Prefer to read? (Transcript)
Speaker 1 00:12 Hey, good morning. Happy Saturday. Welcome to another show. Business legal talk with Leah. Claudia. Good morning. Wakey wakey wakey wakey Hey, what’s up Claudia? And how you doing? Summertime. Summertime come out. It was coming up soon though. Its kids. I can’t imagine where’s the summer go? Well, you know what? Okay, so my husband and I were talking about this the other day. Um, when we were kids. I didn’t know that was a number of moons ago, about 10 years ago. At least 20 minutes. Um, but anyway, we, when we went back to school, it was the Tuesday after labor day weekend. Right. Do you remember that? Maybe? No, no. You a lifetime ago. Yeah. You were in school a lifetime ago. You were in a different, different place. Literally. But w so we, so that was the traditional, that’s why labor day weekend was the big deal. That was your last hurrah, you know, after, after labor day weekend.
Speaker 1 01:02 Then you turn around, you went to school on Tuesday. What? Yeah, for sure. So now the kids, my kids were going to school. I remember they used to start like the third week of August and I can remember thinking, man, that’s kind of stinks for them. I mean that’s kind of a bummer cause they were going to school so early, but this year I know Turlock schools were starting. Um, like the second week, the 10th I think. And the surrounding just falling back. I mean pretty soon it’s going to be July. Right, right. So it’s crazy that kids are going back to school right now. It’s so just, yeah, in summertime for us, I can remember summer we had a full three months. I remember we used to get out in the first week of June and we didn’t come back to school until the Tuesday after labor day. And that labor day weekend was like the big, you know, hang out in pool party and hang out with the kids and friends and stuff. And then now these boy, the boy, the kids have a lot of fun stuff now that we didn’t have, but they sure have a short summer. Yeah, just
Speaker 2 01:57 seems that way. I have now going to have two in high school and one in college. Can you believe that? Wow. I know my college. Thank you. I feel it in my wallet and I feel it in my heart. So yeah, I’m excited. I mean it just, just the different, we’re going into different season of life and um, but in fun season it’s a fun season and we’re enjoying it. And uh, you know, we’ve taken time off. We’re going to, um, go on vacation next weekend. So we’re really looking forward to that right before they go back to school. So we have a great show for you today. If you’re listening to, Hey I, you know, use buckle up buckle, you’re going to be talking about something very, very important in timely health insurance. Just insurance in general. So we have a Matt here from BRS.
Speaker 2 02:43 We’re going to be talking about him, uh, in the next segment. But I’m really excited because you know, there’s just, I don’t know about you, but I have a lot of questions regarding health insurance, you know, candy, when to get it, can we afforded, what does it look like? And what I like about Matt is, and his company is that they just really are very, um, thinking like business owners. How do we, cause they understand what we go through on their side. They don’t understand that it costs money. So, so, so that’s calming. Um, Hey, any updates? I know we had a great show last week, we talked about cyber security and um, how important it is for you to have great FICO and access to credit, you know, and you don’t go to the bank and you know, when you need money because it’s too late. All of this plays into having a profitable and sustainable business. Any updates on the, on the legal side?
Speaker 1 03:33 No, not, not, not too much is going on. We’ve just been, you know, plugging away, getting used to the new digs and um, I’m really, really thrilled with the response that we’ve had with our, with our new digs and, and clients being able to come by being a little bit more accessible, um, being in a little bit larger, um, environment. So yeah, no, it’s great. And boy, we are really anxious to just wrap up this year. Um, and, and just really get digging. So if anybody needs anything, if you have any questions, anything coming up, we, um, I would like to kind of just give a shout out to business owners as you are coming into fall. This is the time that you wanna start talking about tax planning. You don’t want to wait until December. I know this is probably a
Speaker 2 04:21 brilliant. Bring it. Yes. It’s a huge thing. Yeah.
Speaker 1 04:23 So it’s going to be, it’ll be October before we know it. I mean we are now admitted into August. We will be in September and boy, you don’t want to wait past October to start scheduling your appointments.
Speaker 2 04:36 C never fails around middle to end up. Generally every year I get calls from business owners is, Hey, you know, is there anything I can do to fix my 2000, my last year’s tax or my financials? I’m like, we should have been having this conversation six months ago. Yeah.
Speaker 1 04:52 And the, the, the what, what happens for people like in my industry, your industry, the CPAs tax prepares is that the people who are planning are making the appointments and so don’t cry when you can’t get the appointment because you started in December and there’s only so many days in December and we do have the holidays coming up. So, you know, really honestly it for our industry, it does not hurt a bit to get on our calendar now. I mean if you call us and you want to be on the calendar in October or you know, November even we can, we can book that now. We don’t have to wait till the last minute. So if there’s anybody out there, please, please, please think about starting to book your appointment.
