The 80% Step-Up

Upgrade Your Group LTD

Employers should consider updating their long-term disability program to provide 75%-80% replacement of total compensation, to better help employees avoid financial devastation during a disability.

Studies show that the American worker has been financially struggling for a long time. It is no secret. Even a “full paycheck” - 100% of base and bonus - is no longer enough to pay the bills.

Many Employers’ Group Long-Term Disability (LTD) Insurance plans only protect up to 60% of base salary. Replacing 60% of base salary was the “standard plan design”, once upon a time. Since the American worker cannot meet financial obligations with 100% of total compensation – protecting only 60% of base salary is no longer adequate.

Why not simply enhance the Group LTD plan? An employer could explore a Group LTD solution. However, Employers will find that despite the best efforts, a Group LTD plan that replaces 75% or 80% of total compensation does not exist.

In addition, addressing other shortfalls inherent to Group LTD plans, such as including total compensation, offering a higher benefit maximum to better protect highly compensated employees, and offering a tax-free benefit creates a high-risk LTD plan profile that would be extremely expensive. Group LTD carriers are conservative with offering these plan enhancements, especially when bundled. Never mind a plan design with 75% or 80% replacement of total compensation.

Many Fortune 500 companies have revised their long-term disability programs to include supplemental long-term disability insurance plans. These Supplemental plans can help protect up to 80% of base and bonus income when layered on top of Group LTD. Supplemental plans cannot protect 100% of income. Doing so would invite significant anti-selection according to the actuaries. But 80% is permissible and provides better protection than the “standard plan”.

Supplemental plans leverage non-can rates (fixed, state-filed rates) that cannot change for any reason, with group-like premiums. And since Supplemental claims experience has no negative impact on Group LTD claims experience or pricing, Supplemental plans in a sense serve as Group LTD’s version of “stop loss.”

Navis Benefits Group, LLC, specializes in Supplemental Long-Term Disability Insurance plans. Ask how Navis Benefits Group can help design, market, install, and administer a tailored Supplemental LTD plan.

The “Oops” Moment

The “Oops” Moment

When Benefits Professionals Drop the Ball: Executive Employment Agreements and Disability Insurance

In the hustle and bustle of managing employee benefits, a key component of an Executive Employment Agreement is often overlooked, leaving an Employer exposed to a significant financial liability, and potential legal liability.

Read on, to find out where and how Employers, Plan Administrators, and Employee Benefit Consultants miss the mark, and why this is such an important topic.

 But first, what is an Executive Employment Agreement, and why should Plan Administrators be concerned?

An Executive Employment Agreement is a formal contract that outlines the terms and conditions of an executive's employment. These agreements include information about: 

• Salary

• Benefits

• Stock options or awards.

• Vacation time allotment.

• Responsibilities

• Compensation

• Termination clauses

• Competition and confidentiality.

Executive Employment Agreements commonly include the guarantee of disability insurance:

• During employment

• Up to 60%, without a monthly cap on benefits

• Often required to protect total compensation

• That in the event of a corporate “change in control” of ownership, merger/acquisition, or Executive termination, that the Employer continue to provide and pay for the same level of disability insurance for a specified period.

The key component of the Executive Employment Agreement often overlooked is the guarantee of disability insurance to replace a percentage of income (ex: 60% to 100% replacement) without a monthly benefit maximum.

Most Employers offer Group Long Term Disability (LTD) insurance. So, what is the issue?

 Group LTD by itself often cannot meet the requirements outlined in the Executive Employment Agreement. Here is how:

1.      LTD plans include monthly benefit maximums, which limit the amount of coverage paid per month.

a.     These maximums result in a lower income replacement level, for highly compensated employees.

b.      Agreements do not include a benefit maximum. A guarantee of 60% means just that; it is not subject to a monthly benefit maximum.

2.      LTD plans only cover salary 78% of the time, by design. But the Agreement may require that total compensation be protected.

3.      LTD plans are not truly portable. This means that upon the Executive’s termination, due to a change in control/acquisition, the Employer cannot provide the Executive disability insurance as promised. LTD plans are convertible, not portable. Conversion permits terminated employees to convert the Group contract, to a very restrictive individual contract. The conversion required medical underwriting, and the cost of coverage is expensive. Moreover, the converted coverage typically provides protection for a limited timeframe, and the contractual definitions are a shell of what LTD provides. Last, most Executive Employment Agreements will guarantee disability insurance for up to 2 years, even if the Executive has secured another opportunity. Conversion doesn’t solve the problem of portable coverage.

Case Study - Fortune 500 Company:

1. 250 SVPs earn between $300,000 - $2,000,000 of base salary.

2. Target bonus of 30%

3. Group LTD covers 60% of the salary, to a monthly maximum of $15,000.

   • This protects salaries up to $300,000 at 60%. Salaries over $300,000 receive less than 60% due to the $15,000/month maximum.

   • Group LTD does not cover bonus compensation.

4. The Executive Employment Agreement for the 250 Executives requires that:

   • 60% of total compensation is to be paid in the event of a disability. No monthly maximum stated.

   • In the event of termination due to a merger/acquisition, the Company must pay for Disability Insurance, providing the same 60% replacement, for 2 years after termination.

5. Two Issues:

   1. Group LTD does not achieve 60% replacement:

• LTD monthly benefit maximum limits protection

• LTD does not cover bonus compensation.

Example:

An Executive earning a salary of $500,000 + a bonus of $150,000, or $650,000 in total compensation, only has 28% of total compensation protected. This Executive requires $32,500 on monthly benefit, but would only receive $15,000 from the Group LTD.

2.  Group LTD is not truly portable.

• Therefore, the Company would need to “self-insure” the risk in the event of an Executive termination due to a change in control (merger/acquisition).

