The Missed Opportunity of Retiree Medical Benefits

I think it's, it's still something that people, they, they kind of don't get it. And then once they do get it, they go, oh my gosh, this is low hanging fruit that I can, you know, help my groups out with just carving those retirees out. You kind of go, you know, you lower your average age of your active population. So that should help you with your costs on that side.

Hey, hey. Welcome back to the Broker's Voice. Andy Neary here. I'm excited. I go way back with the gentleman I've got on the show today, all the way back to, I think, 2011. Ken. Yeah, when I was at Burke Walton Associates. But I got Ken Peterson joining me today from Benestar. Regional vp Ken, welcome to the show.

No, thanks. I appreciate it. This is, this is great. My first.

We are going to talk, we're going to talk about a, would you say kind of a often misunderstood type of benefit, the retiree benefit. Yeah.

And I think it's, it's still something that people, they, they kind of don't get it. And then they're, once they do get it, they go, oh my gosh, this is low hanging fruit that I can, you know, help my groups out with.

Well, when you and I first met back in 2011, I can tell you, as I said offline, when I would look at retiree benefits, it was like at first it did feel like a completely different world.

Right.

But once, like you said, once you understand them, you can see how they can be a game changer. But before we dive into post 65 group retiree benefits, let's just talk about your journey real quick. Number one, how'd you get in the industry? And how the heck did you end up at Benistar?

Yeah, I mean, it kind of all started back actually through my father. My father actually worked at the Hartford on the group side doing group life and disability and actually ran that whole department. And when I got out of school at Quinnipiac in Connecticut, I was looking to do more tv, radio, like that type of thing. And he was like, you know, I really see you doing insurance. And I'm like, man, I'm not going to do that. It's so lame. It's like, why would I do that? You know, whatever. And then you get out of school, I'm like, I have applications and, you know, trying to get jobs everywhere and that type of thing. And he goes, you know, hey, I heard of a position, it's down in Houston, Texas with the Hartford doing special risk insurance. So it wasn't on the group side. It was group, but it was a different part of group. And so I. I said, you know what? I'll give this a shot or whatever. So I moved to Houston, not knowing anyone, all that stuff, and worked at the Hartford. I was actually only there for about a year. And then about actually before, you know, right around this time or a little bit before, they actually said, hey, we think you'd learn more about the business up in Chicago. What do you think about moving there? And I was like, oh, sounds good. My dad actually rolled his eyes because he had opportunities to move us there multiple times, and we didn't want to leave New Jersey or anything like that. So he was just like, really, you know, so anyway, move up there. I actually worked. Yeah, do it in. One of the main products that Hartford had and still has is group Retiree Benefit, you know, Retiree Medical. And so knowing that we had goals to make, that was the one. One of the few products that actually had a pretty good premium to where, you know, we could hit our goals and that type. You know, we sold a whole bunch of other stuff, like travel accidents, some other stuff, but that was one of the main products that kind of helped us, you know, hit our goals. And it kind of worked because we were helping again carve out these retirees. So I was there about 10 years, and one of the guys I worked with at Hartford, who was already at Benistar, heard of a position at Transamerica Affinity Services. That was one of the other companies that I worked for, and I was there for about five years. But that same guy that was at Benistar, who I knew from Hartford, had been on me the last couple years to be like, hey, yeah, really want to have you come on. It's like, no, I'm on the carrier side. I'm fine. But, you know, he's one of those guys, he just doesn't let it go. And it's like, you know, let's just meet. So we actually end up meeting for lunch in Schaumburg, you know, outside Chicago. Took all afternoon. And then it was like, made the decision. I've been there since 2006, so it's. Yeah, yeah, Been there a long time. And yeah, it's been. Yeah, it's been. It's been great.

Well, let's. Let's jump right into post. Post 65 group retirement benefits. I'd love for you to give, I guess, what we call, like, a basic definition of it, because I think there's probably a lot of advisors who Just aren't quite clear what they are. And then what are some of the common misunderstandings you think advisors have about post retiree, post 65 retirement benefits?

Right. And it'll depend on what type of, you know, industries kind of the brokers specialize in. There are some that are more employer based or employer focused and we will see some that are, you know, kind of paternalistic employers anyway that still have retirees still on their active plan. But a lot of them, because of the accounting regulations that went in, you know, years ago, kind of once they turn 65, they've kind of like said, you know, see you later. You know, they kind of don't do anything. But we've got others that specialize in public sector, you know, municipalities, unions, school districts, universities, where they're potentially some sort of mandate that the retirees get some sort of benefit post 65 retiree even if the group doesn't pay for it. I actually have a lot of municipalities in the Chicago area that we've helped carve out those retirees, but they don't pay anything for it. It's just, they're just there and it helps lower the average age of the group and that type of thing. So I'm hitting on some of the, the bullet points of just what an agent or broker would kind of want to look for when it's, you know, even within their own book or they go, oh yeah, you know what? I know that guy, my buddy is the manager at the city of whatever. It's like I can talk to him and maybe talk to their CFO or whatever. And then, you know, you start, you know, start the conversation from there.