Speaker 2 05:30 If you’re going to, either you’re going to take your vitamins, if you’re going to use that analogy now, or you’re going to take pain medication later, right? Which would you rather have? Right? I don’t like pain. I don’t know about you, but I don’t like pain. I’d rather take my vitamins and vitamins as you know, it’s being proactive is just looking at your, you know, your state planning, your, your business planning, your legal planning and um, you know, if you have in a year and you know you’re going to have significant income, what a bit or if you already know that now, why wait until November?
Speaker 1 06:04 Well, and this is what we really want, want to work with our clients to do and what we really, really encourage them to do. And it’s great that Matt’s here to today because one of the things is when we do meet at the end of the year, um, certainly you should be meeting with your tax person, but we also would like to see you. Um, and we would oftentimes like to see you in conjunction with your tax person and your insurance person because we can talk about what happened last year, what’s going to happen this year? Are we intending to grow? Are we going to shrink or do we need more insurance coverage? Do we need less? And that is all part of, it’s not just tax planning, but it’s really planning for next year. And I can’t tell you how quickly October is going to be here. Right.
Speaker 2 06:45 And that goes, you know, here’s, here’s, you know, here’s something for you to think about. You should be planning, not just for mitigating what may not happen on the, on the, on the legal and insurance side, but you should be planning sales. Yeah. Fourth quarter. It’s big. A lot of companies need to close and wrap up their budgets, you know, for those who run their fiscal year is there, you know, the calendar year, right? You’re not knocking on their doors on November. If, you know, if you’re a, if you’re a sir, any service, you get your sales now, I mean it’s, it’s, you know, unless you’re in a business that customers come to you, the rest of us, we have to go get clients, right? So just, just be mindful of that. So I know on our side, I had a question for you. So, um, I know there was a lot of, you can answer it. I know you can. So anything later on at this 10 99, the back hole in, in, in the new things going on with the W2’s, uh, H have you heard anything more from them?
Speaker 1 07:41 No, I’m there. It just recently got pitched to the California Supreme court to decide whether or not it was going to be retroactive. And I think that was a week or two weeks ago. Um, that there’s always been a question whether or not the Supreme court ruling that came out last year. Was that going to be a retroactive, um, ruling? And there’s been, so there’s been some debate in the lower courts, whether it was gonna be and now, um, it’s been popped to the California Supreme.
Speaker 2 08:10 So social, so far that is scored. Nothing new,
Speaker 1 08:12 nothing new. Although it did make it’s way from the legislative point of view, it didn’t make its way to the, the California’s Senate.
Speaker 2 08:19 Okay. We got two minutes to break. So, Hey, let’s start to, okay, so who do we have today on our show? Well, here are going to go to do my best to give you the proper respect. So Matt Webb is a client services manager to BRS financial group. He works primarily with business owners. Yes. Our crowd to develop an employee benefits package that meets their specific goals. I mean it sounds great. Um, whether it is to save money, I like that recruit or retain top quality talent and simply comply with current laws. Matt helps his clients to find the solution that is right for them. Wow. What is this guys? You know, where were you when I was in high school anyway, he was younger. He spends his days visiting client’s sites and getting to know the employees. This guy is the real deal in educating them.
Speaker 2 09:01 That’s the thing about mad that I like education. He educated on the benefits plans for their employees, including medical, dental, vision, disability and retirement. Matt grew up in Clovis, California and it’s a Clovis high school. Cougar. Whoa. He earned his bachelor’s in science, um, from Cal poly San Louis. Come on slow. Don’t mess. Yes. Yes. That’s great. So, um, he has been in financial services for over seven years. We’d experienced any investment banking, individual financial advising and group benefits management. He’s married to his beautiful wife, Alicia Ashlyn. Ashlyn. Oh, I apologize man. Please don’t hate me. I’m going to Ashlyn. So in they have one four year old baby Luna. So welcome to the show Matt. Thank you so much. It’s great to be here, dad. This guy sounds good. That voice, every everybody out there in radio and something else. Something else. Keep talking. Settle in, enjoy the voice of radio but not the face of it. Right. So we’re very great to have you on our show map. We’re going to get into it in the next segment for right now. So the topic for this for today is insurance. And why should you listen to business owners out there? If you’re driving, you need to come back and listen to us. You listen to business legal talk with Leah, Claudia, and we’ll be right back.
Speaker 3 10:18
Speaker 0 10:34 all right, welcome back. So
Speaker 2 10:50 he sure is. You are listening to business and legal talk with Leah, Claudine, where we are all about helping you be profitable and sustainable. So both apply to Matt. So Matt, tell us about yours yourself.