These two issues may require self-insurance, potentially affecting the balance sheet. IRS accounting rules (for C-Corp, FASB 112), require the employer to set aside appropriate reserves for a claim, when self-insuring the claim.

 In the example above (Executive earning $650,000), if the Executive were employed while disabled, the LTD would pay $15,000. The employer would be contractually obligated to pay $17,500/month ($32,500 -$15,000). The reserve for a $17,500/month claim, might be $1,750,000, using a reserve factor of 100 as an example. This reserve must be reported on the Company’s balance sheet according to FASB 112.

 Now, imagine the Executive was terminated due to a merger. The Company does not have portable coverage to offer, so self-insures the agreed promise to pay for 60% protection, for 2 years after termination. Remember, the agreement was to “pay” for coverage, but the Company needs to self-insure in the absence of a portable product. The benefit duration of the claim could be much longer, such as 5 years, or the Normal Retirement Age. The Executive goes on claim a year after termination. The Company is now obligated to pay $32,500/month, for the duration of the claim. The reserve and corresponding impact to the balance sheet would be substantial, for an Executive that is no longer employed by the Company.

 Further, the Company must make determinations on whether to pay a claim, since there is no insurance company providing guidance or advice to pay. With precedent now set, what is the Company pays this claim and mistakenly fails to pay another claim with similar (or different) merits. This creates a possible legal liability.

 You may be wondering, why would an Employer include language in the Executive Employment Contract, promising coverage upon termination due to a change in control? Good question. But it happens, and it is often aligned with other promised benefits.

True Story – Fortune 500 Case Study:

I received a phone call from an Employee Benefit Consultant, asking if I could assist her in providing portable individual disability insurance to 100 or so Executives, as they were just terminated due to an acquisition. Unfortunately for the Company, the ships had already sailed on that option. Insurance carriers do not offer coverage to unemployed Executives. Even if they did, the coverage would have required full medical underwriting (good luck with that!) and been extremely expensive.

 We were able to help rectify this exposed gap for the 250 SVPs and above, moving forward, however. But the challenge could not be met by upgrading Group LTD alone.

• Group LTD carriers provided a higher monthly limit, but the limits were still insufficient to cover the total compensation for most executives.

• Further, a super high maximum, on an experienced rated employer (fully credible claims experience due to the number of covered employees and experience years), would create sizable reserve exposure and future LTD pricing spikes in the event of a high benefit max claim.

• Group LTD is not portable, so the Agreement’s requirement to offer coverage upon termination due to change in control/acquisition, could not be solved with LTD.

 Rather, the gap was solved with a restructured Group LTD plan, coupled with Supplemental Disability Insurance, and Excess High-Risk coverage. Both the Supplemental and Excess coverages were secured with deeply discounted rates, on a Guaranteed Issue Basis, and included true portability at the same rates. Further, the claims experience on the Supplemental and Excess coverages would not negatively impact on the Group LTD claims/reserves, serving as a “stop-loss.”  Last, although the portable coverage only protected approximately 30% of total compensation, it also served to provide direction to the Company in making claims determination for the self-insured portion; like an “advice to pay”. This helped limit the Company’s legal liability, in determining when to pay the self-insured portion by following the guidance of the Supplemental and Excess coverages.

 Plan Administrators, and Benefit Professionals, should investigate what disability insurance and income replacement requirements are specified in their Company’s key Executives’ Employment Contracts. Chances are you might be surprised, and you will discover that the current Group LTD plan alone does not meet the requirements.

Navis Benefits Group, LLC, can help you address the gaps presented by Executive Employment Agreements, by assisting in the design, and installation, of Supplemental and Excess Disability Insurance Solutions. With over 29 years of experience in specialty benefit solutions, we pride ourselves in being an ally and partner to our clients, customizing solutions unique to their business and employee benefit needs.

James Reidy

Managing Partner

Navis Benefits Group, LLC

860-462-6408

JReidy@NavisBenefitsGroup.com

NavisBenefitsGroup.com

Why Offer Supplemental Disability Insurance (IDI)?

Most employers offer Group Long Term Disability (LTD) insurance to protect their employees’ incomes and lifestyles.

While Group LTD provides a good foundation for protecting the income of most employees, highly compensated employees often remain underinsured, and financially exposed in the event of a disability. Why?

• Monthly LTD benefit maximum limits coverage

• LTD does not typically protect bonus compensation.

• Employer-paid LTD is taxable at time of claim.

• Owners/Partners: LTD may not protect W-2 or K-1 income.

How Does a Supplemental Disability Insurance (IDI) Plan Work?

Supplemental IDI provides an additional monthly benefit, layered on top of the Group LTD benefit. This benefit is offered to employees on a Guarantee Issue (GI) basis, like Group LTD. Coverage is typically paid for by the Employer and generally costs less than 1% of the covered employees’ combined payroll. For larger Employers, coverage can be offered on a payroll deduct basis. In addition:

• IDI premiums are deeply discounted, providing “group-like” rates.

• Unlike Group LTD rates, Supplemental IDI rates are fixed, locking in at purchase age.

• IDI coverage is fully portable, at the same rate.

The “Benefits” of Supplemental IDI

Supplemental IDI plans can further enhance your top performers’ benefit package, by:

• Improving income protection with a higher aggregate benefit amount

• Providing up to 80% income replacement

• Protecting bonus compensation, and other forms of income such as K-1 income

• Meeting the requirements of an Executive’s Employment Agreement, which often requires 60%+ income protection.

  • Note that LTD alone, often can’t meet this requirement due to monthly benefit maximums.

Types of Companies are Good Candidates for Supplemental IDI Coverage

Companies in certain industries tend to be more likely buyers of Supplemental IDI, such as law firms, physician groups, financial institutions, professional firms, pharmaceutical and manufacturing companies. However, most companies with 5 or more employees earning over $100,000 are strong candidates. While over 50% of Fortune 500 Companies offer Supplemental IDI, smaller companies also offer Supplemental IDI. In fact, 75% of Supplemental IDI plans sold cover 7-10 highly compensated employees.

