're more of the old school HMO kind of chassis, but the co pays vary based on quality and cost of care.
Matt Morris:So there's multiple co pay levels that help drive the care as opposed to a high deductible with no co pays and hoping employees open a bank account and put money into every paycheck on top of already being paycheck to paycheck, to pay their other bills. So there's some options there that are new too for the smaller market and the larger market that are taken off as well.
Mike Coffey:So you you mentioned quality and cost of care, and that's I think that's one of the and I know this you know, I'm I'm a board member of the Texas Association of Business, and it's been the one things that this you know, the state Chamber of Commerce here in Texas. One of the things we've really tried to work on over the years is that transparency about qual yeah, from providers about quality and cost so that and mostly around emergency rooms. That's the big conversation. Right? You know, these, but you get in there and, you know, my employees' illness maybe even needs a procedure of some sort.
Mike Coffey:What are either the brokers or the insurance companies doing to help employees understand where to go and and understand what their cost what thing what things are gonna cost before they make that commitment to draw it out of their HSA or pay it out of pocket?
Matt Morris:No. It's a good question. So there's been lots of vendors and partners and carriers attack that, right, through things like, health care blue book and and, premium designated co pay plans that some of you guys have today probably with UnitedHealthcare and Cigna and different where you'll have different levels of co pay if you go online and you figure out which which providers charge the higher or the lower co pay, which in theory is tied back to their cost of care or their relapse rate, their, you know, different things like that. So there that that's been out there for years. The the the human nature effect of it, though, I always say is the hard part because you have to rewire people's brains to go use those tools before they go where their doctor already prescheduled them down the hall with their buddy or whatever.
Matt Morris:Right? So some of these other things we're talking about, have have that solution built in that don't require you to think to do it because the co pays have already driven you that way. And that's kind of problem with the HSA too. You know, we love them. I'm on HSA.
Matt Morris:I've been on one for 20 years, and I'm a huge HSA fan for but I understand it. I budget for it. I put money every side, and I don't think about it. That's not most of America that does that. Right?
Matt Morris:So there are new there are some of these newer plans out that, allow you to design your plan so that the plan design steers the behavior as opposed to having an app or a carrier website or all these things that are already out there, health care, blue book, for example, and then employees having to remember to go do that before they access care. That was the breakdown, in my opinion, of of those models. And it's being improved as we speak.
Mike Coffey:So in those cases, they can get on carrier's app or something like that and say and and do some comparison to figure out who do I go to? You know, I need a dermatologist who's on the plan. That's always a start. But then the dermatology is often not even covered, by by the plans. And so then you have to get in there and and figure out who's who's got a negotiated rate or something like that.
Mike Coffey:Is that generally how those things work? Yeah.
Matt Morris:That's right. That's exactly right. And then build build building those resources and those habits, because you do have to teach people to do that, which is education. Right? That's not just a widget or a AI or a slick enrollment system that teaches people to do that.
Matt Morris:The tools have been out for years. It's just that we've got to integrate that, which is a keyword with plan design. And I think that's what some of these, like I mentioned earlier, are doing, and that's what we're doing in our larger plans as well, or I say larger enough, 50 plus type plans that are doing the level funded and self funded and captive stuff.
Mike Coffey:And I know back when I was in corporate HR, back in the dark ages, all of that responsibility, especially in a large organization, fell on somebody in benefits and HR to communicate that to employees. And often, their understanding was and and they didn't have as many, fortunately, back then, as many options as as they have today because they didn't have the technology to support it. But now for especially small groups, I think that's one of the real values that companies get from a good broker is the ability to, you know, to have somebody who who can really help an employee navigate that process. So it's not on if they even have an HR, you know, function. It's not on an HR that one one HR department of 1 or that small HR group, who may they may even have a benefits team.
Mike Coffey:And so relying on your broker is really key. And I I definitely wanna get into selecting a broker because I think that's something that a lot of people misunderstand because they're looking for the very best rate on their premium, and that's not necessarily how you wanna do it. But let's give them some of these other products, because you mentioned HRAs. Okay. Let's start with that.
Mike Coffey:That high deductible health plan is typically, what a 5,000 or a $10,000 deductible. Is that generally the range on those? And then you you're helping the employee has the money in their health savings account that they've set aside to cover that?
