Why Employee Insurance is a Key Benefit in Recruiting and Retaining Talent — Quentin Moses

It is no secret that the ongoing labor shortage has presented small businesses with unprecedented challenges. Savvy companies have retooled and beefed up their benefits offerings to remain competitive, and insurance has been a key component of those changes. On this week’s episode of The Playbook, host Mark Collier, area director for the UGA Small Business Development Center, is joined by Quentin Moses, an Independent Licensed Agent focused on serving the insurance needs of small businesses, and we’re going to discuss how to evaluate group plans for businesses.

Transcription:

Mark Collier:
Welcome into The Playbook, Quentin.

Quentin Moses:
Thanks, Mark. Thanks for having me. It’s a pleasure.

Mark Collier:
All right. Well, as I said in my lead in, insurance is a big deal to small businesses.

Quentin Moses:
Yes, it is.

Mark Collier:
Well, before we launch into that, kind of give me a little background on yourself, for those of my audience who don’t know as much about you as I do, kind of give me a little background on yourself.

Quentin Moses:
Oh, okay. Okay. Well, grew up in South Jersey, Atlantic City, somebody had to. And went to Livingston College, part of Rutgers University. And thought I wanted to be a doctor, so I went to med school in Newark-

Mark Collier:
Interesting. Okay.

Quentin Moses:
… for a few years, and then got into, actually got a healthcare company, Nutritional, and grew that. And about 1979, 1980 got recruited because I was pretty good at sales, and ended up on Wall Street.

Mark Collier:
Ah, okay.

Quentin Moses:
So as we were saying a little earlier, I was there in 1980, the last time we had an inverse yield curve, and looking at situations similar today.

Mark Collier:
Oh, yeah.

Quentin Moses:
And so, I stayed there and then about… Moved to South Florida, and ended up coming to Atlanta to be with family, and have been an Independent Agent with HealthMarkets since 2006.

Mark Collier:
Oh, phenomenal. All right.

Quentin Moses:
Yeah, yeah.

Mark Collier:
So, we’re going to dive right into it, man.

Quentin Moses:
Cool.

Mark Collier:
A lot of entrepreneurs watch my program, so they probably ask themselves, “Why do I need group insurance now if I only have a few employees?”

Quentin Moses:
Ah, because your biggest problem to retaining employees, they want benefits.

Mark Collier:
Yes, they do.

Quentin Moses:
So, when you’re a small business owner and you’re hiring people, you’re really a mentor.

Mark Collier:
Yes, you are.

Quentin Moses:
And that first year, two, three years, they’re learning everything from you. So your biggest risk is if they leave you after two or three years, and the number one benefit that employees want is health insurance.

Mark Collier:
Yes, they do. Yes, they do.

Quentin Moses:
So I tell my small business owners all the time, “You don’t really want health insurance for health insurance. You want it to retain employees.”

Mark Collier:
Makes sense. No, that makes sense. The market for labor is competitive nowadays.

Quentin Moses:
Very much so.

Mark Collier:
So the better job you can do at presenting benefits to employees, actually benefits they actually want-

Quentin Moses:
Yes.

Mark Collier:
… the more competitive you’ll be in not only attracting but retaining them.

Quentin Moses:
Yes.

Mark Collier:
All right.

Quentin Moses:
Yes, you’re absolutely right.

Mark Collier:
Makes sense. So let’s talk about cost. All entrepreneurs are concerned about that bottom line. So how much does losing an employee actually cost a business owner?

Quentin Moses:
To replace an employee actually costs about a third of their salary.

Mark Collier:
Wow. That’s an eye-opening number, Quentin.

Quentin Moses:
That’s a huge number.

Mark Collier:
Eye-opening number.

Quentin Moses:
So if you think about that for a second, and you’ve retained that person for two or three years, then they walk in and say, “Oh, by the way, I’m going to your chief competitor because they’re offering health insurance.” The health insurance would have been very inexpensive-

Mark Collier:
Got it.

Quentin Moses:
… to start in the beginning.

Mark Collier:
Got it, got it.