Speaker 4 11:02 Yeah. So thank you for that introduction. I really appreciate it. Although Leo, I do have to tell you, I have a fur baby, not a F a four year old baby. My wife would get mad if I didn’t correct you on that. Oh gosh. We left for babies. Yes. I try to read your writing man. I did my best, but you know, I take that’s on me. They ain’t no worries. So no, I appreciate that. Um, yeah, so I’m, I’m mad with Bureau’s financial group and our firm focuses in two different areas. We focus on employee benefits. So specifically with that we generally are talking about health insurance, ancillary lines of benefits, dental, vision, those types of things that people think about. Uh, with that we also do executive compensation, business owners, specific exit strategies. Um, and then the other side of our practice is more of individual managed money, um, equity strategies.
Speaker 4 11:48 Yes. Talk to me about that. Yeah, so I mean, this is the reality that we have as the baby boomers are getting a little bit older. We have a lot of people who have been in business for a long time and they’re saying, Hey, we’re having a great economy. We are trying to figure out how we can get this money that we’ve built into this business out. And so we’re coming up with ways to, to help them sell the practice, to find those a, the find the way that they can, uh, incentivize people to stick around those next generation owners, the ways that they can get money out of the business in a tax favored basis. Um, beyond just your standard, you know, simple 401k with maybe some profit sharing. You know, how do you start talking about hundreds of thousands of dollars a year of getting money out of the ?
Speaker 1 12:32 This is a subject very dear to our hearts. Well, first of all, exit strategy is one that is dear to my heart in every scenario. I literally, every contract we get into, we want an exit strategy. Every relationship, you know, we want to plan, um, we talk about it with, um, employers all the time. When you hire, we kind of want to do that with an exit strategy in mind. So we want to hire correctly. So in the, in the event that we have to terminate, we’re terminating correctly. Um, and so it’s interesting that you bring that up because this is something that Leo and I have spent quite a lot of time talking about is how to take the business from that thing that you’re doing and you’re working all the time to now, you know, maybe retirement or do we want to sell the business? And, and how do you take your business from building it with sales in mind? Um, because a lot of people just don’t do that. A lot of times, you know, people, they get older, they retire, whatever, then they just quit working the business. The business goes away.
Speaker 4 13:25 Yeah, absolutely. And the other problem that I’ve seen, um, and, and had friends who have experienced this is they build this great business and then they find a buyer. Theoretically, if you can see my air quotes around that and then they, they haven’t really planned well enough in advance for how they’re going to get that cash out. New owner comes in, they tank the business and now that previous owner is stepping back in just to try to salvage what they had done. So planning ahead of time, finding ways to get money out early so you’re prepared for that is just a big part of the process and looking for ways to do it in tax efficient manner.
Speaker 1 14:01 Right, right, right. One of the things also we work with clients and it sounds like, um, it’s right up your alley. So this, this is really great that you’re here is that we’re talking to business owners about, um, you know, setting up buy, sell agreements early on, um, and not waiting till the very end. So for industries like mine, I can’t just sell my business to anybody, you know, obviously. So if, if something happened to me, um, you know, getting, getting those arrangements done so that there’s somebody to step in place. Um, of course, you know, we are obviously worried about the clients as well. They need to be managed. We don’t want them just wondering aimlessly looking for a replacement. Um, so to have that agreement ahead of time with somebody that we can trust is, is great. That’s great. Yeah,
Speaker 4 14:40 absolutely. And then our side of it obviously being the, how are we going to fund to this? Yes. So we partner find saying, okay, what’s the strategy? How are we actually going to fund this thing? Because at the end of the day, business owners are there to run their practice. Yeah. And try to be profitable and there’s only so many dollars, right. So where, where are the priorities? So go ahead. I see you have a question and you go, well, I’m, you know, I want to start getting into it. I mean, Matt, you’ve given him a lot of content and this is just, we can go in a lot of directions, but, um, I like to, um, get into the health insurance. Um, you did. Uh, I was very impressed with Matt. He, um, did quite a, it was quite complex situation and unbundling a PEO for a client and, uh, the way they went about it, um, it’s, it’s com.
Speaker 4 15:25 It was complex, right? And they were able to do it, you know, with flying colors and the client was very happy. But, so that’s really a unique, very few companies, uh, insurance brokers can actually pull that off. So kudos to you. Imagine to end a team. So as far as I go to, you know, Hey, isn’t this D, it’s part of a strategy, the, the, the benefit is a retention tool and all of that. But, um, what are some of the challenges, um, that you’ve seen out there that business owners are currently facing in regards to employee benefits? Yeah, so the, the big one we see right now is that all of our clients for the most part are talking about is just how competitive the job market really is. This is, you know, we are at a historically low unemployment rate and, and it is a as well as you have a, a generation.
Speaker 4 16:15 I’m part of that generation. I recognize that, that sees, um, company loyalty as not a significant part of their career. They’re not afraid to jump. And right now it’s that market where they can jump from company to company leveraging raises along the way. Right. And so one of the biggest things that we see as a challenge to business owners right now is just how do you recruit and retain, right? How do you actually find those people and then have the leverage to bring them over, not just giving them a large sum of money, right? Cause that’s, that’s gonna set you up for failure down the road if, if you’re just giving away the farm right now while the economy is good. Uh, the construction industry actually too is specifically, we’ve seen a lot of this just because in 2008 with the market going the way it did, so many people went out of the industry and then we’ve had this push towards higher education.