Matt Morris:Yeah. The the government defines it a little differently based on tax, you know, limits and stuff. It can actually be less than 5,000, but no co pays. It's what the when we talk about HSAs, we're talking about plans with no co pays. An HRA, a health reimbursement arrangement, can be a high deductible plan of any amount you that you consider high, 3, 4, 5, 6 to 7000 with co pays or without co pays, technically.
Matt Morris:An HRA is just a reimbursement mechanism where the the employer is reimbursing after a certain level. It's like a mini self funded plan, right, where in traditional self insurance, the you, the employer, are on the hook for the first 50, a 100, $200,000 per belly button in claims, and HRA limits that's the, you know, 2 or 3 or $5,000, whatever you wanna design. It's it's a whiteboard of how you wanna design it.
Mike Coffey:So the HRA is a reimbursement from the employer for for those expenses, where an HSA is the employee setting money aside for their That's
Matt Morris:right. That's right. And those have been out for a long time. We for my first 10 or 15 years of my career, we would put a lot of those in, still have them on the books, some of them, and they work. They're they're they're clunky at times, especially the HRA can be somewhat clunky, Multiple systems, you know, the employee has to file an EOB and get reimbursed, and there's a process for that.
Matt Morris:The care some of the carriers have made it a little better with integrating those, but it's nothing like what we're into now with some of the next level stuff. You know, it's it's gotten a lot better when you want to take on a portion of that, for sure.
Mike Coffey:So let's get into some of those, you know, these these newer tools. It seems like I first started hearing about self funded plans for smaller employers that weren't, you know, Lockheed or somebody of that size, you know, maybe 10 years ago, 10, 12 years ago. And, you know, you can't go to an HR association meeting or a chamber of commerce meeting without 15 benefits guys coming up and giving you their cards and telling you how they're gonna change your life. And I will say that that's one of the great things, that y'all do at Hub International. Y'all are so supportive of the HR associations, where you're doing business.
Mike Coffey:And you provide a lot of education and information. And I'm a big believer for anybody who's who's in a a vendor role in the HR world. You go to these HR association meetings, these conferences. The best thing you can do is be helpful and education oriented, and the sales will come to you. You don't have to do you don't have to do that.
Mike Coffey:That's that used car salesman thing. But and I'll just say, you know, I'm not getting any money from this, but, you know, your guys have always been amazing, to on on that front. But so let's talk about what you know, that self funding seemed really complicated when I last looked at it years ago, and, it seemed like a really high risk thing for a smaller employer. How has how has that changed? And I know there's this thing called level funding that's a little different.
Mike Coffey:So talk about those products.
Matt Morris:Sure. And and I'll bridge the gap before we jump into that with something you said a minute ago, which I wanna touch on because I forget it. You're exactly right in how many we still run across companies, Mike, with 20 employees, a 100 employees. We were I was with 1 with our team the other day, had over a 100 employees, and HR was doing everything. I mean, they were doing, in my opinion, in our opinion, they were doing half the job with a broker, and it just baffles me that that's still out there.
Matt Morris:So I think that's a casualty of our kind of our industry too. You know, our industry is built on relationships, and you all you guys all know. I mean, it's there's I used to get frustrated because I'm I'm a grinder type. I I don't even play golf. I'd love to be able to play golf.
Matt Morris:I'm not good at it, but there's a lot of business, one, in social settings on the golf course and all that kind of stuff, and I respect that. That's our industry. But then you look up and you see an HR team of 1 or 2 or 3 doing the job of the broker a lot still, and it's that just baffles me. So it's that when you talk about education and how to use a health plan, when especially when you start designing what you're asking about now, some of the alternative funding methods, now you're kind of mixing the lines of, you know, some financial discussion as well as the normal HR benefits discussion, and it really gets complicated. So, choosing your broker and having a broker partner, whoever it is, that really does their job, quite frankly, to say it directly and not just brings rates on a spreadsheet once a year and takes you to lunch midyear and calls it a day.
Matt Morris:I mean, that was 25 years ago. It's evolved to so much more now. So to get into what you're talking about, level fund is probably the easiest first step. There's a lot of groups that are on that, have been to that back when, you remember, Cigna bought Great West. Great West had a level funded product forever.