Quentin Moses:
So yeah, that’s why you want to have it in place.

Mark Collier:
All right. Well, I’ve talked to a lot of employers, kind of clients of mine, and I consistently kind of repeat the mantra that it costs much more to hire a new employee than it does to retain one.

Quentin Moses:
Oh, that’s so true. That’s so true.

Mark Collier:
So back to what you said, losing an employee is going to cost them that eye-opening statistic of a third of their salary, man. Hopefully that’ll get some of these guys’ attention now.

Quentin Moses:
Oh, definitely. Definitely.

Mark Collier:
All right. So, how many full-time employees do I need to start a small group plan here in the state of Georgia?

Quentin Moses:
Oh, that’s a good question, good question. Well, in Georgia, you really only need two W-2 employees.

Mark Collier:
Two W-2 employees, okay. Interesting.

Quentin Moses:
1099s, they don’t really count.

Mark Collier:
Okay. They don’t count.

Quentin Moses:
You’ve got to have W-2 employees.

Mark Collier:
Got it.

Quentin Moses:
And once you have two full-time employees, well, I guess to define small group, if you have less than 50 employees, you do not have to provide health insurance.

Mark Collier:
Okay, so it’s not mandatory.

Quentin Moses:
No, it’s not mandatory.

Mark Collier:
But as you said earlier, it’s a good idea.

Quentin Moses:
It’s a good idea.

Mark Collier:
Okay.

Quentin Moses:
If you have more than 50 employees, full-time employees, and you can talk to your accountant about how you define full-time employees, but you have to offer something. But under that, you don’t.

Mark Collier:
Okay.

Quentin Moses:
So with two employees, you can start a plan. But what’s interesting is you have access to the same plans that all the major companies do.

Mark Collier:
Aha. Okay. Very good.

Quentin Moses:
You have access to the same plans that Coca-Cola does, or Chick-fil-A or something like that.

Mark Collier:
Very good.

Quentin Moses:
The rules are essentially the same.

Mark Collier:
Okay. Very good. So let’s talk about some of the vernacular within the group health insurance business. Qualified health plan, I hear that term a lot.

Quentin Moses:
Okay.

Mark Collier:
Why don’t you kind of define it for us and let us know what it means to small business owners.

Quentin Moses:
Okay. Well, health insurance, even though it’s regulated state by state, these rules for qualified health plans are set up by the federal government.

Mark Collier:
Got it.

Quentin Moses:
So there are three qualified health plans. One is group insurance.

Mark Collier:
Okay.

Quentin Moses:
Another is ACA, be it Obamacare, or state run plans and Medicare.

Mark Collier:
Okay.

Quentin Moses:
So the federal government sets up the rules. So we won’t talk about Medicare, but we’ll talk about group and individual. So what that says is, if you’re a person, if you’re a 45-year old person in Georgia, it doesn’t matter if you’re a male or female person or any other sort of person, or if you can run 18 marathons or you have Stage IV cancer, the premiums are exactly the same for the same plan.

Mark Collier:
Interesting.

Quentin Moses:
Which is interesting. Now, California is going to cost more than Georgia because of the cost of healthcare, but that’s it.

Mark Collier:
All right.

Quentin Moses:
Also, it’s saying that all of your preventive care is zero.

Mark Collier:
Okay.

Quentin Moses:
So your annual exam, lab, x-ray, mammogram, pap smear, colonoscopy, all that is zero.

Mark Collier:
That makes common sense.

Quentin Moses:
Yes.

Mark Collier:
Because it costs much less to prevent a problem than it does to treat one.

Quentin Moses:
So your preventive care is included. Also very, very important, for one person on that plan, the out-of-pocket maximum, which is again one of these federal terms, is $8,700 for 2022. It goes up a little bit every year.

Mark Collier:
Got it.

Quentin Moses:
But that means if you had a million dollar bill, the most it’s going to cost you is $8,700.

Mark Collier:
Okay.

Quentin Moses:
And twice $8,700 for your family, whether there’s two people in the family or eight people in the family.