Navis Benefits Group, LLC, is a leading provider of Supplemental Disability Insurance programs. With over 29 years of experience specializing in Supplemental IDI programs, Navis can help you design, install, and administer an effective and affordable Supplemental IDI plan.

Not Offering This Benefit, Yet?

Not Offering This Benefit, Yet?

Most employers already offer Supplemental Life Insurance, on a voluntary basis for all employees, or on an employer-paid basis for Executives. But surprisingly, only about half of Fortune 500 Companies offer Supplemental Disability Insurance Plans. Why, given that the American worker has a 4 x greater likelihood of becoming disabled, versus dying, during the working years?

One reason may be perceptions. With some exploration, these perceptions are truly misperceptions. Here are two common misperceptions:

1.        Enrollment/Guarantee Issue:

o    Misperception:  

• Supplemental Voluntary Group Life is easy to enroll, since it is offered on a Guaranteed Issue basis. Supplemental Disability Insurance is hard to enroll and not offered on a Guaranteed Issue basis.

o    Truth:

•  Supplemental Disability Insurance is easier than ever to enroll. With the right negotiation, it can be offered on a Guaranteed Issue basis, or Guarantee Standard Issue basis, making enrollment easy.

• Often, Employer-paid Supplemental Disability Insurance can be enrolled just like Employer-paid Group LTD – via a census.

•  Voluntary Supplemental IDI can be enrolled via a web platform, which includes decision-making support and a personalized illustration. Communication and educational support can be provided by an Executive Benefit Specialty Broker, in conjunction with the carrier. The “employer lift” is minimal. This product is typically offered “off-cycle” from the health insurance/open enrollment period.

2.        Cost:

o    Misperception:

• Supplemental Life Insurance is inexpensive. Supplemental Disability Insurance is extremely expensive.

o    Truth:

•  Supplemental Disability Insurance is very affordable, often costing less than 1% of compensation. Carriers offer deeply discounted premiums, resulting in group-like pricing. Today’s benefit, offered through the employer, is very affordable, sometimes less than Group LTD.

• Supplemental Disability Insurance can be offered on an Employer-paid basis, or on a Voluntary Basis.

• Employer-paid Executive Supplemental Disability Insurance often costs a fraction of a cost compared to employer-paid Supplemental Executive Life Insurance.

Group Long-Term Disability (LTD) insurance provides a good foundation for income protection, in the event of a disability. However, Group LTD plans inherently have limitations in protection levels, and present gaps in coverage. Simply put, Group LTD protection does not provide enough protection by itself.

Group LTD benefit maximums leave highly compensated employees under-protected (less than the plan’s target protection level); common forms of compensation such as bonus, are not covered in 78% of LTD plans; and benefits are often taxable at time of claim. Even if the common LTD plan’s target replacement level of 60% is achieved, 60% replacement still results in an income shortfall during a disability.

With higher medical expenses incurred during a disability, coupled with the higher cost of living in today’s inflationary environment, consider offering a Supplemental Disability Insurance plan that can protect up to 75% or 80% of pre-disability earnings.

Supplemental Disability Insurance can cover total compensation, is fully portable, offered on a Guarantee Issue basis, easy to install, can be employer-paid or voluntary, and is a very affordable benefit.

May is Disability Insurance Awareness Month (DIAM), and it is a suitable time to explore offering this benefit program.

Navis Benefits Group, LLC specializes in Supplemental Disability Insurance plans, and can help you design, market, install, and administer the plan.

The Missing Fourth Pillar - Financial Wellness

For most Employers, the financial wellness of their employees is a front and center priority.

The four pillars of an Employer’s financial wellness strategy should include protecting the ability to earn an income when disabled; providing the opportunity to save for retirement; extending an income lifeline to the employee’s beneficiaries in the event of death; and preserving accumulated assets in the event of a long-term care event.

Income Protection (STD/LTD/IDI), 401k, and Life Insurance are commonly offered benefits. These benefits address three pillars of a financial wellness strategy.

A long-term care event is perhaps one of the greatest threats to one’s accumulated assets, and the odds of financial exposure are greater than that of a disability.

Until recently, Employers haven’t had a viable solution for the fourth pillar: asset preservation in the event of a long-term care event.

Benefit and Human Resource Benefit Professionals practicing in the late 1990s will remember the surge in popularity for Group Long-Term Care Benefit programs.  GLTC programs saw its peak as the most popular benefit program between 1996 and 2010, primarily due to favorable tax legislation introduced in 1996 and the ability to secure coverage on a guaranteed issue basis. By 2012, the leading GLTC insurance companies abandoned the new sales of GLTC products, recognizing too late that the product was underpriced, and the risk assumed would be costly.

Today’s asset preservation solution is better than ever.  Known as “Hybrid” products, this innovative benefit combines permanent life insurance, with long-term care protection.  

What is a Hybrid Product?

•  Offers “two-in-one” protection, with bundled Permanent Life Insurance and Long-Term Care Benefits

  •  Permanent Life Insurance provides:

    • Death benefit

    • Cash Accumulation

    • Ability to take a loan against the policy

  • Long-Term Care (LTC) Benefits provides:

    • Accelerated funds from the Life Insurance policy, in the event of a LTC event

    • Benefit can be paid monthly, or via single lump sum

    • Funds are used to pay for care at home or in a skilled facility

    • Limits the need for insured to “tap into savings” or sell assets, to fund costly LTC.

What is Long-Term Care?

• The care required when someone is unable to take care of themselves, due to a loss of 2 or more activities of daily living (ADLs) or if suffering from severe cognitive impairment.

  • ADLs include bathing, dressing, eating, toileting, transferring, continence

  • Severe Cognitive Impairment includes Alzheimer’s, Parkinson’s, dementia, or brain trauma.