Speaker 4 17:04 So the trades have taken a hit with that as well. So construction industry, especially right now is just dealing with this lack of employees heavily in the central Valley. Um, you know, I just looked this up right now. Um, I was curious, the employment rate in California right now for June was 4.1%. Now let me give you a little bit of history, right? In 2012 was 12% when I first moved to California in 1993 was 13 and a half percent. And I remember that for every, I mean this is where the four year college degree top of my class, I couldn’t land a gig to save my life. It’s, it’s a, it’s an entirely different
Speaker 2 17:50 situation. Now,
Speaker 1 17:50 it’s funny when you, when you go back and you say, you know, 13% in 2003 and then you know, 12% in in Oh seven is that
Speaker 2 17:59 90 I remember in 93 that I came in right out of college through a 13 and a half percent interest, uh, unemployment rate.
Speaker 1 18:05 So if you, if you have ever said to yourself, man, I feel like I’ve really been struggling for a long time. That’s why I mean, unemployment rate as is a is a cause and effect. It’s a direct, direct relation to um, you know, and it’s not just that 13% are unemployed, but it’s that scarcity of jobs where you don’t get to move, you don’t hop to the next job. Um, you don’t leverage that pay increase. Um, that is
Speaker 2 18:30 huge. So you’re in a different situation now. So we’re fighting, I mean if you’re the employer, you’re fighting over the talent. How do you attract and retain, know the top talent that you want and the benefits, which is why you’re here, you know, how do, how do companies, what are we, what do we need to do to be competitive in what, you know, I’m just curious, what have you seen out there to be competitive? What kind of tools or, or perquisites are employers using nowadays?
Speaker 4 18:59 Yeah, cause, and that’s a great question and that’s a question we get a lot, right? Because we can all come out and say, okay, small employer, um, here’s, here’s this platinum health insurance plan where the premiums are really, really high. It’s a great benefit. But now you’ve got the problem again that you’re committing to a really high benefit with a really high cost and let dollars, dollars aren’t unlimited, right? If $5 were unlimited, we’d all offer platinum health insure, right? Uh, that’s just not the reality. So we gotta work with what we have. So we’ve seen a couple of different strategies that people are using. Um, one of them, and I know Leo, you’ve kind of heard me do the pitch on this, um, that we’ve seen as a trend in the industry is moving towards first dollar benefits. Things where you’re, instead of these platinum style plans, you’re moving to bronze or silver plans and putting in, so you’re reducing those premiums, making it more affordable to bring dependents onto the plan. And then you’re putting in things like an HRA or what’s called a health reimbursement arrangement or an HSA health savings account, allowing the employees or the employer to put money away on a, on a taxpayer basis for the employees to pay the claims. Um, and one of the benefits of that is that it puts some of the onus on the employee to now manage their, their medical. So they’re starting to see some of the real reality of what health insurance costs. Right, right.
Speaker 1 20:22 So let me ask you, what did, um, quantify it in size of business? So w what is the smallest business that you’re seeing in terms of like five employees, three employees, two employees that are now beginning to offer, um, health insurance benefits?
Speaker 4 20:39 Yeah, so I mean, the smallest you can be is about two. We have to, in order to be considered a group, we have to have generally a, another employee. Okay. I think there might be one carrier out there that we can do it with, but generally you’re talking about to, um, owner and at least one other. Now, that doesn’t mean everyone has to go on it, but we generally have to have that. So that’s the smallest we see. Um, and then in the insurance industry, obviously you, you’re going up to tens of thousands employees, hundreds, thousands of employees. Um, what we deal with in the central Valley is more employees that are in the, you know, 15 to maybe 50 range. That’s your sweet spot or is that’s kind of what’s available. That’s what’s around here. You do get some that are in the hundreds and we have clients there as well.
Speaker 4 21:27 Um, and then then you get the really, really large companies where you’re talking about multiple thousands of employees and that’s kind of a different animal. Now you’re talking about fully insured, uh, sorry, a fully self funded health plans re-insurance. It’s kind of a different animal. There’s a lot more flexibility with what you can do. So when we look at our book generally just because of the market we’re in, where we’re working with, most of our clients are in the couple hundred down to, again, I have clients that are small as you know, two or three employees. So, so what, at what point is that, should a business owner start looking to work with a broker like yourself and move away from the covered California that the marketplace they refer to as the marketplace? Yeah, I mean it’s as soon as really you want to begin offering it from the company.
