April 2 4 15pm - don cooper

“Is Fee-Based Planning In Your Future?”

Don Cooper, MBA, ACBCTRIFLEX Corporation

© TRIFLEX Corporation, all rights reserved

What Will Be Covered In This Course

I. Why Charge Fees?

II. The Legal Basis and Best Practices

III. Laying the Foundation, Best Practices

IV. Fee Based Planning Opportunities

V. Q & A


DISCLAIMERThis presentation is for educational purposesonly. It does not constitute legal advice, nor doesit constitute advice about any particular set offacts or issues. If you have questions about aparticular set of facts or issues, considerindependently consulting an attorney or otherprofessional.


I. Benefits compliance issues will likely:

a) Becoming more complex

b) Becoming less complex

c) Not change

PPACA Pop Quiz:


II. Insurance requirements will likely:

a) Become more complex

b) Become less complex

c) Not change

Pop Quiz Continued:


III. Commissions will likely:

a) Increase

b) Decrease

c) Not change

Pop Quiz Continued:


Why Charge Fees?I. PPACA – “Commission Compression”

a. Individual mandate

b. Employer mandate “Shared Responsibility”

c. “Marketplace” assisters/navigators

d. Medical Loss Ratios “MLR”


II. New opportunities

a. ACA Marketplace notice. Educating employees, part‐time & full time.

b. Creative plan designs = market expansion opportunities.

c. Compliance & Budgetary analysis.

d. Long‐range planning.


The Legal BasisCan You Charge Fees?I. Check with your state Department of

Insurancea. Check the DOI Code and any regulations.b. Consult with legal council (Statewide

AHUs).


The Legal BasisCan You Charge Fees?II. What justifies charging of fees?

a. To offset reduced commissions.b. To help clients comply with the complexities of

PPACA and other IRS, HHS & DOL regulations.c. Expansion of available client services.d. Budgetary analysis and design services.


Best Practices In All States

a. Producers should not charge fees for transacting insurance.

b. Fees should only be charged when not transacting insurance.

c. Utilize a separate contract between the producer and the client.


When Are You Transacting Insurance?

California Insurance Code gives a good definition:

a. Solicitation;

b. Negotiations preliminary to execution;

c. Execution of a contract of insurance; and

d. Transaction of matters subsequent to execution of the contract and arising out of it.


When Are You Transacting Insurance?a. The concepts of solicitation, negotiations prior to

execution, and execution of a contract of insurance, are relatively straightforward.

b. Matters arising out of must be distinguished from matters which simply relate to a policy of insurance.o A service arises out of an insurance policy if the need

for the service exists only if that specific policy exists.o A service merely relates to a policy if the service

could be of value regardless of the existence of that policy.


Other Things You Need To KnowA fee should be agreed to in advance by the client after full and accurate disclosure by the producer of the service(s) which will be provided in exchange for that fee.The contract should be in writing. A written agreement reduces the potential for misunderstanding by the consumer, and also documents for the producer that the appropriate disclosures were made and the consumer’s consent obtained.


Engagement AgreementsThe contract should identify, at a minimum:1) The parties to the contract;2) The services to be performed;3)A plain statement that those services are outside the scope of any agency relationship the producer might have with any insurance company;


Engagement AgreementsThe contract should identify, at a minimum:4) The fee to be charged; 5) Any other conditions to be enforced (such as

limitations, if any, on the refunding of fees); and

6) The signature, or some other expression of consent, of the consumer.”


One Other Point to consider

Do not reduce, waive or alter a fee for placement of insurance products or a Broker of Record (BOR)!

It may violate your DOI Anti‐rebating Laws


How many of you agree with the statement

“Knowledge is Power”?

Laying the Foundation

“Application of Knowledge is Power”

WRONG!!