  • Care can be provided in a skilled nursing facility, or at one’s home often by a licensed professional

Cost of Long-Term Care (LTC) Services?

• Generally, not paid for by Disability, Medicare, or Health Insurance

• Medicaid only pays once assets are depleted

• Cost for LTC services is expected to double by 2051

• The current cost can exceed $10,000/month in the Northeast

• The average duration of care received is between 3 to 4 years

  • Resulting financial exposure ranges from $360,000 to $480,000

• Only 1/3 of Americans have set aside money to protect themselves should the need arise

• In the absence of LTC Insurance, a claim can quickly deplete assets including savings, retirement accounts, and even the home.

Why a Hybrid Product?

The benefit is a cornerstone to Financial Wellness, by providing 2-in-1 protection. Permanent Life insurance that can be taken into retirement, at the same cost, unlike Group Term Life Insurance. Valuable Long-Term Care coverage helps protect assets, by providing a source of funding the cost of care, rather than depleting savings, retirement accounts, or assets to pay for the cost of care.

Unlike GLTC plans once offered where the insured might not ever receive a benefit after years of paying premium, Hybrid products provide the opportunity to realize a return on investment by either collecting under the Life Insurance’s Death Benefit, or Long-Term Care provision.  Also, unlike GLTC plans once offered, insurance carriers can’t file for state approved rate increases due to claims experience with Hybrid products.

Considering adding a new Hybrid Life/LTC Plan to your Employee Benefits?

• Product design, underwriting offers, and plan pricing are important factors to consider.

• Employee education and appropriate enrollment tools are crucial to the success of the program.

• Most States require the Broker or Consultant meet specific Long-Term Care licensing requirements.

An Intelligent Investment

Employers can different themselves from their competitors, and strengthen their Financial Wellness Program, by adding a Permanent Life Insurance with Long-Term Care Benefit Program.  Asset preservation is an important fourth pillar that, until recently, Employers haven’t had a solution for, since 2010.  

This solution provides the ability for employees to realize a return on investment, by collecting under the life insurance’s death benefit, or the long-term care benefit.  Coverage can be offered on a voluntary/payroll deduct or an employer-paid basis, secured on a guaranteed issue basis, and offered with affordable premiums. The coverage is portable in retirement, at the same premiums. 

Most importantly, the absence of an asset protection pillar can place a substantial financial burden on employees, leaving employees and their families exposed to exorbitant cost of long-term care, and rapid asset depletion. A Hybrid program is an intelligent solution for asset preservation – the fourth pillar of a holistic Financial Wellness approach.  A Hybrid Benefit Program provides valuable Long-Term Care coverage that can help protect assets, by offering a funding source for the cost of care, rather than depleting savings, retirement accounts, or assets to pay for the cost of care.

Trending “Executive” Benefit Alert!

Employer-paid Asset Protection, with Golden Handcuffs

Employers are always looking for new ways to improve their benefit program and retain top talent.

Retaining key employees, leveraging a golden handcuff type benefit, is nothing new. Employer-paid group long-term care (GLTC) programs were a huge hit in the 1990s - 2012, when all the largest providers left the market, and the industry died. Still, nothing new here.

So, what’s different and trending?

Employer-paid Permanent Life Insurance, with a Long-Term Care Rider, and fully paid up within 10 years. Yes, this benefit offering is one of the newest, and hottest, Executive Benefit Programs.

Why?

The employer can identify a class of key-employees, or Executives to exclusively offer the program to. As an employer-paid benefit, coverage can be secured on a true Guarantee Issue basis. Upon issuing coverage, the Permanent Life Insurance provides an instantaneous death benefit, and well as Long-Term Care Protection in the event of a long-term care event. As the employer pays premiums on behalf of the key employees, cash values accumulate. With an Accelerated Payment Option, such as a 10-Pay, the Permanent Life policy’s premium can be fully paid up within 10 years. After 10 years, the key employee(s) have their own fully paid-up permanent life insurance policy with a full death benefit, long-term care protection, and access to their policy’s cash value. The cash value can be leveraged to take loans, against the policy. Or the key employee has the option to surrender the policy and “cash the policy in” for the policy’s cash surrender value.

The 10-Pay, helps the Employer retain top talent. Should the key employee leave before the 10-year period, the Employer has the option to stop funding the policy. Sure, the Executive port coverage with the accumulated values if they leave before the 10 years. However, the key employee would be responsible for paying the higher accelerated option premiums until the plan is fully paid for. The longer the key employee stays with the Employer, the greater the accumulated cash value, and the less premium that remains to be paid.

Permanent Whole Life Insurance, with a LTC Rider, and paid on a 10-Pay basis by the employer, is a resurrection of the old Group LTC plans, but better. These plans offer the guarantee that premium will not increase once fully paid-up, unlike GLTC plans which have seen numerous rate increases. And unlike GLTC where no benefit is realized unless the insured collects for a long-term care loss, Permanent Whole Life with LTC Rider provides the possibility of a benefit for death, long-term care protection, and accumulated cash value.

Navis Benefits Group specializes in designing Employer-paid Permanent Life with Long-Term Care protection programs, on an Accelerated Payment Option basis. Ask how Navis Benefits Group can help you with this trending benefit.

Specialty Benefit Brokers complement the Employee Benefit Broker’s medical insurance expertise.

With over 29 years of experience in specialty benefit solutions, Navis Benefits Group is well positioned to help Employee Benefit Brokers, and their Employers successfully compete for top talent with better benefits.

By focusing only on non-medical benefits, Specialty Benefits brokers are in the best position to partner with Employee Benefit Brokers and Employers on their STD, LTD, Life, Executive Benefits, and Worksite Benefit programs.