Matt Morris:Cigna purchased it many years ago, kind of boosted it even more. And then you had UnitedHealthcare and Allsavers that entered the scene. And I would I would say those are 2 of the bigger ones that we still use. And it's a good product. It's kind of a tweener product where you paid a fully insured premium.
Matt Morris:It looks, smells, and feels like fully insured all year. But on the front end, you know going into it, if my claims spend is less than x, I get a refund. So, you know, the first I I won't say the name of the group, but the first group we ever put on it was about 200 employees, 180, something like that. And I'll never forget, they got a $68,000 refund check, and they were over the moon, just excited. It worked like it was supposed to.
Matt Morris:But then the longer we did it and the more we really started looking at a bunch of groups that were on it, you know, you live and learn like just like anything. You start to realize, man, those refunds are few and far between on a lot of those because the fixed cost is so high. The carriers are smart. If you look look at all their stock returns, look at the market, you'll see how smart they are. I mean, I love our carrier partners.
Matt Morris:Don't get me wrong, but we started digging the onion back in
Mike Coffey:I like going to Caesars in in Las Vegas too, but I I understand how it works. Right?
Matt Morris:Yeah. I mean, they're great people and we have great relate we have to have great relationships with them. I'll never kick them, while they're down or anything like that. But the reality of it is the fixed cost on those level funded plans is really, really high. You can get
Mike Coffey:So let's define a level funded plan because I'm not sure if, let's tell me if I'm right or wrong. Okay. So it's it's basically a, well, self funded. Let's start there because that's the one you know, that's an easy one to understand. Right?
Mike Coffey:That's the one where I, as the employer, I'm just as expenses come in, I'm paying it.
Matt Morris:Right.
Mike Coffey:Then maybe I've got some sort of supporting stop loss insurance to cover a certain amount over a certain amount. Is that right?
Matt Morris:That's correct. Self funded. There's 2 ways we do self funded plans, bundled and unbundled. And, and bundled just means that your carrier partner, Blue Cross, Aetna, Cigna, whoever, they own it all. Right?
Matt Morris:So they're the they're the administrator. They're the stop loss. They're the pharmacy pieces all under that logo. Your ID card still says you have health care, Blue Cross, whatever. That's bundled self funding.
Matt Morris:That is the same as level funded. The difference is level funded, you don't fund claims every week. It's a lot you don't get reports every week. You it's a lot simpler model. Like I said, it's kind of a tweener model for fully insured smaller groups that say, you know what?
Matt Morris:I'm spending $1,000,000 in premium over the year right now or a 100,000 or whatever the number is. I understand if I do that with level funded and I run below x, I can get a refund. So it's kind of baked in behind the scenes. It's on it's on a self funded chassis, so you save some state premium taxes or compliance wins with it. But it's really kind of a re if you ever seen the old, and most people have not seen these, but there's a term life policy you can buy on yourself, individual life policy called a refund to premium life policy.
Matt Morris:And if you buy a 20 year term life policy and you outlive it, you get a refund back. And so that's kind of what level funny is, but on the on the, you know, health insurance side. Although, like I said, when you the bigger the group, the the more advantageous or attractive the traditional self funded models are. And then you go into bundled and unbundled, which is a whole different story.
Mike Coffey:So with a level funded plan, the employer is paying what feels like a certain premium every month per head. Right? I mean, so it's not like I'm not waiting for bills to come in.
Matt Morris:Correct.
Mike Coffey:I'm just saying, okay. We had this is our claims history. Let's say it's a $100,000 or $120,000 So I'm gonna pay $10,000 a month into to this amount. Like, I'm gonna treat it like a premium. We're gonna pay out of that.
Mike Coffey:And then when we hit above that, maybe I've got some sort of stop loss insurance on the head. You know your
Matt Morris:your cost, your all in cost, your total cost per employee per month. Right? Employee only down the family tier on level funded for the whole year. It doesn't change. The difference is, you know, you get reports, and we provide those reports at the end of the year.