What are some of the shifts you've seen maybe in the last two or three years just in the employer market where, where post 65 retirement benefits have probably even become more relevant than they were in the past.

I think with the emergence of group Medicare Advantage, that's kind of been a big push and we've seen a big shift again because of the cost savings. They're getting a lot of subsidies from the government in order to provide these benefits. And it works a little bit different than a Medicare supplement program. But the group Medicare Advantage not only is going to be less in most cases premium wise, but it also includes a lot of the bells and whistles that med supp plans can't really add into without either having it be an extra cost on their plan or they just don't have the ability to add those, you know, hearing, vision, dental, gym memberships, all that type of Stuff and that's been kind of a big shift and it's. There's been some. And I'm sorry to keep going on, but.

Oh, keep going. This, some, some. Some stuff they need here, so keep going.

Yeah, there was a shift of where kind of everyone and there's still some of, of movement of moving from Med Supp to Medicare Advantage because it's like we just need the cost savings and everything. But there's also been some that have said we're moving back to Med Supp. And sometimes that relates to the networks that the group Medicare Advantage plans have. Then even though it's a, what they call a passive PPO network, meaning that if the doctor, hospital, physician, whatever, accepts Medicare's payment, then the in and out of network benefits are the same, there sometimes becomes an issue where that hospital system, whatever, doesn't take. That doesn't either take group Medicare Advantage or doesn't take that carrier or whatever, even though it's out of network. They won't even file or send the claims into Medicare on behalf of the retiree. So then it becomes kind of a long trail for the, you know, now it's up to the retiree to file their own claims and submit them into Medicare. And it just becomes a big arduous task for them and just makes it to where it's not really worth it. It doesn't happen very often. It's just, it's once in a blue moon, it kind of pops up and then sometimes those. It's like, you know what, let's just go back to Med Supp. We don't have to worry about any networks at all because Medicare is the network.

Well, and that's. I wanted to get your opinion because I think we could probably say that this is a benefit a lot of advisors may overlook because they don't know how to have the conversation. And so when you think about the typical ideal clients you brought up, like municipalities, remember when I met you at Burkwald, it was because we had some large municipalities, holidays in school districts where this was very, very, very applicable. What are some common questions they might hear from a client or prospect that would trigger like, this is where I need to think about a post 65 retirement type of program.

Yeah. And it depends. It depends again on the size of the group. But in a lot of cases, just carving those retirees out, you know, you kind of go, you know, you lower your average age of your active population, so that should help you with your costs on that side, even if it's a wash on the retiree side, so they kind of hear those types of numbers. And administratively, you know, with us doing the administration, the billing and collecting, we have a call center. It's kind of, we're taking a lot of those responsibilities off the HR person's, you know, plate really, and kind of freeing them up to do other things. And you know, I know the HR people, they love obviously talking to the retirees when they can, but there's going to be questions that come up that, and is, you know, they probably know enough to be dangerous when it comes to Medicare, but there's going to be a lot of situations where retiree will call into the HR person and ask them a question and they're going to have to look it up or find out what the answer is. Whereas if they just call a resource that's already built into the plan, they'll get the answer right away. And then again, the HR person obviously, you know, tends to, you know, probably going from meeting to meeting and the retirees are, you know, wanting to talk about, you know, other retirees or anything else. And it's just, you know, they're HR person's like, I, I gotta go, I can't, you know, so they're running from place to place on that. So again, it takes a lot off their plate. So those are kind of some of the things that they can hear cost wise and administration wise that would really help them. And again, it goes back to, it's, it's really, if they've got retirees, it's, you know, if you take care of this, it should trickle down to help you out in a whole bunch of different areas that you probably weren't thinking about before.

Yeah, I was, I was going to ask you an obvious question. Dare I get an obvious answer? But demographically. So if I've got clients or I'm looking for opportunities, are there certain demographics I should look for in a specific workforce where I go, okay, getting a Ken from Benestar involved makes a lot of sense.