Navis Benefits Group partners with Employee Benefit Firms that focus on medical insurance, as their independent outsourced “specialty benefits” firm.  We help them diversify the range of products and services they offer to their clients, without the need to hire an internal specialist to bring intelligent and creative non-medical benefit solutions to their Employer clients.

 Navis Benefits Group helps Employers upgrade their benefit plans to a more state-of-the-art, competitive benefit program by identifying benefit gaps over-looked due to the heavy focus on medical insurance. We benchmark existing STD/LTD/Life, Voluntary Worksite, and Executive benefit plans; and we provide better benefit solutions.

We’ve worked with Employers of all sizes and industries and have helped solve some of the most complex problems.

Reach out to Navis Benefits Group, to see how we can help.

Why Partner with a Specialty Benefits Broker?

Non-Medical Case Study

        I.            Employee Benefit Brokers focus attention heavily on Health Insurance. Why?

a.     One of the highest budgetary items for Employer. It is a “must” priority.

b.      Highest revenue generating product of all employee benefits for Employee Benefit Broker.

      II.            This is problematic for non-health insurance benefits, which are often neglected year after year.

a.      STD/LTD/Life Renewals are often “rubber-stamped” given the smaller budget scale to health insurance, and limited Employee Benefit Broker shelf space.

                                          i.      This has a compounding effect on the cost of these benefits over the year.

b.      Benefits can become stagnant. Result:

                      i.    Ancillary benefit provisions are not modernized enough to meet today’s diverse workforce, do not include new creative benefit provisions, are not in alignment with the market, and are overpriced.

                                          ii.   Specialty Benefits such as Executive Benefits, Voluntary Benefits, and Long-Term Care benefits are last in line; designed poorly; or ignored completely.

     III.            Specialty Benefit Brokers complement the Employee Benefit Broker’s health insurance expertise.

a.      By focusing only on non-medical benefits – Specialty Benefits brokers are in best position to partner with Employee Benefit Brokers and Employers on STD, LTD, Life, Executive Benefits, and Worksite Benefit programs.

Non-Medical Case Study:

Ø The Employer had been with the same Employee Benefits Broker for 20+ years.

o   Employer also with the same Group LTD/Life Insurance company for 20+ years

 o   No rate decreases in at least several years, was a strong indicator to the Specialty Benefit Broker that LTD/Life plans had not been market evaluated.

 o   Antiquated Group LTD and Group Life plan designs were not in alignment with the market.

Ø A competing Employee Benefits Broker with the Employer, partnered with Navis Benefits Group to “test” the ancillary market and provide modernized solutions. Results:

 o   Demonstrated Employer had been paying too much for Group LTD and Group Life - 2x market!

 §  Provided 50% savings with same plan designs from current plans.

 o   Provided alternative plan designs with modernized provisions at 49% savings from current. Stronger benefit provisions with higher net benefits! 

§  Life: Doubled GI face amounts from 2x to 250k, to a 2x to 500k plan.

 §  LTD:

·        Increased benefit maximum from $10,000 to $12,500/month

·        Improved after tax/net benefit from 50.4% to 65%.

 o   Helped Employer fill benefit plan gaps with ancillary savings:

 §  Group STD: replaced fully insured program with enhanced self-insured.

 §  Executive Disability Insurance:

o   Ancillary savings helped fund a Supplemental Disability Insurance plan for highly compensated employees, to address gaps in Group LTD protection.

 § Voluntary Life: Introduced as a new benefit.

Happy Birthday, Navis Benefits Group!

Today we celebrate Navis Benefits Group’s 3rd Birthday!

I am humbled, and beyond grateful for the support and partnerships to make my dream a reality!

I am forever grateful to those Employee Benefit Firms and Employers that chose to partner with Navis Benefits Group and placed their trust and confidence in my young firm.

A very special thanks to my wife Christina, and my three growing boys (Dominic, Brayden, and Desmond), who have been my inspiration and motivation to make this dream a successful reality. Navis Benefits Group is a reflection of you - my precious family - and of your love and support!

After a successful 25-year career working for one of the industry’s best insurance carriers, making the move to start my own firm was a risky, and frightful proposition to say the least. But it was a dream that I had long wanted to pursue.

I am proud to report on this 3rd birthday, that Navis Benefits Group continues to exceed expectations with a blow-out year. We’ve helped Employee Benefit Firms and Employers install successful Employee Engagement Programs, Executive Benefit Plans, Long-Term Care Plans, New Hire Orientation Platforms, Voluntary Benefit Programs, and secure up to 50% saving in ancillary benefit programs. We’ve successfully helped our partners compete against the largest consulting firms in the world, that were over-charging their clients. Navis Benefits Group is in a strong position, and proud to celebrate this milestone achievement with our partners, customers, friends, and family.

I will always hold close to my heart, the support, encouragement, guidance and advice of my former colleagues, business partners, employee benefit consultants, human resource professionals, and friends. And most importantly, my family for taking the leap of faith, and for the sacrifices they made to get things going!

Happy 3rd Birthday, Navis Benefits Group!

With Sincere Thanks and Gratitude,

Jamie Reidy

Managing Partner & Founder

Navis Benefits Group is a “specialty benefits” Firm, focusing exclusively on non-medical employee benefits to include Executive Disability Insurance, Voluntary Supplemental Disability Insurance, Executive Life Insurance, Long Term Care Insurance, Voluntary Worksite Benefits, New Hire Orientation Onboarding, Ancillary Benefits, and Benefits Enrollment/Communication solutions.

Emerging Benefit Trend

Supplemental Disability Insurance sales demonstrated another 15% YOY growth. This includes employer-paid Supplemental Executive Disability Insurance care-outs and Voluntary Supplemental LTD plans.

A primary driver of this sales growth has been the emergence and expansion of Executive Supplemental Disability Insurance (IDI) Centers of Excellence, sometimes referred to as Executive Benefit Practices. This is evidenced by some of the largest national consulting Firms who have built their own internal center of excellence or specialty practice, such as Mercer and AON.