Fee Based Planning EssentialsFor The Broker:

1. To charge fees you must add value beyond transacting insurance.

2. Earn a professional designation (ChHC, RHU, REBC, CEBS, CBC, etc.).

3. Never stop expanding your knowledge base.

4. Join the National Association of Health Underwriters (NAHU)


Fee Based Planning Essentials

For The Broker:

5. Own a quality resource library (NAHU Guidebooks, Thomson Reuters Checkpoint, EBIA, RIA, etc.).

6. Find a mentor.

7. Establish strategic alliances (TPA’s, Lawyers, Accountants, and other benefits professionals).


Fee Based Planning Essentials

For The Presentation:

1. The Presentations must be to C‐office decision makers to effect a fee‐based sale.

2. The presentation must be condensed in a 2 page or less Executive Summary.

3. Provide adequate technical support to substantiate claims.


Opportunities1. Educating full & part-time

employees.2. Compliance evaluation and

analysis3. Discrimination testing4. Comprehensive strategic

planning


Educating Employees

1. Health insurance basics

2. Qualifying for subsidies

3. Navigating the Marketplaces


Compliance Evaluation1. ACA (duh!)2. Section 1253. ERISA4. HIPAA5. COBRA


Discrimination Testing 1. Section 125 (3 tests)2. Health FSAs (2 tests)3. Dependent Care FSAs (4

tests)4. Section 105(h) (ACA, waiting

on the Regs.)


Comprehensive Strategic Planning

Engaging the Employee is Critical


10 Healthcare inflation Drivers

1. Over-utilization2. Defensive medicine3. Lifestyle abuses4. Demographics, aging population5. Uninsured & underinsured care6. Medical malpractice litigation7. Administrative costs8. Technology advances9. Pharmaceutical advances10. Government regulations

Employee Engagement Influences


Consultative Fee‐Based Planning isPartnering

Benefit Needs Assessment• Plan information• Risk exposure• Employer objectives

StrategiesProposal(no product)

EmployeeEmployer Shared Responsibility

• Competitive benefit options• Adequate contribution• Benefit Support Services for EEs• Educate employees

• Learn to make wise benefits choices• Be a prudent consumer• Adopt a healthy life style• Pay their fair share

Presentation Goals:o Confirm priority of objectiveso Identify compliance riskso Present Strategies to evaluateo Propose an employer/employee

partnership in benefits

KEY DIFFERENCES:o One page fact findero No census informationo No payroll informationo Begin 60 to 120 days

prior to renewal

Executive Summary(2 pages or less)

Option AFee Based

Three Year Strategic Plan

Option BTraditional

Product/ServicePlan

Option AValue Added ServiceThree Year Strategic

Plan


All Necessary Group Proposal Information

PlusEnhanced Fact Finding

o Ownership & HCEo Section 125, 105, etc.o ERISA, COBRA, HIPAA,

etc.

3 YearStrategic

Plan

Benefit Needs Assessment• Plan information• Risk exposure• Employer objectives

StrategiesProposal

(no product)

EmployeeEmployer Shared Responsibility

• Competitive benefit options• Adequate contribution• Benefit Support Services for EEs• Educate employees

• Learn to make wise benefits choices• Be a prudent consumer• Adopt a healthy life style• Pay their fair share

“Option A”© TRIFLEX Corporation, all rights reserved

BROKER BENEFITSI. Increase existing client revenue

A.Market expansion

B.Improved product penetration

C.Fee based revenue


II. Win new business – differentiate yourselfA. Compliance risk analysisB. Employee engagementC. Long range strategic planning

III. Lock out the competition – 3 Year Planning Strategy

BROKER BENEFITS


What We Have Covered In This Course

I. Why Charge Fees?

II. The Legal Basis and Best Practices

III. Laying the Foundation, Best Practices

IV. Fee Based Planning Opportunities

V. Q & A


Questions & Answers

Don Cooper

TRIFLEX Corporationwww.triflexcorp.com

[email protected]

866.874.3539

Everyone, Please Take Out A Business Card

B – Benefit Needs Assessment FormW – To be put on our webinar listC – To discuss a case address a specific issueNo letter, put your card back in our pocket


April 2 4 15pm - don cooper

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