Yeah, I mean, it's, it's funny because I'll get asked, well, what's your typical size group? And, and it's usually, you know, 40 to 80 retirees, but we go down to as few as two, so. And spouses count, so. And again, I've got a broker in Michigan where they kind of do mom and pop shops where the kids are kind of taken over and need to kind of get mom and dad or the two brothers or two sisters, whatever, off the plan. So again, helps lower the average age and it's not a big drain on their active resources and things like that. But you know, we also do groups that are in the thousands. So it's, it's, we're kind of all over the gamut, but usually. And then the carriers we work with, it depends, they all have their own different thresholds of where they like to see numbers too, whether some are 10 or higher. And again, this is, again, we can do med supp down to two. You know, some of the group Medicare Advantage carriers are 10 or 50 and higher. And then once you kind of get into the hundreds of retirees, then they can kind of get a little bit more aggressive. And then that's kind of the same thing on the prescription drug side with the part D and the egg whip, the employment waiver plan, where it's the same thing where, you know, the, the more spread of risk is, the more, you know, bargaining where you can kind of go, hey, if we can get to this price, you know, this will probably, you know, be enough to where we can carve those retirees out.

Yeah, this is, I'm going to ask you a two part question. With that being said, if I'm an agency right now and I primarily focus on groups who have actively working employees, are there any questions I could use or you know, could you arm me with to, to even initiate a conversation like this? And then if we did implement a Post 65 retirement plan, what are some of the metrics we should be using with our clients to determine if the program is a success or not? Okay, so let's start with questions like I'm an advisor, right? Are there any questions I should be asking with my clients to see if this is even a need? Because remember, a lot of advisors are focused on the active employees and they're not even thinking about the retirees, right?

And this is where, if it is a current client, you get a look, you obviously have their census information and you look at it and you kind of look and you go, you've got 25 people here over 65. What's their story? It's like, ah, they're just, you know, they're retired but they're still on our plan, that type of thing. And then that's when it's like, you know, you can carve these guys out. And that's where I think a lot of brokers and even groups, they're like, I didn't know you could carve out retirees on a group basis. I didn't know and I can sponsor. It's like even. And going back to my example, 20, 25 retirees on a group plan. And it's like, do you pay anything for them? No, they're just, they're just there and it's like, well, you know, you can carve those retirees out. That gets rid of your accounting liability, you know, for those, for those people, that's one less thing you have to worry about because everything that's being moved over to what we do is fully insured. So the accounting liabilities go away. That's if there's no contribution. But if there is contribution, they at least have a more definable number that they can put down on their balance sheet to kind of help them. I'm not an accountant or anything like that.

Yeah, yeah.

It's just, you know, those are kind of the, the buzzwords and things like that when it comes.

Well, isn't it actually, correct me if I'm wrong. Wouldn't that potentially be a cost containment idea? Let's say the group's self funded.

Right, Right.

Couldn't we argue that post retire 65 retirees are probably some of the highest health risks?

Correct.

So if you, if you initiated a program like this, you're probably driving a lot of that risk off the plan.

Yeah. Especially if it goes, I mean, it goes over to Medicare and it's, if it's a med supp, you know, Medicare is taking 80% of the claims, you know, right off the bat and then just, you know, then you're filling in the gaps after that with a supplement or you move them to a group Medicare Advantage where the carrier is kind of doing all that, you know, for them.

What, what's your response? If, if I have a client, I'm an advisor, I got a client says, but yeah, Andy, we want to, you know, we want to just give our retirees the same plan, the same benefits they've always had, which is why we've kept them on for so long. What would be your response to that?

It's, I would say we can do that because with group plans there is flexibility to how they're designed. It's not. And again, I'll start with the med supp. Where with Medicare supplement you're kind of on an individual basis with the individual plans, you're kind of bound by plan F, plan G, the letters, basically, the standardized plans that are out there. However, on a group basis, you can customize the benefits so that it mirrors, comes as close as possible or beats, matches or beats what's currently in place. So you eliminate as much disruption as possible because retirees generally don't like change, actually, people don't in general anyway. But you, you, you kind of move them to a plan that they're sort of already used to, but you're getting them into benefits that relate more to them, whereas active plans kind of accommodate working around Medicare, whereas these specifically work with Medicare. And then to go back to your other point, your question before, how do you know if a plan's working or not or that type of thing? And I know from, from my standpoint, obviously, you know, there's a renewal season that happens every, you know, renewal season that happens, you know, actually right around now from like July to now, basically, you know, on 1 1. But the, you, from my standpoint, no news is good news. So if you don't hear anything from the broker, the retirees, or, you know, from our service center or anything like that, that there's anything kind of quote unquote wrong or there's a problem, then usually no news is good news when it comes to that.

What are you seeing on the leading edge right now? So I'm going to ask you to put your crystal ball in front of you. Put your Nostradamus hat on and look ahead maybe three to five years and you look at retiree benefits. Are you seeing any big changes, innovations coming down the road that advisors need to be coming cognizant of?