Speaker 4 22:16 So generally what kind of, what we find is that the first, if you’re taking on a client new who’s smaller, it’s generally the owner who wants health insurance and doesn’t want covered California individual insurance. Um, they may have one or two other employees. Those employees probably waive it cause they’re covered on spouses plans or things like that. Right. That would be kind of generally when we start seeing the conversation happen. Um, after that, once you get into the, I would say seven, eight, nine employees, maybe 10 employees, your general, your employees are really clamoring for it and expecting the company to offer it. So before that, you know, if you’re a smaller company, you’ve only got a handful of employees. It’s not uncommon for those employees to not really expect the company to do anything with health insurance. But from the , as you get a little bit bigger, that expectation does mean there’s an expectation that they’re there, you know, that is set as the bigger that you get. And if you’re unsure, you need to start talking to someone like you right away. So yeah, I mean at the end of the day, in the health insurance market specifically, um, there’s no reason not to use a broker. So we’re compensated based off of the premium and the premium is the premium. If you went directly to Kaiser, it’d be the same thing. So that’s a no brainer. So if you’re a business owner, you’re concerned about costs, you get expert advise the, you don’t have to pay for it, right? This is the best of both worlds. So
Speaker 2 23:46 that stopping you from looking for an insurance broker, then your, you’ve been, you had it all wrong. So I think it’s worth repeating. So, yeah. Yeah, absolutely. And that’s one of the beautiful things that we get to talk about in our industry, which is, um, there are very rare instances where I have a client actually write a check to our firm. Uh, generally we’re getting just paid by the carriers and we’re not adding loads. It’s not extra costs because of their working with us. It’s, it’s how the industry is designed, right or wrong to be able to provide benefits.
Speaker 1 24:13 Right. That’s amazing. I think so many business owners for up until, um, you know, we had covered California, this kind of open marketplace. We just didn’t really know where to go. I mean it, you finally, like you said, you get to a point where you’re, you’re at such a size that there’s an expectation and it’s like, okay, now I have to go do this. Um, but now we have, we are in a position where as a business owner, this is another tool that we talk about, um, of how we gained success. And their success is clearly coming through your employees. I mean anybody who doesn’t understand that your, the, the employees will make your break yet. Um, and if you have that offer to the employees, um, that is why they will come work for you as opposed to somebody else or stay with you and not leave.
Speaker 2 24:58 Absolutely. So, um, and that’s great. I mean I think is, um, it’s inevitable with the employment rate of 4%. We are fighting for talent. So, um, and you are in your employees out of reflection of you as the business owner. Be careful who you hire and if you’re gonna hire someone, give him, set him up for success. Right. And, and I think it’s just, it’s just is becoming the thing that I know that Matt has been involved in in at least one transaction and you know, he, he handles our stuff now and it just, um, I honestly, that’s an area that I stay hearing in. I know enough to say, ah, ready to talk to somebody who knows a little more. So there’s a bunch of other things. If you’re just tuned into this show, we’re talking about health insurance for businesses and what he means and what a competitive tool it is. If you do it right, we’re going to be talking about, um, how to evaluate carriers, how to partially sell fund and, and, you know, coming off of the brake hell thrust and a lot more. So stay tuned. There’s a lot more to talk about and hope you benefit and you’re listening to business illegal talk with Leah. Claudine. We’ll be right back.
Speaker 0 26:10
Speaker 3 26:21
Speaker 5 26:36 all right. We are coming back from break and we are with Matt today talking about employee benefits and specifically insurance and
Speaker 1 26:43 health insurance and other aspects of insurance benefits. So one of the things I wanted to talk to you about a little bit and maybe get a little know a little bit more about is um, the, the whole covered California thing, the marketplace. And it started off to be this, you know, amazing idea that people were going to be able to shop and in and it was going to be easy. You could shop really competitive plans and then now it gets tied in with your income and, and there’s that whole challenge because when you’re doing it in October in, unless you, if you’re a business owner, you’re not exactly sure what the income is going to be next year. And so you’re kind of predicting, because you know, if we did it on April 15th and we knew because we just filed their taxes. So we had an idea of, of what we were looking at. There’s a lot of sole props out. There are sole proprietors who don’t just actually take a check. Um, you know, if you’re a corporation, you ideally you’re, you’re getting a paycheck, but a lot of sole props don’t necessarily know what their income is, um, until they’ve done their taxes. Um, and so that’s, for me, it’s a whole challenge because now we have the income tied in with what can I afford because what I make has a difference is different on what your premiums are. So talk to us a little bit about that.
Speaker 4 27:58 So as people look at covered California, and when I say cover California, I’ll say specifically covered California for individuals, the individual marketplaces we talk about, um, that is a dynamic, right? So many people like it because of the ability to go out and get a, what we would say as a subsidized rate. So if your premium should be $1,000 a month, let’s say, depending on your income, you might only have to pay 500, which, um, love it or we love it or hate it, right? That’s just kinda the, the what we’re in right now. And so there is the benefit of that potential. The downside is that it does create this dynamic of I don’t fully know what my cost is going to be always. Um, there is another, another reality that we face with the individual market is that for a long time, and this is kinda changing a little bit right now, but for a long time the network that was available was not the same.
