Shrinking Payrolls

Mike Whitney, CEO of Flexible Benefit Group Inc., Dallas, finds that in the current environment, critical illness and hospital plans offer a way to help employers that have cut health care to deliver a safety net for their employees.

It's important to remember that employers who have pulled back on health care are still concerned for their employees, Whitney says. They're not going to like it if think enrollers are too pushy with employees.

Whitney reports one employer that offered employees a benefit allowance of $350 a month. They were given a choice of a low, medium or high-deductible health plan. Those who chose the high deductible would have money left over from the employer's allowance to buy other voluntary benefits.

The problem arose when the enrollment company, seeking more commissions, pressed hard to get many employees to buy the high-deductible plan, Whitney says. When the employer's chief financial officer found out about the high-pressure tactics, he fired the broker, refused to honor the enrollments and ordered a reenrollment without the voluntary product.

Whitney believes the broker's mistake was to rely on commission people who felt no responsibility or accountability for the overall success of the company's benefit enrollment. "They only wanted to bring in a maximum enrollment," he says.

Enrollers "need to be salaried and certainly not commission-driven," Whitney believes. "They need to be advisors, not salesmen. When sold in that environment, you have high employee satisfaction and a profitable enrollment over years rather than a one-year success."

David Czaplicki, president of Employee Benefit Communications, Hamden, Conn., says his company's focus on signing up clients in the health care industry, such as hospitals and nursing homes, has paid off because it's an industry that always does well.

For other industries, company consolidations present a continuing challenge, Czaplicki says.

"We've experienced situations where an existing client is purchased by another company that already has a broker relationship for voluntary benefits," he says. "So we're constantly fighting to keep these clients, and we don't win them all."

One opportunity for worksite sales stems from the fact that many employers are reluctant to throw any more cash on the table to pay for new benefits, says Michael McGrath, executive vice president, Fedeli Group Inc., Cleveland.

His brokerage is looking to rounding out existing accounts that have a solid package of core benefits but who in the past have not signed on to voluntary benefits.

"We are taking a critical look at existing accounts and finding substantial revenue opportunities," McGrath says. "We also know competitors are looking at our clients, so the more product lines we have with a client, they better it is for us. We are not only cross-selling property-casualty and commercial policies but also critical illness and accident policies to round out services. I think there are tremendous opportunities in worksite."

Mark Gebhardt, CEO of Aigilis Corp., Orlando, Fla., says the consumer-directed health care programs his company sells have provided solid growth. Wellness and self-care programs also have shown healthy profits, he says.

The biggest obstacle to sales continues to be employees' concern about whether they will continue to have a job, he says.

"They're cautious, maybe holding back because they want cash in the bank in case of a pink slip," Gebhardt says. "All you can say to them for whatever program you may be selling, such as critical illness or cancer, is that it makes sense for them to protect themselves. You have to reach into their hearts, not their minds."

Employees are exercising extra caution, and that's bound to have a direct effect on sales, Gebhardt acknowledges.

"Right now, it can be difficult, but keep your chin up and work a little harder," he advises. "There's a lot of money waiting on the sidelines. That money will come back, even if it takes couple of years."