Mark Collier:
Got it. All right. So let’s talk about group health plan versus individual health plan. Talk to me a little bit about the tax advantages between those two.

Quentin Moses:
Ah. Group health insurance is the number one tax shelter in America.

Mark Collier:
Is it?

Quentin Moses:
It has been around, oh my gosh, since the fifties.

Mark Collier:
Okay.

Quentin Moses:
And so, what happens is, you as the employer, for the full-time employees that you have, you have to put up a minimum of 50% of the premium.

Mark Collier:
Got it.

Quentin Moses:
So if that premium is $500 a month, you put up $250, they put up $250.

Mark Collier:
Okay.

Quentin Moses:
But the big deal is your $250 is a write-off, their $250 is pre-tax. It comes out of their paycheck before they get it.

Mark Collier:
Understood.

Quentin Moses:
So even if they got the same, exact, individual plan deductible, everything was exactly the same, they’re going to be paying more because they’re using after tax dollars.

Mark Collier:
Got it. Got it. Why do I have a 95% chance of saving 40-60% on my small group plan versus a fully insured plan?

Quentin Moses:
Ah, great question.

Mark Collier:
Break down those numbers for me.

Quentin Moses:
Okay. Let me break down the numbers. And this is actually global.

Mark Collier:
Okay.

Quentin Moses:
Even though we’re in America, these same numbers work around the world.

Mark Collier:
Okay.

Quentin Moses:
So here’s what’s interesting. When you’re looking at the market under 65, think about all the employees in America under 65. 95% of those employees only make 5% of the claims.

Mark Collier:
Got it.

Quentin Moses:
Think about that for a second.

Mark Collier:
Oh, yeah. Yeah.

Quentin Moses:
So 95%. So what the heck is the 5% doing? So the 5% of the employees are making 95% of the claims.

Mark Collier:
So it’s kind of a play on the 80/20 rule, but with-

Quentin Moses:
Much more extreme.

Mark Collier:
Yeah, probably much more extreme.

Quentin Moses:
Much more extreme. And what happens is when you kind of drill down to look at that 5% making 95%, most of those sicknesses have to do with cardiovascular disease.

Mark Collier:
Yeah.

Quentin Moses:
It’s cardiovascular and cancer.

Mark Collier:
Right. Both top two killers in the country, right?

Quentin Moses:
But with cardiovascular disease, you have some control.

Mark Collier:
You sure do.

Quentin Moses:
So think about not smoking.

Mark Collier:
Yeah.

Quentin Moses:
Okay? Which will… Let’s think about changing your diet.

Mark Collier:
Yeah.

Quentin Moses:
Let’s think about exercise. Let’s think about just being calm and not getting all stressed out about things you can’t control.

Mark Collier:
Those are all the common sense things that your doctor talks to you about it each time you go to visit, huh?

Quentin Moses:
Think about pre-Covid, and think about the big companies. We’ll talk about, since we’re here in Atlanta, Coke. Well, what did they do? They would come in and put gyms in and want you to work out in the gym.

Mark Collier:
Oh, yeah.

Quentin Moses:
And if you quit smoking, they’d write you a check and things like that.

Mark Collier:
That’s right.

Quentin Moses:
Because those companies are self-insured.

Mark Collier:
Sure.

Quentin Moses:
And what they mean is that if you go in the hospital, they’re writing the check.

Mark Collier:
Right.

Quentin Moses:
So they’d rather pay you not to go in the hospital.

Mark Collier:
That’s true. Makes perfect sense. All right. Let’s talk about refunds for a minute. I don’t know if that’s the proper term or not, but can I get money back from my health insurance carrier at the end of the year? And if so, how?

Quentin Moses:
Well, good question. So when we go back to that, why you can save so much money is because they’re fully insured plans versus level-funded plans.

Mark Collier:
Okay.

Quentin Moses:
So what that means is that fully insured plan, the insurance company is taking a hundred percent of the risk. So when I’m talking to a small business owner, I simply say, “Well, let’s do a census and get a quick, what we call, a easy app.”