Speaker 4 28:50 So in in cover California for individuals really it boils down to two carriers. It’s blue shield or Kaiser. Kaiser is Kaiser. Everyone you just go to Kaiser. It’s the same. Um, with blue shield, there are actually a lot of doctors who won’t take the individual plans. They’ll only take small group because of there’s an issue with, you have a 60 day grace period to pay. Um, if I remember correctly, it’s 60 days on the individual market. And so what was happening is people were getting the insurance, going to the doctor to get something done, never paying the premiums. The doctors were then not being reimbursed. So dr loved doctor said, we’re not going to take it. Um, so that’s been one of the challenges. So like I know in Fresno Clovis area, one of the biggest challenges has been the Santee who negotiates for everybody and community providers was not in network.
Speaker 4 29:37 I mean providers were not in network with blue shield covered California individual. Now that has, that is shifting as people get more comfortable with the individual market. The other reality is is that it never hurts just to look at the small group market because sometimes the premiums are actually better than you would think. And there if you’re talking the full premium, it’s actually cheaper potentially to go outside of the individual market. Right now if you’re getting subsidized, that’s not going to be the case. And then there’s the other side of that too, that you get to a point where you no longer can do that. Once you hit 50 employees, you become what’s called an applicable large employer. You now have to offer benefits, otherwise you’re going to be dealing with penalties for not offering. So 50 is the magic, the magic number, correct? Yeah.
Speaker 4 30:22 50 is the magic number to be what’s called an ale. And at that point, you now have to offer health insurance through your work, through your company, right? Otherwise you have a penalty that can be assessed. Now, when you say offer, you have to offer it, to what extent does the employer have to pay the premium? Yeah, so in the carrier standard is 50% of the employee only premium. So if, if it’s $300, the company has to pay $150 a month. Um, once you get to an ale 50 employees, you’re now subject to affordability rules. Um, and that’s everyone. You know, for those who are out there that are dealing with this, you, if your dreaded 10 95 C’s that you have to file every year. Okay. Um, what does it mean in layman’s terms to that person? It means realistically the, in order to be considered affordable, you’re going to be having an employee pay somewhere around $95 a month. Okay. 95 to maybe 150. 200. So is the premium then, okay, so is the premium in that kind of scenario for each employee? Is it a bout $1,000 a month and the employees paying 95 no. Yeah. So it’s, if we’re under a hundred employees, I’m assuming we’re not using health trusts or anything like that. It’s just a standard small group. It’s age rated. Everyone is a different rate. So I am going to be a different rate than Leo. The older you get, the more expensive it is. What? Yep.
Speaker 4 31:45 So we will have a good laugh. Yes. So, um, yeah, that’s, that’s what you’re dealing with. So what you have to do is you say, okay, um, for this, you know, if I have two employees, one’s 30 one’s 50 as an employer, I’m going to be spending more money for my 50 year old for health insurance because their rate that they can pay, again, if they’re over 50 is no, you’re going to be no more than about a hundred dollars 150. And again, it depends on what you pay. If you’re a high a high wage earner business, right, you’re in it, let’s say. And you’re doing a lot of, a lot of really high income software engineering, high-income, those numbers change. But if you’re talking manufacturing little over minimum wage, a construction, low twenties, you know, you’re talking more like, uh, again, that’s a, the 150 Mark is about where it comes in.
Speaker 4 32:33 So give us, give us a, an idea of what the employer can expect to pay. I know it varies. We’ve established that it varies based on age. Yeah. But in general, it’s people who are listening right now who are, you know, maybe have a landscaping business and have 10 employees and are considering um, to get, um, as a retention tool or yeah, yeah, yeah. I mean if, if generally what we find is that employers who are really concerned about cost, who want to come in and, and have a really competitive plan and control their expenses, they’re gonna with Kaiser and Kaiser, you can, you can come in and you might pay, let’s say $300 a month and $100 a month for the employee. We would, they employer would pay, lawyer would pay that and the employee would have a portion correct. Of the 300 or in addition to, in addition to that on average, again, some are going to be higher, some are going to be lower.
Speaker 4 33:23 Um, you know, you’re probably looking in that range for, for like what we would say like a silver plan. Okay. So, so Kaiser can coverage somebody under a small business plan for about four or $500 a month. Yeah. Yeah. Individual. Then they start adding family members. It gets more expensive cause everyone’s charged as well. So, um, most, most of the time we see, again, we do have access to them trust. So I’ll use that an example. Um, we can get family rates in the neighborhood of a thousand to $1,200 a month for a family. Okay. And that’s, that’s not an unrealistic idea of what you might be spending in terms of health insurance premiums that you have to know. If you’re a little bit older, it’s going to be more, um, if, you know, depending on what plans you’re going with, if you love blue shield, it’s going to be a little bit more loose.
