16. The Difference Card Deep Dive with Chris Calderone and David Lauritzen

Sam. All right, welcome back to to the Broker's Voice. I am excited today. I have Chris Calderon and David Lauritson joining me from the difference card. If you are a broker listening in and you have no clue what the difference card is, by the time we're done, you are going to want to get a hold of these guys to figure out how you can start offering the solution to your clients and your prospects. So with that being said, guys, welcome aboard.

Thank you very much.

Andy.

Thanks for having us. Andy, great to be here.

All right. Yeah, Absolutely. No, I'm, I'm going to. I'm excited for this conversation. So the first question I'd love to ask, and I'll let any you know, I want both of you to answer. But Chris, I'll kick it to you first. Most of us did not get into the health insurance industry by design. And so I'm always interested in how people found themselves. And I just realized. Chris, talk. As I asked this question. You must be a Notre Dame fan.

I am.

Rough loss for us yesterday, but I.

Am, I'm a Badger fan. Equally rough loss. So don't worry about it.

Chris, how did you, when did you get in the health insurance industry and how did you find yourself in the industry?

Yes. So I started my career with Aetna. I went through their group school program. So my professional career did start in the health insurance industry. But just to take a step back from that, I was a pre med student in college. I went to the University of Notre Dame and thought I was going to go to medical school. And as I did internships and met some surgeons, I wanted to be an orthopedic surgeon. At the time, I recognized that I didn't really love being in a hospital setting. Wasn't right for me. So I tried to pivot before it was time to take the MCATs and go to medical school to a field that was related. But I didn't have to deal again with a hospital setting. That that wasn't the right mode for me. So health insurance was a logical step. I had some friends that were in the space. I had a friend at Aetna, they got me an interview at the group school, went through that training program, stayed at Aetna for a few years. I jumped to Anthem Blue Cross Blue Shield, which was WellPoint back at that point, and. And then went to the difference card from Anthem after meeting the founder of our company, Paul Stabby.

Awesome. And you're now the chief revenue officer of the difference card, correct?

That's correct. Yeah. My Title is the chief revenue Officer. I run our national sales and account management team. So sales and service for our broker partners and clients.

Awesome. Excellent. We're obviously going to get into the Difference Card. David, what about you? How did you, how did you find. Now very. I know about five people in my career that actually went to college for this stuff. I'm guessing you're not one of them.

I am not.

How did you find yourself in the health insurance industry?

So I came to the health insurance industry via the United States Marine Corps. I actually got out of the Marines. I was in Baltimore. I met, I met an insurance company. This was 30 years ago. I basically worked for this company. They were on the self funded side. Learned everything I need to know about self funding. I've started as an account manager. I quickly got into sales. What's unique about this is what I've been at the Difference Card now a little bit over a year. But the guy that Paul, that Chris just mentioned, Paul Stauby, I actually worked with him as an account manager 30 years ago when we were doing self funded groups. So I've got a special attachment to the Difference card from that perspective. But I left that company. I've been with Blue Cross Blue Shield. I've also been with Kaiser and I've also ran a health management care management company which was a very special niche on the self funded side. So like I said, I've been here a little bit over a year at the Difference Card.

So is it safe to say you're a recovering carrier rep?

Absolutely.

So let's. You know the reason I bring, I wanted to bring you guys on is David, you and I have had a chance to connect a couple times and I've connected with a few other sales reps from the Difference Card around the country. I know the thing is Jennifer Revelle in Indiana is somebody that I've gotten to know a little bit. And let's talk about what you guys are doing to really help the broker space bring, bring a very good solution to their clients. Maybe even have an opportunity to use it as, as a wedge, I hate to call it that, but an opportunity to go win some business.

And again Chris, I'll throw it to you first for the people listening in who are like Difference Card. Difference card. I've never actually heard of this. Why don't we just start with the basics? What is the different Difference card and how does it work?

Yeah, from a most basic level we write the Difference card on a medical expense reimbursement plan platform. So it's a MERP for short. It is a Section 105 plan. So it's all pre tax reimbursements and deductions. And the whole concept is, is to introduce the customer to a small level of self funding while still staying with a fully insured carrier. And a lot of our broker partners use the difference card as the first step into the self funded direction without taking on too much claim exposure and too much lasering and self funded risk. So again it's that first step into the self funded direction. And what we do is we go to the fully insured carrier with the broker partner and we ask for the highest deductibles, highest out of pocket maximums, highest co pays we can find in order to drive the premiums down as low as possible from a fixed cost perspective. And then the difference card sits on top of the fully insured plan and sets up a self funded 105 plan, that's the medical expense reimbursement plan that pays all the differences between the plan that we're buying and the plan that the employees used to have so that it pays the difference, thus the name between the new plan and the plan they used to have, but on a self funded basis. So that the employer is paying a lot less in fixed premium and they're only paying those claims as claims are actually incurred and paid.