Matt Morris:If you do really good and your claims come in below expected, then you get a small piece of that back. That's kinda how level funding works. Self funding, as you mentioned, a whole different deal. You pay a fit the fixed cost. If you take a health plan and break it down, you've got fixed cost, which is doesn't change, hence the word fixed per head.
Matt Morris:It's your stop loss, your administration, etcetera. And then you've got your claims, which is the bigger piece of it. Claims is variable. That's always the biggest part of any health plan. So on traditional self funding or true self funding, you pay the fixed cost every month.
Matt Morris:You pay the claims usually weekly, sometimes every other week, sometimes daily. There's all these options, but it's a variable cost. So the company, you know, has different involvement, more different cash flow, etcetera, with the claims piece. There's caps and limits of protection on it. So you know you have, you know, some stop gap, but it is a variable cost every week on this on the self funded piece.
Mike Coffey:And on the consumer side, can you still have an HSA if you're participating in one of these plans? So I mean because I think one of the big challenges we've got with health care in in the US is that the people who are receiving the services don't have a often have much of a a dog in the fight as far as the cost goes. And so giving the employees some some incentive, you know, especially when you're self funding or level funding would seem to be the incentive for the employer to make sure the employees do what they can to manage cost. You always want your employees to go get the best care that they need when they need it. But how do you control cost in in a plan like that?
Matt Morris:Plan design. Exactly. You hit nail on the head. It's plan design. So all those things we talked about earlier, HSA, HRA, GoodRx, all the transparency tools, HealthJoy, health care blue book, and so forth.
Matt Morris:And the carriers, the Bucca carriers have a lot of them too. All that applies and so and or can apply in self funded and level funded as well. But that's how we control cost or or should control cost is through changing behavior, rewiring our actions to use those tools or those plans to drive the cost down. Because let's be honest, we transparency's come a long way, and you mentioned that, but it's still not to where you walk into the hospital and everything's posted like it is at the restaurant. Right?
Matt Morris:So we may get there, and we are making strides on some of that, but a lot of this stuff you don't know the cost till you get the bill, especially on the bigger stuff. That's why these tools are really important because they can at least estimate, if not some of them, tell you to the penny depending on what the the version you're on of what these things cost. So that the plan is on piece is the same. There's multiple options. The funding is not the same between self funded, lower funded, and fully insured.
Mike Coffey:And let's take a quick break. Good morning HR is brought to you by Imperative, bulletproof background checks with fast and friendly service. HR leaders are often approached by other parts of the organization with a request that they run a background check on someone for a legitimate business purpose, but not an employment related purpose. And because the laws regarding employment background checks are totally different from any other kind of background check and most employment background screening companies won't even run other kinds of checks. The HR professionals think they have to say no.
Mike Coffey:While for the last 25 years, Imperative has been the best source for employers who wanna make well informed hiring decisions, we also provide a variety of other due diligence background investigations. So whether your company needs to check out a potential service provider, needs help with the due diligence on an investment or acquisition, or maybe your legal department needs a litigation related background investigation, Imperative is here to help. You can learn more at imperativeinfo.com. If you're an HRCI or SHRM certified professional, this episode of Good Morning HR has been preapproved for 1 half hour of recertification credit. To obtain the recertification information, visit good morning hr.com and click on research credits.
Mike Coffey:Then select episode 160 and enter the keyword benefits. That's b e n e f I t s. And if you're looking for even more recertification credit, check out the webinars page at imperativeinfo.com. And now back to my conversation with Matt Morris. So what, we've got level funding.
Mike Coffey:What are the other, kinds of of pricing that are available or kind of plans that are available to especially small to medium sized employers?
Matt Morris:Yeah. So I'll start with the kinda medium and up. Right? That's that's where some of our work has been the last 2 years since we joined Hub in 2020. And I'll say even before we joined Hub, we Justin Phipps, who's in our office, and myself, and Cammy, and Peter, and a lot of our senior folks, we've had cases on captives for a long time.
Matt Morris:We've had cases with the Berkeley captive and with AIG captive and Pareto. Pareto's probably the largest, and we have a lot of business with Pareto nationally. Captive is a next level self funding thing. And to explain it as simple as I can, it's a self funded chassis. It works, looks, and feels like self funding.