Mark Collier:
Sure.

Quentin Moses:
It’s kind of an underwriting.

Mark Collier:
Okay.

Quentin Moses:
It takes five minutes on the employee’s phone. And the insurance company comes back to me and says, “These are hard numbers.”

Mark Collier:
Okay.

Quentin Moses:
Same companies. So deductibles, out-of-pocket max, everything, same network, same everything. In fact, I just did one for a group, there’s only three employees, 50% difference from the same company for the premium.

Mark Collier:
Interesting.

Quentin Moses:
So what people say-

Mark Collier:
50%, that’s sizeable.

Quentin Moses:
No, it’s not a little number.

Mark Collier:
That’s sizeable, yeah.

Quentin Moses:
No, it’s huge. So what ends up happening is, for most folks, all kinds of insurance, they have what’s called a claims pull. So let’s make the math easy. Let’s say you had 10 employees. It’s $500 a month per employee, $5,000 a month, $60,000 a year. There’s $20,000 sitting in the claims pool. So if there’s a million dollar hit, there’s not going to be anything in the claims pool.

Mark Collier:
Right.

Quentin Moses:
But that’s why you have reinsurance in place. But for the most part, the things that cost money are babies and mental health and substance abuse.

Mark Collier:
Absolutely.

Quentin Moses:
Most folks aren’t having that with most businesses.

Mark Collier:
Right.

Quentin Moses:
So let’s just say, for example, it’s normal, and there’s $10,000 left in that claims poll. At the end of the year, the insurance companies split the money with you.

Mark Collier:
I love it. I love it.

Quentin Moses:
Yeah. So you can get that money back. It doesn’t happen all the time.

Mark Collier:
Okay.

Quentin Moses:
And also, what’s very powerful is the renewal rates tend to be one-third of renewal rates of fully insured plans.

Mark Collier:
All right. So let’s talk about timing. When can a small business set up a small group health insurance plan for their companies?

Quentin Moses:
Oh, great question.

Mark Collier:
Anytime?

Quentin Moses:
Anytime.

Mark Collier:
All right.

Quentin Moses:
Anytime, all year round.

Mark Collier:
Okay.

Quentin Moses:
So right now, we’re getting into this period, which is the open enrollment period.

Mark Collier:
That’s right. That’s right. Yeah. We got an email at my organization that open enrollment is happening on November 1st.

Quentin Moses:
So what’s a little confusing is there are two types of open enrollments.

Mark Collier:
Okay.

Quentin Moses:
So 80% of employers have open enrollment on a calendar year. ACA or Obamacare is on a calendar year, too.

Mark Collier:
Okay.

Quentin Moses:
So if you want an individual plan, you need to sign up between November 1st and December 15th to make it happen.

Mark Collier:
Right.

Quentin Moses:
But your larger companies work on the calendar year, of course, is simple.

Mark Collier:
Sure.

Quentin Moses:
But you as a small business owner can set up a… So you could set up, it’d make it a little tight now, but let’s say November 1st.

Mark Collier:
Right.

Quentin Moses:
You set up your own fiscal year from November 1st, 2022 to October the 31st-

Mark Collier:
Next year.

Quentin Moses:
… 2023. And you lock that in. So you can start anytime.

Mark Collier:
Okay. I love it. So for small businesses who want more information can get in touch with you. We’re going to scroll your website at the bottom of this call. Do you want to say your phone number so they can reach you?

Quentin Moses:
Oh, sure. They can reach me at 404-492-7942.

Mark Collier:
Fantastic. Quentin Moses, Independent Licensed Agent, focused on the insurance needs of small businesses, I want to thank you for taking the time out of your busy day. Insurance is something that’s not often talked about in small business circles, but it’s vitally important-

Quentin Moses:
Yes.

Mark Collier:
… for a lot of the reasons that you enumerated today.

Quentin Moses:
Yes.

Mark Collier:
And I’m sure small businesses who are watching today will gain great information.

Quentin Moses:
Mark, thank you so much. Thanks for the opportunity.

Mark Collier:
All right.