Offering a successful Supplemental or Executive plan requires specialization and attention to detail.

Building a center of excellence is an expensive and risky proposition for mid-size consulting firms. The knowledge and infrastructure required to build a center of excellence does not present the best short-term ROI for mid-size or regionalized consulting firms.

Yet, the benefit is in high demand, provides valuable financial protection to employees, and offers a strong revenue source for the employee benefit consulting firm.

To better compete against the largest consulting firms with established Centers of Excellence, without the risk of a significant investment, employee benefit firms can partner with a third-party Center of Excellence, or Specialty Benefits Firm.

Navis Benefits Group, LLC helps:

• Employee benefit consulting firms bring value to their clients with Supplemental or Executive Disability Insurance plans.

• Better compete against the biggest consulting firms who have built Executive Benefits Centers of Excellence; and

• Provides a minimal risk/high ROI option.

Record Breaking Benefit

It has never been a better time for an Employer to offer a Supplemental Disability Insurance Benefit Plan.

Employers have caught on to the importance of this benefit offering.  

Demand is incredibly high as evidenced by the top insurance carriers demonstrating multiple record-breaking sales years in a row…  in an inflationary market!

Why should Employers offer a Supplemental Disability Insurance Benefit Plan? Simply put, Group LTD alone does not pay an adequate benefit.

 While traditional Group LTD provides a base level of income protection, Group LTD might not meet the unique financial needs of an Employer’s diverse population. Employees that are commission-based, receive bonus compensation, or are highly compensated, may have a sizable portion of their income unprotected.

 Employees struggle during a disability to cover expenses that are important to them because of Group LTD plan design limits and gaps in coverage. With a reduced income, employees still need to:

·        Cover mortgage or rent payments.

·        Pay for childcare.

·        Meet monthly bill obligations such as grocery, clothing, entertainment, or children’s sporting and activity tuitions.

·        Pay non-reimbursed medical bills and out of pocket medical expenses.

·        Continue funding a retirement savings account.

·        Continue college savings for children.

·        Repay student loans or other debt.

 A Supplemental Disability Insurance Benefit Plan is essential to provide strong financial protection levels to a diverse employee population.

Common reasons Employers offer Supplemental Disability Insurance Benefit Plans include:

·        Enhance coverage without increasing risk to Group LTD plan.

o   Protect other forms of income such as bonuses, commissions, deferred compensation.

o   Supplement the Group LTD benefit maximum.

o   Increase replacement percentage to 75%.

·        Provide an Executive Benefit Plan.

·        Provide a new benefit program that is affordable.

·        Offer a plan that is easy to implement and administer.

May is Disability Insurance Awareness Month, and a fantastic opportunity to explore offering a Supplemental Disability Insurance Benefit Plan as a new employee benefit.

Mental Health Awareness meets Disability Insurance Awareness

The month of May highlights two particularly important and related topics when it comes to Employee Benefits: Mental Health Awareness Month, and Disability Insurance Awareness Month.

Rates of depression, anxiety, substance abuse, and burnout have spiked since the pandemic. Employers have made substantial progress raising awareness of the importance of mental health, and enhancing benefits related to mental health. However, many Employers have overlooked updating a key benefit as it relates to mental health and disabilities.

Most mental health benefit offerings focus on preventative care, and education.

Employers are placing more emphasis on work-life balance, flexible working arrangements, and even provide mental health days to their employees as an addition to the overall PTO package. Take a day when you need to for your own mental health benefit! More commonplace benefit offerings provide workers access to mental health providers more easily and discreetly and offer both in person and virtual therapy options.

Where do many Employers fall short?

Preventative benefits are great, but “disabilities happen. In fact, 25% of all working Americans between ages 18-65 will experience a disability for at least 90 days. A leading cause of disability is what the insurance industry categorizes as “mental and nervous” disabilities. This includes disabilities caused by illnesses such as depression, anxiety, bi-polar, schizophrenia, and substance abuse.

Many Employers’ Group Long Term Disability (LTD) and Supplemental Disability Insurance (IDI) plans limit benefit payments for a disability categorized as a “mental and nervous disorder,” to 24 months! This limitation applies only to disabilities categorized as mental and nervous related, unless confined to a facility. No other “type” or cause of disability is subject to a 24-month benefit limitation.

Considering that mental health related claims, including substance abuse, is a top cause - and growing cause of claim, employees are under-protected in a serious time of need. The “disability” does not stop after two years, but the benefit payment will stop unless the insured remains confined to a facility.

With the improvements and options available today for out-patient care, and so many American workers battling to return to work, a 24-month limit to benefit payment “unless confined”, is a restrictive and outdated benefit.

True, the 24-month limitation does provide risk and cost containment for Group LTD plans. It is not a restriction found in other benefits such as health insurance plans; so why should the restriction be in an employer’s Group LTD or Supplemental IDI plan?

Two especially important topics collide in May: Disability Insurance Awareness and Mental Health Awareness Month. It is a great reminder for Benefit Professionals and Employers to consider removing the 24-month limitation from your Group LTD or Supplemental IDI plan. Instead, offer a Full Duration Mental/Nervous Protection feature in your Group LTD and Supplemental IDI plan.

If you need help securing this protection at an affordable cost, Navis Benefits Group can partner with you to help

May is Disability Insurance Awareness Month (DIAM)!

What would you do……if you became disabled?

Most Americans do not have enough savings, to pay their bills and household expenses for over 90 days.  So what?

Your employer provides you with Group Long Term Disability (LTD) protection! Great, you’re all set! Not so fast!!

Group LTD plans provide a basic level of protection. But they often don’t provide enough protection for highly compensated employees, or incentive based employees.  Group LTD plans can leave significant gaps in coverage due to plan benefit maximums, uncovered compensation, and taxation of benefits to name a few reasons.