Matt Morris:It's unbundled usually, meaning it's not all with 1 carrier. 1 carrier doesn't own it all, and that's for cost reasons. I mean, when you start peeling out your stop loss, your pharmacy, your administration, your tools and resources, there's some serious cost savings you can get to there, but you've got to integrate that stuff. And that's where all these captives I just mentioned have been somewhat clunky through the through the years of how do you if you peel that stuff out and you bolt on a plan that's got best in class savings, you know, saving, saving, saving, savings, you you save a bunch of money, but now you have an unbundled or a bolted on plan. And when employees go to use it, they have 7 apps on their phone or, you know, try to figure out how to use it.
Matt Morris:That's not usually a win on the on the execution part. So what we've worked in in Texas specifically, it's actually gonna be a national, platform before we know it. It's something called the hub Live Oak Captive. And we've built our own to add to the arsenal, add to the quiver with Pareto and the others, which is unique. It's very different.
Matt Morris:It's got 2 of the biggest networks in the world as an option, Blue Cross and United, which no other captive to my knowledge has a choice of those 2. In fact, I don't know if the Blue Cross has ever had theirs as an option, and that solves a lot. Those of you in HR and benefit managers, you understand this. But, like, when you have Cigna or Aetna or these other rental networks as a captive or no network on your captive or your self funded plan, you're already buying health care somewhat, you know, at a higher cost or more headache. And the 2 that everybody wants is Blue Cross and United because they have huge discounts.
Matt Morris:They have the brand name and the logo, and they have the recognition there. So we're we were able to go get the 2 biggest through Trey Smith, our Texas employee benefits leader who worked at Blue Cross for 20 years and start there with a foundation and build on top of that life.
Mike Coffey:So okay. This is where it becomes really apparent that I spent my HR career chasing managers who could keep their hands to themselves. And I ran away from anything that had numbers associated with it, comp benefits or anything. But a captive plan, as I understand it, is like a group employ multiple employers come together to build a to build a plan, or can you just randomly just pick 1 and buy into it? Or is it DFP part of associations?
Mike Coffey:How do how do those things get created?
Matt Morris:Good question. Great question. So a captive, in our sense, what I'm talking about is really just a shared layer. It's not it's not like all your employees have to get on a Zoom call and make decisions together. Right?
Matt Morris:That's not the case. It's you're just sharing a layer of the risk. So on a captive plane like what we built and not some of the others I mentioned, you still get to pick your specific deductible. So the employer, based on their size, based on their risk tolerance, based on their cash flow, can pick, you know, do I wanna have a 50,000 deductible per head or a 100 or just like you pick your deductible on your property schedule or on your Mhmm. You know, other things in p and c.
Matt Morris:But the first layer, when there's a big claim that hits over the specific deductible, which is what it's called in our industry, the first layer is a shared layer with multiple employers to your point. So what it does is it drives down, you know, the cost of of that risk. You share in the wins and losses. In a good year, you you could get some money back or towards a refund or a credit or whatever. It's big it's built in that way from the start so that you already know there's gonna have, you know, 10% of the group's gonna have a bad year and a bunch of them gonna have good years.
Matt Morris:That's just why insurance works. So that captive layer is really the definition captive. But because we're able to build it on an unbundled chassis, we've bolted on, like I said, but a lot fewer, not 7, just a few of the best in class vendors and then tie them together through one app with Hub. That is where everybody goes to use it, and that's the secret sauce to what we've built there.
Mike Coffey:So if I'm looking at a Captiplan and I I wanna go see, you know, what the pool that I'm buying, I'm joining, what they're will that will I typically get the visibility of the, you know, of what their claims history is, or I know what I'm buying into? Or do I need to drive past those businesses and see which ones are located across the street from chicken fried steak places and and figure out, okay, they're probably too high.
Matt Morris:No. You'll get your own data in our end, and you'll get aggregate data on the captive you're in. You won't be obviously share individual, HIPAA stuff or even claim specific stuff by group with each other. To my knowledge, at least we don't. You absolutely see your own data throughout the year.
Matt Morris:And in the captive overall. Like, we just one of the things that's different about ours is we don't own it. We are not, you know, playing an ownership role. We're not a vendor in this thing. We're just we truly and this is a Hub thing.
