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Lindex Online® – Hitting the Mark in Iowa

Lindex Online“Torture the data, and it will confess to anything.” Ronald Coase, Nobel Prize Laureate

Throwing darts at a dartboard takes great skill, especially if one is incented to consistently hit the bulls-eye. For most others, it is merely a game of chance – so what if the errant dart lands in a different zip code from the bulls-eye? The difference between those throwing the darts can boil down to one word – ‘motivation.’

Due to the sheer cost of offering benefits to employees – thanks largely to escalating health insurance premiums – employers are increasingly motivated to rely on credible, localized data to make decisions about employee benefits. According to the Bureau of Labor Statistics, the cost of employee benefits constitutes a significant percentage of total employee compensation – roughly 31 percent for private organizations and 36 percent for state and local governments!

An essential, on-going source of Iowa benefits information is summarized in our annual ‘Iowa Employer Benefits Study,’ which now enters its 17th year. This report provides overall statewide data that combines all industries based on employer-size categories, which is important for employers who wish to benchmark their plans with other similar-sized employers. This study gives employers a ‘birds-eye’ view of overall benefits offered by Iowa employers, but it does not compare employers to key industries – or by employer location.

But Lindex Online® does!

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Lindex Online is our innovative web-based tool we designed to ‘slice-and-dice’ the myriad of data from our annual survey into meaningful benchmark information that compares key benefits offered by employers.

Lindex Radius

Lindex Radius is a benchmark filter

An online purchaser, such as an employer, broker/consultant, association or insurance carrier selects a ‘filtering’ tool that compares the client organization to six key industries – based on seven different employer-size categories. Additionally, the on-line purchaser can benchmark their benefits using the Lindex Radius, which combines only those surveyed employers who fall within a designated mile-radius of the client zip code (see Lindex Radius on right).

Key benchmarked industries include:

  1. Overall (All industries combined)
  2. Manufacturing
  3. Retail
  4. Finance, Insurance, Real Estate
  5. Other Services
  6. Government and Education
  7. Healthcare and Social Services

Depending on the number of respondents within each survey, we may consider adding a few more industries to Lindex Online in the future.

Because employee benefits data can be both voluminous and complicated for an employer, Lindex Online distills this data into one relevant number to provide clarity – known as the Lindex®.

2014 Lindex Gauge

Overall 2014 Lindex score in Iowa is 74.

The Lindex is a complex algorithm that measures the types of benefits offered, preferences employees have for each specific benefit, and employee costs associated with those benefits. Ranging from 0 to 100, with lower scores indicating fewer and more expensive benefits, and higher scores indicating more comprehensive benefits being offered at a lower cost, the Lindex allows the benchmarked employer to compare their overall benefit offering to other employers on an on-going basis.

Without great practice (and torture!), Lindex Online will guide your dart to the intended bulls-eye. To learn more about the features and cost of Lindex Online, please contact us.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

Business Relevancy – A Matter of Life…and Death

Resisting Change Leads To Obsolescence or Death

Resisting Change Leads to Obsolescence or Death

“The reports of my death are greatly exaggerated.” Mark Twain

In 1897, when reports of Mark Twains’ (Samuel Clemens’) death were misconstrued, Twain made his famous quip to a reporter who had inquired about his health.

Such premature reports about one’s demise can be similar to reports about a particular product or profession.

Having relevancy in business truly matters, especially when economic and social climates continue to shift in unchartered territories. One glaring example of this can be found in a profession that I have some knowledge about – the employee benefits brokerage business.

During the past five years, the word on the street and, within the brokerage community is that Obamacare is a major threat to their business model, which could eventually render their practice obsolete. Could this really happen?

It depends on the broker.

In the past, traditional benefit brokers, especially the small- to mid-sized organizations, relied on ‘transactional’ services when serving their individual and employer-group clients. Within this role, brokers acted as the liaison between insurance companies and their clients, seeking numerous products and services from a host of insurance companies that offered various benefits-related insurance products. As a result, voluminous information was subsequently placed into spreadsheets to ‘compare and share’ the features and prices of products. Client involvement usually escalated at the end of this acquisition and implementation process.