May is the perfect time for Employers to audit their Group LTD plan.  An income replacement gap analysis, or a stress test, can help identify coverage gaps that may have been long overlooked in the annual renewal process.

Navis Benefits Group, LLC helps Employee Benefit firms, and their Employer clients perform income replacement gap analysis, and stress tests Group LTD plans.  Reach out to Navis for help!

Change your Approach to New Hire Orientation

Employee appreciation, recognition, and retention starts at new hire orientation.  Don’t wait until your Open Enrollment window to begin your work to retain your employees.

By re-thinking your new hire orientation approach, you can have a positive impact on how employees feel about your organization.  A modern-day, new hire benefits orientation experience can establish a long-term, sustainable, and trustworthy relationship with your new employee-hires.

Leverage third-party partners who offer services thoughtfully designed to turn administrative tasks and transactions into high-quality, lasting impressions to make the company’s culture and benefits shine.  These services focus on connecting and onboarding new hires and providing continued support and engagement throughout their tenure. 

Services can be fee-based, or offered through other funding mechanisms, and include:

·       New Hire Orientation:

·       Individual employee onboarding sessions.

·       Introduction to culture and benefits.

·       Support employee benefits education and enrollment.

·       Consistent and clear messaging from employee to employee.

·       Annual Benefits Enrollment:

·       Employee benefit enrollment support on Employer’s Benefit Admin System.

·       Telephonic, virtual, or on-site support.

·       Flexibility in staffing support.

·       Employer messaging.

·       Multi-channel communications: print, video, web, mobile.

§ Customized to Employer’s brand and messaging.

·       Year-Round Service Center

·       Reduces mundane HR tasks and workload.

·       Employee assistance with benefit questions, FAQs, triage.

·       Warm transfers when necessary.

Now is the time to showcase your corporate culture, new benefit offerings, and communicate how you value your employees, beginning with a modernized new-hire orientation process. 

If you are interested in conducting an RFP for modern-day New Hire Orientation options, reach out to Navis Benefits Group.  We can help!

JReidy@NavisBenefitsGroup.com

BENEFIT ALERT!

The top seller of Group Long Term Care through 2012, announced it will seek a 50%+ rate increase on its block of business, nationally.

The carrier will file with each state's Department of Insurance for approval.

GLTC is a tremendous benefit. But navigating and effectively managing a sizable GLTC rate increases requires skill, knowledge of the benefit, and specialization in the GLTC product offering. 

As a top GLTC benefit consultant with Unum for 16 years, Navis Benefits Group can be a valuable resource and partner to Employee Benefit Consultants and Employers.

Ask me how Navis Benefits Group can help navigate this significant rate increase.

Inflation and the 60% Paycheck

The American worker has been financially struggling for a long time. Most Americans, even those earning over $100,000/year, have been living paycheck to paycheck.

With inflation, the struggles are worse and very real.

The full paycheck - 100% of base and bonus - is no longer enough to pay the bills, never mind meeting other financial goals.

If faced with a sickness or accident, most Employer’s Group Long-Term Disability (LTD) Insurance plans only replaces 60% of base salary. Due to LTD plan design limitations, highly compensated employees and Executives might only receive 25-45% replacement, or less. Why?

·       Benefit maximums limit benefit payments.

·       Benefits might be taxable if the Employer pays the premium; and

·       LTD plans do not cover bonus compensation 78% of the time.

The American worker cannot meet financial obligations with only 60% of base pay…. Or less.

To help address and avoid financial devastation during a disability, employers should modernize their long-term disability insurance plan. Employers should consider offering their employees a Disability Insurance plan that provides 75%-80% replacement and protects total compensation.

 Navis Benefits Group, LLC, specializes in Supplemental Long-Term Disability Insurance plans. These plans can protect up to 80% of total compensation for highly compensated employees, and Executives. Employers can offer a Supplemental LTD plan on either an Employer-paid carve-out basis, or an Employee-paid payroll deduct basis.

Happy 2nd Birthday, Navis Benefits Group!!!

Today we celebrate Navis Benefits Group’s 2nd Birthday!

I am thrilled, humbled, and beyond grateful to have seen my long-time dream become a reality, and thrive over these past two years.

Without the support, encouragement, guidance and advice of my former colleagues, business partners, employee benefit consultants, human resource professionals, friends, and my family, I would not have had the courage to pursue my dream two years ago. After a successful 25-year career working for one of the industry’s best, making the move to start my own firm was a risky, and frightful proposition to say the least. But it was a dream that I had long wanted to pursue.

I am proud to report that this 2nd year’s business results significantly exceeded expectations. Navis Benefits Group is in a strong position, and proud to celebrate this milestone achievement with our partners, customers, friends, and family. You have helped make the dream a reality!

I am forever grateful to those Employee Benefit Firms and their Employer clients that chose to partner with Navis Benefits Group and placed their trust and confidence in my young firm.

A very special thanks to my wife Christina, and my three growing boys (Dominic, Brayden, and Desmond), who have been my inspiration and motivation to make this dream a successful reality. You’ve made incredible sacrifices in the past two years, and your support and love has been unwavering. Navis Benefits Group is a reflection of you - my precious family - and of your love and support!

I look forward to the excitement and continued growth this next year - and thank you again for helping to make the dream a successful reality!

Happy 2nd Birthday, Navis Benefits Group!

With Sincere Thanks and Gratitude,

Jamie Reidy

Managing Partner & Founder

Navis Benefits Group is a “specialty benefits” focused Firm, focusing exclusively on non-medical benefits to include Executive Disability Insurance, Voluntary Supplemental Disability Insurance, Executive Life Insurance, Long Term Care Insurance, Voluntary Worksite Benefits, and Benefits Enrollment/Communication solutions. We partner with Employee Benefit Firms as their outsourced specialty benefit consultants.