Matt Morris:Like, Hub does not believe in force feeding our own product down our clients' throats. And a lot of our competitors, right, wrong, or indifference is how they built it. And it's their model is they will own pieces of it. They'll own the coalition. They'll own the pharmacy a piece of the pharmacy piece or they'll be the captive manager and all that.
Matt Morris:We're not, we're in the quarterback seat. We bring best in class vendors, and we consult and advise, but we're not gonna take a shared piece of that on as far as ownership or driving you to our own product. But you will see, your own data and the captive data throughout the year, and then we make decisions throughout the year at each renewal based on how the whole thing's running.
Mike Coffey:So the other thing that I've heard about and don't really necessarily understand fully is, reference based pricing Mhmm. Where I guess they go negotiate the fees or there's a flat amount. How does that work?
Matt Morris:That's That's a good question, and we probably have to have a separate segment on that one just so. But I'll give you I'll try to give you a small version of it. We did a lot of that back in the day too. I had one time we had 15, 20 clients on reference based pricing. It's it's a completely different model where you just take the network, the doctor's network, you know, the Mhmm.
Matt Morris:Blue Cross United Synod, and you throw it out the window, and you build a self funded plan with no network, or a rental network. You can some of them had rental networks just for doctors or different things, but the reference base is really meant to drive down the cost of care at the bigger ticket items or the hospital, etcetera, outpatient and so forth. So it's a Medicare plus. The reason it's called cost plus or reference based is they're referencing Medicare as pricing, base level pricing, which is public data based on code that's filed, claims code, and it's Medicare plus x. Right?
Matt Morris:So in theory, it's I loved it. When it first came out, I was like, man, this is awesome. We're gonna get every body on this stuff, and it's gonna be medicare plus 20%, which by the way is about 1 third or sometimes 1 fifth of what some of the carriers pay. So it's a huge cost savings. Your own paper it can be, but then doing it, living it for 15 years, you can ask HR directors that have had had plans like this.
Matt Morris:Sometimes the negatives outweighed the positives. Right? Because there were a was a savings if you had larger claims. If you didn't have a a many large claims that year, it didn't save you a lot. But the headache and the noise from employees got was pretty big in North Texas.
Matt Morris:Now other parts of the country works better, but in North Texas alone, a lot of these hospitals banded together. They can't stand it. They don't enjoy it at all. And HR was pulling their hair out, quite frankly, with people running the door because they would tell the employee, you don't have insurance. It's not insurance.
Matt Morris:Call your HR director. And so there's some things that still are out there with reference based, but I'd tell you kind of one of these things for us in our client base. We still have it. We still show it when a client wants to do it, but it takes a really to roll your sleeves up and get ready for ultra education to not have a a network on the card anymore.
Mike Coffey:So we talked about captive plans. What what other plans are there other plans out there that employers should be considering, especially if that's small to medium size? Or what else should they be asking their broker about?
Matt Morris:You know, the private exchange stuff, which I I won't talk a lot about just for time's sake. But we, you know, we do have a private exchange. Like I said, this kind of a level funded chassis product only available to us. And, again, we don't own it or anything, but we've got an exclusive on it. The level funded's still a real deal.
Matt Morris:And then the getting credit. We call it the power of payroll deductions. You mentioned it, Mike. I mean, one of the biggest fail I've seen in our industry through the years is brokers. We did it too early on.
Matt Morris:It's like, bring you the spreadsheets. You go over the you shop the rates. You go over all the options. Right? Here's your deductible choices.
Matt Morris:Here's your cures. But unless you take the time, and it's time, it takes work to break that total premium down into another chart or page to really have a conversation with your employer over what we call the power of payroll deductions. Where are you, the employer, funding it? What are you funding it? How are you funding it?
Matt Morris:Because the net result of that equation is what your employee is paying. And that's what drives a lot of times. As you know, the first thing employees look at in enrolling is what?
Mike Coffey:What drives?
Matt Morris:So that's what drives how they enroll or don't enroll or where they enroll. And I would say that's a misstep with a lot of brokers if you don't really dive deep and spend some time with some analysis on who's paying for what, not just what, you know, plans are offered. And that's still a really powerful tool. It sounds simple, but a lot of folks miss it. And it's a powerful tool when you talk to these smaller employers about what are we paying for, what are we funding, how many options do we have.