So is it safe to say, you know, I've used to, I used to refer to level funding as dipping your toes in the self funded waters. This is really dipping your toes in the self funded waters.

Yeah, A lot of our customers are actually even in a self funded, level funded bucket today. So this is one step further. We have a nice little step stool that we talk to our brokers about like fully insured, right? You're, you're on the floor. Step up. One might be that level funded solution where you're getting some of the surplus at the end of the year and you're starting to see your claims on a paid basis. Step two, in that step stool up to self funding, that's where we put the Merc strategy and the difference card in that step two bucket. Because you can be on a level funded or a fully insured platform and now you really are paying claims as they go. You're getting that immediate cash flow discount of only paying them when they, they come in and you're, you're participating in share of that savings as well.

David can expound on that. How does, okay, so I'm listening. And Chris, I heard, I heard you say, you know it's, in a sense, it's self funded itself. Right, Because I think a lot of people instantly go to the health reimbursement arrangement, right, which is self funding. But really what the employer is doing is self funding its own part of a deductible. David, go into depth a little bit on how does that work. When you talk about the MERP and setting this up, Chris said, hey, you know, we're going to go to the highest deductible, lowest cost plan. How does that actually work from a, a tactical standpoint.

In, in what regard?

And from the standpoint that, you know, okay, Chris said, you put this in place. The difference card sits. So talk to, talk to the audience about, okay, now an employer has the difference card in play. A member has a claim. How does, how is that going to work for the member?

So what's interesting about this is that, you know, a lot of, you know, I see here in the Mid Atlantic where I am, a lot of brokers use HRAs and they use HRAs to basically reduce a deductible for an employee. So they have, they move to a high deductible plan with what Chris just said. It's just with the merp, you take a group's current benefits, you go back to the carrier, you buy that higher deductible plan to bring the premiums down. But the member experience is that you're putting the same benefits or better benefits back in place for the member. So it's basically, it's not an HRA from where it's just an employer sponsored program. It's an actual plan that is very similar to what the member has today. So the member experience, going to the doctor, going to the hospital and is going to be the same or better than it was before.

Okay, I love that because.

I think, you know, especially if an employer is listening into this, there's that belief in our industry that if we're going to save money on health insurance, we either have to shift cost to our employees or make the make the plan worse.

With the difference card, it gives an employer an opportunity to not only improve the plan, but do it at a much lower cost.

Right, right.

That's a great point. And we've seen a trend over the past six months or so where we've got this whole great resignation going on. Right. That is a big hot topic in the news. And with a lot of our brokers and employer customers, we can't afford to cut benefits in this environment because companies are already losing staff to turn over. So instead A lot of our customers are asking can we improve the benefits? Can we improve. You have the copays go down, the deductibles go down and they can do that through the difference card customization. That way we can still save the employer money by paying less fixed premium to the carrier. But the employees end up getting a better benefit. Maybe their co pays go down, their deductibles go down and that's potentially one way to help retain those employees because maybe they can't get that great platinum level plan if they go to that next employer. Obviously not the only factor in that decision, but something that can potentially help retain employees.

Now I'm going to ask an ignorant question because Chris, you mentioned that obviously this can be added to a fully insured plan. This can be added to a level funded. If a group, if there was a broker who has clients who are already partially self funded, whether that's in an ASO format or an unbundled, working with an unbundled independent tpa, is there any reason they would need to add the difference card to their program?

There are components of our system that do work well for a self funded plan, but it's not that traditional arbitrage play of buying the fully insured plan with the high deductibles and self funding the differences. It's more about our wellness program where sometimes those differences in co pays and deductibles, those are only paid if people are meeting their wellness metrics that can have a really big impact on a self funded group. So this the difference card as an incentive vehicle for wellness, that's a big play for some of our self funded customers with some really large wellness customers on the self funded side. And then we do a lot of consumer accounts, so simple things like FSA Health savings accounts, those are all bundled in for our self funded customers as well.

Hey David, if you don't mind, I'd love to have you kind of go into a little more detail with what Chris just said. Chris brought up wellness components. Talk a little bit about what wellness components are built into the difference card program and how that can help an employer. Chris, you talked about great resignation. Culture is everything right now. So how can the difference card help a company not only with cost but from a culture standpoint with the wellness programs you have built in?

I think the wellness is very important.