Today, this customary role is merely one of many multiple services that brokers must now partake in order to differentiate their services (and value) from other competitors and emerging disruptive technologies. To avoid being displaced, brokers are constantly forced to find new value-added competencies that will enable them to:

  • Embrace adaptation efforts in an ever-changing environment (including technological advances).
  • Anticipate and identify new industry trends before others do.
  • Mask the complexities of new laws and regulations through continuous compliance education and communication efforts with clients.
  • Serve as an indispensable resource on relevant information and data.
  • Initiate creative solutions in an otherwise mature industry.
  • Stay close to the client and develop an emotional connection that elicits trust.

In short, the reports regarding the death of benefits brokers are greatly exaggerated, at least for those who proactively serve their clients and are well-positioned to take advantage of new opportunities.

Business disruption is clearly not exclusive to the brokerage world. In fact, it is rampant in most every other segment of our economy. The disruption of a product, business model or entire industry can happen relatively quickly, especially when innovative technology initiates a simpler life that allows greater affordability for those who have a ‘job’ to do.

Having an energized mind that continues to learn new things every day is a good start to becoming a knowledgeable thought leader within a given profession or industry.

In fact, it’s imperative.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

Shifting Health Costs to Employees – Pre vs. Post ACA

Consumer-Driven Health Care in IowaAccording to various media reports and a recent USA Today article, Americans continue to pay more of their own healthcare costs.

But there was one sentence in a December 3, 2014 Wall Street Journal article that got me thinking. The sentence reads: “The trend is being accelerated by the Affordable Care Act (ACA) because many private plans sold by the law’s health exchanges come with high-deductible health plans.”

Can this be true? If so, what is happening in Iowa with employer-sponsored health plans since the ACA was passed in 2010? From our vault of study data, I decided to perform a quick ‘audit’ of pre-and-post ACA trends in Iowa on this particular issue.

My findings appear to be a bit different than conveyed by the WSJ article – at least for our state of Iowa.

To clarify, our survey does not exclusively analyze the health plans offered within health exchanges. After all, the ‘public’ exchange has only been operating since the beginning of 2014. But rest assured, because we randomly select employers to participate in our surveys, a few employers may have purchased their group health plans through the Iowa Partnership Exchange and participated in our 2014 survey. Realistically, a scant number of these employers would have affected our overall findings.

PRE and Post ACA Deductibles
The chart below illustrates the average single health plan deductibles offered by Iowa employers during the period 2005 to 2014. All group medical plans within our data include PPOs, HMOs, Indemnity and consumer-driven health plans. Looking at the five-year period prior to 2010 (the year the ACA became law), the deductible increased from $750 in 2005 to $1,061 in 2009 – an increase of 41 percent. Yet, when we look at the five-year period that follows 2009, the deductible growth appears to be more tame – increasing only 13 percent ($1,247 in 2010 to $1,410 in 2014).

All Medical Plans DeductiblesPNG

Many key ACA provisions did not take effect until sometime after 2010, so we cannot completely comprehend how the ACA will ultimately impact employer-sponsored plans on cost-sharing arrangements and cost. When attempting to clearly understand the ACA impact, this comparison is only one of many metrics that will need to be assessed in the years to come.

PRE and Post ACA Out-of-Pocket Maximums
Similar to the above deductible chart, the chart below illustrates the average single out-of-pocket maximums (OPMs) offered by Iowa employers from 2005 to 2014. Again, the five-year period prior to the 2010 ACA implementation year shows that OPMs increased by 19 percent, compared to 13 percent since 2010.

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There are many variables to consider that are not addressed in this blog, such as average health plan designs within the public exchange versus outside the public exchange. Assuming a healthy number of employers enroll in the public exchange, it will take a few years to have a better accounting of such differences. At this point, plan design changes continue to show additional cost sharing with employees and their dependents, just not at the accelerated pace that some may think.

What will the future eventually reveal about our ever-changing health insurance world? Stay tuned…

To learn more, we invite you to subscribe to our blog.