Matt Morris:You know, I used to believe a dual option was all you needed when I started the business. And now you look up and some plans have, you know, 4, 5, 6 off offerings or more because people are different, incomes are different, needs are different.
Mike Coffey:What about communicating to employees how much a premium cost? What the employer's actual contribution really is? How often do you see employers, especially small and medium ones? I think under ACA, the larger employers have to do that. Is that right?
Mike Coffey:But smaller employers, I don't think. I hope because I don't think we do. But, I don't ever look at my stuff, pays no. But
Matt Morris:Yeah. So
Mike Coffey:what do you say about that?
Matt Morris:Well, I I always say it's more around offering it. Right? And the penalties associated with not offering or not paying enough of it and penalties based on cost. That's the ACPs. I'll tell you, what you just mentioned is my for what I'm most passionate in this world about, employee benefits space.
Matt Morris:In the world I'm in now, the role I'm in now, I get, involved in a lot of different things besides benefits. So I love this piece when I we come back to our teams and I hear them talking about this, and I'll give you a perfect example. Came up the other day with my daughter. She was I was trying to send her a reminder of something she has coming up with a volleyball cam. She said, dad, I have 52 emails from you with calendar invites and emails that I haven't read yet.
Matt Morris:We can we just talk about it? And and I thought I went, man, I was thinking about this podcast. Well, that's exactly how I feel sometimes when I get emails and, you know, stuff on my calendar and tech AI stuff on this enrollment stuff. But sometimes people just wanna have a quick conversation. They wanna you know, like YouTube.
Matt Morris:There's a reason kids learn from YouTube more than they do reading a book. So the education piece of this stuff and the and the relational piece of this and how you enroll it is so, so important. And, Mike, we're in the middle of about 8 finalist meetings right now. As we sit here today, larger companies, smaller companies, these are just ones I know about from our team. And what's funny is over half of them have literally said to us, hey.
Matt Morris:Y'all made the cut. You're in the final 2 or final 3. Please come and spend an hour. Bring your team that's gonna work on our account, and don't talk about any more tools or resources. That's all vetted on the front end.
Matt Morris:Right? We just wanna meet the people and have a conversation and and see what the relationship looks like. And I love that. We all love that in our office because that's who we are. And I think that's the piece as you talk about AI and technology and carrier feeds and online enrollment, all the stuff that Sentry has been through and keeps going through.
Matt Morris:I don't personally believe the technology piece really solves the education part of this as best. It may someday. Maybe someday a chatbot or avatar can build a relationship and teach you how your health plan works, but we're really big on the education piece. And there's lots of ways we do that.
Mike Coffey:Yeah. So let's talk about that. I can just say from the 25 years I've been in business, it's I've seen it change so much. I mean, there was no technology issues back then. And and and we weren't talking about apps, and we weren't, you know, we were filling out a ton of paper on new hire and all of that.
Mike Coffey:So where does technology fall versus what do you evaluate for customer service, and what are the other criteria you think a an employer ought to look at when making a broker decision?
Matt Morris:Yeah. Yeah. No. That's a great question. So so much of it this day, that's part one of many, many reasons we chose to join Hub is that some of those things with technology and with the different tools and resources are kind of you just have to have them.
Matt Morris:Right? They're just rights of passage. If you don't have it this day and age with a large especially a medium even a medium sized case, you're just not gonna make it to the dance. If if an HR team or benefits manager and HR team or CFO are doing their due diligence, which a lot of them do when they go through these broker reviews, they're gonna see real quick who's got the toolkit and who doesn't. So and some of that stuff's expensive.
Matt Morris:Some of that stuff you just don't, you know, wake up and invest 50 grand. You've got everything you need to go win these cases. So we've with Hub now, we have it all and then some, and it's constantly being developed. So the tools and resources piece is no problem. But the the the people piece and the the educate I mean, to to what you mentioned, when I started, we were carrying around milk crates.