I attended the Ascend conference this year and you hear a lot of advisors talking about, you know, getting make sure people are doing the right thing. And I think with the wellness platform itself is is keeping the population healthy, make sure that they're doing the right thing. And to Chris's point, you know, we can put a medical expense reimbursement plan in place and be able to steer the dollars where we need to. So the platform has the ability to basically customize a wellness program for a particular group. So maybe you want to do health risk assessments or walking challenges or put different components of a wellness program in place. Our platform has that capability. And again, it's customized per the group or per the client. But again, it allows the Merck dollars to be spent in the right place and it allows the population to stay healthy and informed.

Awesome. You know, as I sit here and think about the brokers that might be listening in, I have two questions. And either one, you know, either one of you can answer the question. Number one, do you guys, can you define who the ideal employer would be or what the ideal employer looks like for the difference card?

Yeah. From an ideal employer perspective, it's a company that wants to maintain rich benefits. Right. So they're looking for benefits in that gold or platinum level. Those are ideal customers for us. And it's typically the mid market group that's maybe in the the 50 to 500 life range that they've heard about self funding, they've thought about it, but they haven't gone down that path yet. That's the ideal customer for us. And sometimes there are smaller groups that can't be self funded under 100 in New York or California. This is the only strategy that they can use to save money without cutting benefits or without passing costs to employees. And then as you get to that 100 to 300 range, some employers are nervous about lasering risk. And this is a way for them to just start to understand how to pay their own claims without taking on too much exposure. So rich benefits, mid market group, that's the best.

Chris, right back at, right back at you on that. Does there actually come a time, as I think about how the difference card works and who the ideal employer is, does there actually come a time where an employer technically doesn't need the difference card anymore and they graduate from it?

Yeah. I mean, where we lose most of our business. So we closely study our client retention rate. We're in the 90% range. And that 10%. Those customers that choose to leave the difference card, we closely study why are they leaving? And the biggest reason every year that we lose business is because they have graduated, as you said, and they've gone to that next step. They're paying their Own claims they're buying stop loss and they're truly self funded. Now we'll often maintain their consumer accounts business like FSA and HSA and and will often maintain the wellness benefit. But the MERP program doesn't make as much sense for a self funded customer. So that certainly is where we see migration and we're proud of those customers. I'd love to maintain the business, but still I understand that's the right path for them.

Let's call it the. I don't know what to say. The challenges of doing your job. Sometimes you get fired because you did your job.

How about you David? Now let's spin the question.

Chris talked about the ideal employer. What about the idea, what does the ideal broker look like? So if you think about books of business and stuff like that, who would be an ideal fit from the broker perspective?

Yeah, that's an interesting. So obviously you know, you have a lot of advisors, a lot of brokers out there talking about self funding right now. And you know, my point to all of them is do you, you know the broker that believes in self funding but at the same time has those groups that Chris just talked about that basically are fully insured today? Chris also mentioned the level funded groups. We have a lot of brokers that have the level funded groups that are seeing some big increases where we can really have an impact. For me personally I'm seeing a lot of government contractors. I'm seeing brokers that have a lot of schools, charter schools and other types of schools, universities. We're seeing a lot of nonprofits as well. So again the brokers that have these grips we can certainly have an impact on.

Awesome. Peter Broker listening in it. Go ahead Chris.

Sure.

Yeah.

In terms of just the ideal broker, Dave talked about a lot the broker that has those customers. But we have been really successful in helping brokers to grow their client base. So the brokers that are looking for something unique and different to really create that wedge, you open the discussion talking about that, but really to change the playing field when talking to an employer group and brokers that are again looking to hunt for new business, grow their block and use a strategy that's different and unique that maybe the customer hasn't heard of yet. Those are some of the best fits for us.

Yeah, and I think about, you know, and this is a question I want I'm going to pose to you guys. There's a lot of advisors out there who don't sell self funding right now quite frankly because they don't understand it. They haven't taken the time. There's no, there's no shame in that. But if they don't feel like they're the expert, they won't talk about it. The other part of that is I see a lot of advisors out there who do self funding, self funded business, but they feel like the only way they're going to get hired is if that group, that employer, is ready to go self funded. And my, my advice to them is always get hired now to take them to self funded. They may not be ready today. It might take 12 months, 24, 36 months, but get hired now to take them there. And the difference card can be one of those huge stepping stones to help a group get from where it is today. Maybe it's just fully insured, stuck in that one year hamster wheel. The difference card is a great step to getting them to that ultimate destination. So I want to pose a question and this is where you get to share your opinion.

For the advisors out there who and you and I did make a shift from brokers to advisors because if you're doing self funded business, you're more of an advisor in my world.

What's your advice to those who still have a bit of hesitancy about offering self funded products, offering self funded solutions?

Anybody want to chime in?