Speaker 4 34:05 Yields just kind of expensive. But I’m more Anthem. So then an employer does the employee contribution change if they’re going to insure the entire family. Great. So that’s where the employer gets to set up what they want to do. Right? So our job is to sit down and say, okay, employer, here’s the rule. You need to pay a minimum of 50% of the employee you only premium based on the lowest level plan. Okay. So let’s say we offer three plans, a bronze, a silver and a gold. Um, the bronze plan, you’re gonna pay 50% minimum of that plan. Then we have clients who range from there. We have some clients who pay just that. They just pay 50% of the minimum plan all the way to, we have clients who pay 100% of the family premium on a gold or platinum plan. You that could be $1,500 per person.
Speaker 4 34:52 Uh, for, yeah. For a family. Yeah. Yeah. Easily. Yeah. It’s doesn’t go from blue collar to white collar kind of, um, you know, the, the higher in um, service delivery or technology. Yeah. It’s part of, it’s part of, it just depends on the what, what value the client places on these benefits. Good point. Generally for us, we have a ton of construction clients. One of our specialties is prevailing wage and how to, to manage the fringe benefits. And so what we find is, because we work a lot with contractors who are, um, who are competing against the unions for retention, it’s not uncommon for our clients to offer a gold level plan and pay 100% of the employee plus 50% of the dependence. Wow. And again, we have clients who are paying 100% of the entire premium. So some of it depends on the industry you’re in.
Speaker 4 35:46 Um, kind of the standard, what we see most often is, is the employer picking up the, uh, majority of the employees premium somewhere around 90 to a hundred percent. Wow. Of the employees only premium. Right. So what I’ve seen as, as, as I’ve seen, I’ve seen employers who do that, the minimum, um, whatever that is, cause you can go both ways. You can do at percentage salon as it is at least 50% or a dollar amount, right? Correct. The dollar amount is where it gets a little bit trickier in that because you have to be careful about not charging older employees too much in relation to younger employees. Um, so this is where, you know, we tell our employers, Hey, here’s, here’s kind of the way it should be done. Um, what you do, right? I mean that’s you, that’s your decision. It’s your business, right?
Speaker 4 36:38 We’re just trying to give you the tools to, to make the most sense. Right? Um, but yeah, you, you do see that where you see a flat dollar contribution a little more is when you get out of small group and into large group. Because in large group or in trust, we have what are called composite rates. You just get four rates. So the nice thing is, is it doesn’t matter how old the employee is that you’re hiring, they’re the same cost. So I know I can pay 300 bucks, they’re going to pay 150 it doesn’t matter how old they are. Wow.
Speaker 1 37:06 What is probably, what would you say is the average to cover, say somebody in their mid thirties on an individual? Like just, if we’re just gonna cover the individual themselves. not rapping on the family and
Speaker 4 37:18 yeah. Yeah, that’s, you’re probably mid thirties you’re probably again in that, in that $400 range, depending on the type of plan, four to 500
Speaker 1 37:25 see that seems very, very reasonable. That seems very reasonable. And then the employee contributes to employer contributes to correct. It
Speaker 4 37:33 could be lower than that. It could be. You could be, depending on the style of plan, your could be in your threes. Yeah. So the way I look at it, if you have a company that is really, really profitable and they don’t offer a health plan, I would say, look, you’re gonna pay to the IRS or you’re going to pay right to the benefit of your employees, which one you choose because you’re, you’re, you’re, you know, you, you pay taxes on the income. Yeah. And the other thing with that too is you can offer, right? These benefits are tax favor, right? So you get a deduction as an employer. The other side of it is if you give an employee money through a benefit, like health insurance, retirement plans, those types of things, you’re not having to pay social security, Medicare, your workers comp, your GL.
Speaker 4 38:15 So you start talking about, you know, saving 10, 15, 20% of what you would spend your payroll tax, correct. All your payroll, taxes, payroll, right? Ups and bruises that we take, right? So, Hey, uh, we need to go to break and I in a few seconds. So I want to, I like to talk about this whole thing about PEO, uh, conceptually what, you know, demystify it. If we will and how you’re able to help some of the creative things that you guys do as a company, I think that our audience could benefit from. So stay tuned. You’re listening to business and legal talk with Leah and Claudine. We’ll be right back.
Speaker 3 38:48 Excellent.