I would think that still on the group Medicare supplement side, they're still going to try to figure out a way to add more of the benefits that a Medicare Advantage plan can add on to so that they can compete more with those plans and work on their pricing. Because sometimes it's, it's a pretty dramatic difference between what is offered on each platform when it comes to that. And I would think also there's a part of me that thinks that there might actually be more of a shift for more groups to entertain going back to Medicare supplement as opposed to group Medicare Advantage just because again, it depends on the group. But if they just don't want to have to worry about any network disruption or anything like that, then that would be, you know, probably the direction, you know, looking to potentially go.

Awesome. You know, let's pivot here as we wrap this up.

Sure.

Now let's talk about working with Benistar. Number one, if I'm an advice. What it, what does a, how do I say this? What is your ideal agency look like? If you could, if you could define, okay, these are the type of agencies we typically love to work with and are a great fit based on what we do. What would that ideal agency look like?

Well, there's two. Two ways at least for me, how I look at it. I like working with agencies in a local area because. And it's. It's kind of like they, they have kind of like this not stranglehold, but they've got a. The ear and eyes of that local market. So it would be. And they don't really have a lot of offices maybe really anywhere else, but they've got a. Everyone knows to go to those guys and you know, so I like working with. With those types of agencies because they tend to have the control over either the municipalities or that type of thing. Then there's also working with the national houses as well because it's a little bit of a mixed bag when it comes to working with both of them. They're both good either way. But the national agencies where we can have arrangements where we're working with one particular office, but they've got the whole region kind of tied in through them where they're funneling all their business into either this one region or nationally or whichever. And that way you're working not only groups because I'm in the Chicago area, but my territory is everywhere. But I'm working in North Carolina, California, Texas, it doesn't matter. North Dakota, South Dakota, Wyoming, wherever. I have the ability to kind of do any of that. And working with the national agencies allow me to kind of branch out and work with. With those agencies. But you know, attending conferences and things like that, you run into people all the time.

Well, I think. But I think your point's well made. You know, if you're a. An independent agency that's very geographically driven. Right. You're very centralized somewhere.

Right.

You'll often find they may have the local municipality, school district, things like that. But to your point, because of the way a lot of public sector works, they typically tend to go with the bigger organizations for the sake of the fact that are bigger organizations. And that's where you often find your. I'm sure you guys are doing a lot of work with some of the larger agencies in the country. You guys also have a different. How do I describe this? You're not like the traditional carrier as far as how you partner with agencies. Talk about, talk about that a little bit. It's a different approach than what most may think. Think of carrier part.

Yeah, we've been referred to kind of as a broker's broker. Okay. And. And third party administrator. So we have the ability to Not. And that was kind of one of the things that was appealing when I came over to these guys was I don't have to be not stuck with, but not working with just the one carrier's products. Now I can work with anyone's products.

Yeah.

And you can get the best solution overall, whether it is Group Med, Supper Group Medicare Advantage, and are we doing, you know, Medicare Advantage with the Part D attached to it from that particular carrier or are we attaching one from another carrier where it's two that are merged together and then with the administration backed on top of it? And the fact that we're United States based in Avon, Connecticut, you know, and we don't rush retirees off the phone or any of that stuff. And you can do list billing, split billing, direct billing. And one of the other things that's appealing to the brokers too, because there's been a lot of upheaval, at least on the individual side, is that we can pay new and renewal commissions. So that's another thing that, you know.

Really good to know if somebody was tuned in and was unaware of you up until this point and said, all right, I have a couple clients or I may have some prospecting opportunities where I could drive a wedge here. What is the easiest way to get a hold of you, Ken?

Through email or they can call my cell phone. Either way it doesn't matter. You know, K. Peterson.

That's Peterson. S O N. Yeah.

And Peter and not P E D. Right, right.

Well, this has been. Thank you, man. I appreciate this. I wanted to have you on because again, I know when I first met you 14 years ago now, I was completely unaware of this world cause called post 65 retiree benefits and it had a big impact on some of the clients we were working on. So I'm sure there are plenty of advisors in the industry right now who either are unaware, maybe on the periphery, but not leveraging it like they should. And I'm hoping learning more about what you do is going to be super helpful for them. I hope you get some people reaching out to you after this episode.

No, I think thanks for reaching out and having this conversation. And it's, you know, it's good to see you again, as usual.

Yeah, likewise. Be good, everybody take advantage of this. If you've got post 65 retirees on plans you are administering today or you are working with prospects who do use Benestar, this is a big opportunity for you to create a nice benefit for those folks and a good cost containment strategy for the client. Be good.