Matt Morris:Literally had a group of 67 milk crates, English and Spanish, and job saw trailers at 7 in the morning doing paper enrollment. You know, then you went to online enrollment and different things, and now we use Brainshark. We use all kinds of recorded Zoom and Team calls, in person meetings, which we still love, if the client will let us do that, if it's conducive to their their their group and their what they need. And then we do fun stuff. This is my favorite part of it.
Matt Morris:We'll offer to bring the trailer smoker out and cook barbecue or do like a wellness fair and have a couple vendors come that are gonna be making money from your plan anyways. You might as well invite them to come and spend a little money and provide, you know, giveaways and gift cards and some food and different things and get people together. There's something about that fellowship and that and I realize you can't do that with everybody now with remote work and multi location accounts, but you know what? You can do it where you can do it, and you can offer those other solutions for those that are remote or in different areas as well. So we do a lot of that kind of custom education stuff centered around what the client needs and wants.
Matt Morris:Because let's be honest, we can spend all your building the best health plan in the world, saving money integrated, blah blah blah. If no one understands it, we've wasted everybody's time.
Mike Coffey:And speaking of that getting together, Hub for several years now is maybe you're up to 10 years, I think. You know, 1st goes based and now hub, you do this annual leadership conference, and that's coming up. And it's a great opportunity for your certification credit, and I have participated in the past. So talk about that real quick as we wrap up. I I just wanna make sure we get we get that in in front of our audience.
Matt Morris:Sure. And then we very much you're always a strong supporter of it, Mike, and I can't thank you enough for that because you and your business and what you do to serve your clients is so right down the lane of what this is about. So thank you for that. And I'll be brief. This was a 20 year ago vision.
Matt Morris:We started in West Fort Worth to send their center. We had, like, 50 folks in the room, and it was us largely on stage talking about this or long term care or this new product. I tell you, just like everything in life, we learned the hard way. Right? We learned and it was fine.
Matt Morris:It was successful. We had people come, but it was not near as successful It could be in a lot. What went off by 2 or 3 years ago? You know what? What if we took all the product stuff out of it?
Matt Morris:What if we didn't get up there and talk about anything that was insurance related and we made it about the audience? We made it about them and gave them a reason to come that was, you know, about about what they they deal with. So being that it's over half the room's HR, a lot of now it's evolved into a lot of controllers and CFOs and benefit and risk managers, but we just polled them every year. So what do you wanna hear about? And then we changed our speaker lineup to be truly leadership development centered.
Matt Morris:So now it's powerhouse speakers. It's grown now, Mike, to 2 locations across Texas. Like, we have 700 companies out last year or something. It's huge. But it doesn't feel huge because you're in small tables.
Matt Morris:They're still get to meet and mingle in some intentional break time. And the the point of it for me, you know, Gus senior used to always say this on this is like our motto in our office. Don't tell me how much you know, just show me how much you care. And I love that because that's really how we try to live every day. And that summit is designed to if you don't leave there feeling good, then we've done something wrong.
Matt Morris:You should be energized and empowered and something you can take back to your teams and invest in your own people, and that's the purpose of it now. So I think that's partly why it's grown a lot. Hub's helped out a lot too with the stuff they brought to the table and help get it out there. But it's it's more of a bring your current leaders and your emerging leaders and let them learn together and hear from the speakers about all kinds of topics versus product.
Mike Coffey:And we're going to include in the show notes, links to the upcoming dates and, links to register for, for those conferences too.
Matt Morris:Yes, sir. That'd be great. End of August, August 27th and hers, August 29th in San Antonio. So we'd love to see anybody there that's a listener on this great show.
Mike Coffey:Well, thank you, Matt. I appreciate you joining me today.
Matt Morris:Thank you, Mike. Appreciate you.
Mike Coffey:And thank you for listening. You can comment on this episode or search our previous episodes at goodmorninghr.com or on Facebook, Instagram, or YouTube. And don't forget to follow us wherever you get your podcasts. Rob Upchurch is our technical producer, and you can reach him at robmakespods.com. And thank you to Imperatives marketing coordinator, Mary Anne Hernandez, who keeps the trains running on time.
Mike Coffey:And I'm Mike Coffey. As always, don't hesitate to reach out if I can be of service to you personally or professionally. I'll see you next week. And until then, be well, do good, and keep your chin up.