Yeah, I'll start there. From an overall perspective, it's the right thing for many customers. Not, not every customer. Right. There are some smaller groups that shouldn't be self funded, but you want to always be doing the right thing for your customer. And when you take out that premium tax and you take out a lot of the carrier margin and you give back control and transparency to the end employer, buyer, you're really doing the right thing for that customer. And if you can understand that talk track and just get your mind around how it works, it's, it's not rocket science. And you're going to do really well by your customers, you're going to grow your business substantially because that ultimately is, is the end game for many employers, especially as you get up market again above 300, 500 lives, they really ultimately should be going down that self funded path. So doing the right thing for the customer I think is the main message.

Yeah, and I, I agree, Chris. I think the day is coming too where hey, if you're not talking about it, somebody else is. And the last thing you want to do is lose a piece of business simply because you didn't talk about something out of fear that you didn't know enough about it. So David, I'm going to pose a challenging question for you. Are you ready?

Okay.

So for the, the advisors that are listening in and they're, they might be sitting there going, yeah, yeah, yeah, I've heard of MERPS before. You guys are all the same. Your challenge as a company is commoditization, right? If I said, okay, David, what makes the difference card different?

What, what, what is the secret sauce that I said, you know what the difference card is doing it just a little bit different than anybody else, what would you say?

I would say that.

The reason why I got into this business was to, was to help brokers bring solutions to their clients. To obviously reduce costs, but at the same time keep members healthy and obviously now keep members retain and attract new employees. I think for me what makes us different is our consultative approach. You know, you said it earlier about, you know, some brokers, some advisors don't want to bring up the self funding topic. Here's a great conversation to start early and to be able to have that conversation with the group. If they have to stay fully insured, let's help them reduce that cost instead of paying all that premium to the carrier. And I think that's what makes us different. I mean, I just went to a conference down in Washington D.C. this past week. There was probably nine or ten competitors of mine sitting in the room that do a lot of the TPA services, they do the hra. But when you go up to every one of their tables and have the conversation, what makes the difference card different? It's that Merc and the fact that they don't do that. So, and I get, and again, taking a group where they are today, going back and buying that higher deductible plan, lowering that premium, but then being able to improve the benefits for the employees while reducing cost, to me that's key and that's why I'm here today at the difference curve.

That's awesome. You know, I always looked, when I was advising, I looked at, okay, how, how does my overall strategy. Because I had a process, I had a strategy that I wanted to bring my clients and at the end of the day it was about helping them control their health insurance cost by giving them better access to the health care system. Financing is a part of that. Right? You know, you've gotta, we, we know that being, you know, some form of self funded is going to help you create greater control. And so when I think about the difference card, that's just one of those tools in my arsenal that for those groups that aren't Full blown self funded. They aren't unbundled. You guys are an awesome weapon to help them get start getting to where they want to go. Because I always, I tell advisors if you think a group's going to wait to become self funded until they think they're ready, they're never going to get there.

Right.

They're never going to be ready. And so with that being said, last question.

If a broker's listening and says okay, I need to know more about this difference card, I haven't heard about them before but listen to this now I know what is the easiest way to get a hold of you.

Yeah, I'll take that because I have territory across the country and I can kind of push you to the right person. So the easiest way is salesifferencecard.com if you email that email address I will make sure you get to the right representative in your area. There's also a form right on our website where you can fill out a couple of pieces of information. Your name, your agency and same deal. You'll get an email from us same day put pushing to you to the right representative in your market.

What was that address again Chris?

Salesifferencecard.com.

Perfect. I'm actually putting it up right now.

Excellent.

David, you want to add something to that?

No, I, I think, you know I, I think going back to a point that Chris made earlier, I think it's so important because you know we're seeing so many groups that are fully insured with some pretty high renewals right now. And I think you know, for me a final comment is, you know one qualifying question that I talk about a lot with advisors and even with groups is leave the difference card out of it for a minute. If you get a 35% renewal fully insured, what are you going to do? Are you going to pass off the cost? Are you going to absorb the cost? Are to you going are you going to switch carriers or are you going to increase deductibles? And again that for, for me that's really important because that leads right into my conversation about the difference card and, and that's what I try to do when I try to consult and educate with brokers here in the mid Atlantic.

Well that's awesome guys. I want to thank you for taking the time today to be, to be on the broker's voice because.

David, you and I have connected a couple times. I love when I see solutions that spit fit a very specific niche and I think you guys have, that have one of those great solutions and so for the brokers listening in. Remember, if you're not going to talk about it, eventually your competition is going to and the last place you want to find yourself is losing a piece of business simply because you failed to have the right conversation. So, Chris, David, I want to thank you guys for joining.

Thank you for having us. Great to be here.

And for everybody else, you know what happens if you get that clarity, which is what I wanted to help give you today, you mix it with confidence, you will create massive action. So go take that massive action today.