Missing the Boat?

Are you an Employer that still doesn’t offer Supplemental Disability Insurance (IDI), also known as Supplemental LTD?

You’re missing the boat.

In the employee benefits world, large employers tend to be the “pioneers” and early adopters of new benefit programs and products.  Over 50% of Fortune 500 Companies, 68 of the AM Top 100 Law Firms, and more than 50% of the country’s Top 100 Healthcare Systems offer Supplemental IDI plans, layered on top of their Group LTD plans.

With the strong and continued growing presence of Supplemental IDI plans in the larger employer space, Supplemental IDI is a mainstream and popular benefit program.  

The popularity of Supplemental IDI plans has spread down-market as a well-established benefit offering in mid to small employer space.  In fact, over 70% of new plans purchased cover less than 10 lives!

Supplemental IDI plans can protect up to 75% of income, including bonus compensation. 

Plans can be employer-paid, or voluntary with payroll deduction.  When offered as an employee benefit, IDI coverage is offered on a Guarantee Issue basis, with deep discounts to the premium, making coverage affordable.

Don’t miss the boat! If you’re thinking about adding Supplemental IDI to your benefit portfolio, Navis Benefits Group, LLC can help!

Navis Benefits Group is a specialty benefit firm, partnering with employee benefit consultants and employers, to design, market, install, and administer new, creative, and exciting benefit programs.  We help employee benefit firms focus on what they do best – health insurance – by serving as their outsourced, turn-key specialty benefits partner.

Looking to upgrade and simplify your Open Enrollment experience?

Human Resource Professionals,

It’s no secret that the tight labor market has created a heightened awareness around employee appreciation, recognition, and ultimately retention. 

Re-thinking your Open Enrollment process and implementing new approaches to the way older benefits are enrolled can improve the employees’ benefit enrollment experience, and their feeling towards the employer.

It is more important now than ever before for Employers to showcase new benefit offerings, and better communicate current benefits. Doing so will attract new talent and help retain current valued employees.

Embracing modern technology or digital solutions can help HR Professionals better engage their workforce and reduce time consuming benefits administration tasks.   However, technology should be complemented with face to face or virtual benefit counselor sessions, or a call center, to provide a more human touch to the open enrollment process. 

Human assistance during the Open Enrollment process is a very effective way to introduce a new benefits enrollment/administration platform to your employees.  Benefit counselors can help employees learn to navigate and use a new enrollment platform, while educating and enrolling employees on the benefits program.

Navis Benefits Group helps Employee Benefit Consultants Firms and Employers modernize and simplify the Open Enrollment experience.  We help consolidate complicated Voluntary Worksite Benefits programs, upgrade the voluntary benefits offered, design and implement improved Open Enrollment strategies.

Navis provides expert support during Open Enrollment, and throughout the plan year. Employees receive personalized guidance, education, and help choosing benefits that meet their needs.  Employers maximize their benefit program to help retain and attract talented employees.

Why Physician Groups Purchase Supplemental IDI Programs:

Physicians are extremely intelligent, caring, insightful, and thorough professionals. Understanding why Physician Groups are a top consumer of Supplemental IDI plans can provide valuable insight to Employers in other industries looking to offer a more competitive benefit program.

The healthcare industry includes a high proportion of highly compensated Physicians relative to the other employees in the practice or hospital. This is especially evident in the “specialty” physician groups. Group LTD plan maximums often provide inadequate protection, and only able to cover a portion of a Physicians income.

 Many Physician Groups include “Partners” or Owner Physicians. A personal motivation to secure coverage exists. This is especially true since K-1 income is often not covered by Group LTD plans, which typically covers “base salary or draw” only. IDI plans often cover K-1 income/Total Compensation.

Often, the organization’s structure (Private Practice or Healthcare System) easily allows for Physician and Executive carve-outs – the most common type of Supplemental IDI offering.

Physicians have exposure, experience with, and knowledge of disability insurance, at a young age. For a Medical School to be “accredited”, the school must provide disability insurance to medical students.  Most schools either pay the premium or make coverage mandatory and include the premium as a “line-item” in the tuition. Upon matriculation, it is a common practice on “matriculation day” for the Medical Faculty/Dean to encourage medical students to port the disability coverage, since:

• Coverage is portable.

• Coverage is deeply discounted compared to street rates.

• Coverage was secured at a young age, and very affordable.

• Coverage was secured on a Guarantee Issue basis.

• Matriculating Students generally have significant debt from medical school; therefore, the disability insurance helps protect against default.

• Recognition that, when eventually employed as a Physician, an Employer’s Group LTD plan will not provide enough protection alone.

The contractual features of Supplemental IDI are especially attractive to Physicians:

• Portability: Physicians see value in having potable coverage that they own.  Many Physicians have a base level of coverage which was ported from Medical School or Residency

• Specialty Own Occupation Protection appeals to Physicians with specialties and subspecialties.

• No loss of income is required for Total Disabilities.  This is beneficial to Physicians who have “trailing income” often for several months due to billing/accounts receivable, and/or have K-1 income as owners.

• No offsets at time of claim.  IDI will not offset at time of claim, from other benefits such as SSDI.

• Full Duration Mental/Nervous Protection is available and most often purchased in the Physician segment.  Psychological and Substance Abuse claims are the #1 cause of claims in the Physician segment.

The cost of coverage is very affordable, relative to the volume of protection.

Last, coverage can be secured on a Guarantee Standard Issue basis.

Navis Benefits Group, LLC, specializes in Supplemental Disability Insurance (IDI) programs, with extensive expertise designing programs for Private Physician Groups and Large Healthcare Organizations. Navis Benefits Group, LLC, partners to provide specialty benefits to employer groups looking to offer cutting-edge benefits.