Speaker 0 39:00
Speaker 4 39:16 alright everybody, we’re back. Hey, what a Fasten made in top. I know. And this insurance, this, we could literally do two or three units and I can’t believe I’m sad. It’s the last part of the hour. I know. I haven’t even gotten started yet. I don’t even think you’ve asked hardly any questions that’s taking up all the time. I’m sorry. Glad the bring it. I want you to just, you, you are the star and I add is the star, but you’re the coast star, right? There you go. I’m just here for flavor, but my wheel start spinning really, really fast. I have a question actually that came up recently. Now, see, I can’t help myself. ladies first please. Thank you. Um, if you let, if you have a company and you’re offering health insurance to your entire group of employees and then something happens and for whatever reasons you want to back off and just offer benefits, um, pay for managers or for, you know, certain group, how do you go about doing that?
Speaker 4 40:12 Yeah. This is where it gets a little tricky. You have to always be careful because rules generally, if you’re going to try to favor highly compensated, your upper management rules are generally intended to not help that. That’s right. Public policy, just everybody knows public policy in California is we just don’t do that. Yeah. You can. We get this question a lot. You can create classifications so that you can offer different tiers of benefits. Okay. On different, different styles of employees and as long as you have clear delineations and it’s not, again, discriminatory, so write it. What we’ll see for example, is a client in construction who says, okay, our office, we’re going to offer this style of benefit and our field, we’re going to offer this style of benefit cause the field employees, you’re competing against the union. Whereas the office you’re, you’re maybe not.
Speaker 4 41:02 So you do see that delineation a little bit. Um, but you have to be careful about saying, okay, I’m going to offer it only to management. And one of, and really the way I’ve understood it in the way I’ve been told this from, from HR professionals is that you’re not necessarily violating, depending on how you do it, you’re not violating law, but you’re violating the master contract of the insurance companies because the insurance company writes the contracts, assuming that you’re going to offer it to all eligible employees. Oh. So you have to be careful about those types of things. We do see it happen. Um, we’ve had clients who have, who have at times in their, you know, history, depending on them, the environment had to make some adjustments like that. Um, cause there’s a reality of here’s kind of what the rule, this is what I tell clients all the time.
Speaker 4 41:47 Here’s what the rules are. I’m going to tell you how it’s supposed to be done, right? It’s a business decision for you. You have to decide this is your practice. I don’t make these decisions. Right. Hey, before we get any farther along, I think we know we mad. You’re great. I highly endorse you and uh, I work with you. I know what it’s like working with you, but the world at large doesn’t know. How do we find you? How do we get to you? Yeah. So you can reach us. Our phone number is (559) 432-0440. I’m Matt Webb. Uh, we just have one line so anyone can get you over to me. Our website is www.brsfg.com. So that’s BRS financial group.com. Um, and, and you can get us there. You can also email or call Leo and Claudine and they can get us over absolutely. Okay. So can I ask my question there?
Speaker 4 42:35 Thank you. I feel special. All right. PEOs. What is a PEO? Why do companies go for it? How do you unbundle a PO? Take it away. Yeah, so this is fresh for us. We just did one of these with a client. So the idea of a PEO is that you bundled together with other employers to create, to come together, right? So let’s, it stands for professional employer organization and you, you pull together your resources to then be able to offer benefits and kind of that economies of scale idea, right? Um, so they’re generally offered by, by their payroll vendor or an insurance company and they’re putting it together. Um, and, and so they’re attractive to small business owners because they’re sold on this idea that they don’t have to take on the legal responsibility of owning an employee, of, of being the employer because they’re what’s called a co employer.
Speaker 4 43:28 So you’re sharing some of that responsibility, seeing the whole leasing, leasing, you’re co employing a lot of these terms. Um, and generally what we find is that there’s a lot of language in these contracts that say if you do X, Y,Z , one, two, three, ABC, and it has to be done in this order and we’re not really going to give you a ton of direction, then you’re going to be not responsible if something happens. But let’s just be honest, that’s not no one, no one wants to take responsibility if something happens with a boy. So, um, the, I generally where we find PEOs can work. Um, where we find PEOs to be beneficial is if, if an employer has had a really bad workers’ comp claim or a couple of workers comp claim, ho you know, your, your moderate goes bad, you can get into a PEO, but there are different styles of PEOs, right?
Speaker 4 44:14 So in our case with the one that we worked on with Leo, that was one where there was a true Cohen point employment situation. So benefits, payroll and workers’ comp keeping workers comp was, everything was inclusive. Um, we unbundled it. So we, we got all the carriers we needed to. We were in multiple States, so we got contracts in other States as well. We got the, we brought out the 401k, gave them a better fun lineup in the 401k, um, got brought into a worker’s comp. We don’t do liability insurance. So we brought in workers comp, liability broker. Uh, we had the payroll vendor as well and all said and done. Once we were able to dissect the fees of the PEO, um, we were able to save this client an estimated a hundred thousand dollars a year. So let’s say that again. How much? Yeah, you have a thousand. It was, it came down to that.
Speaker 4 45:03 I said we did that analysis and I had Matt and we met with the client. It was a, it was quite a lot too for the client to actually wrap their head around. But once they actually saw it and they saw the numbers, the side by side comparison, it was clear the management fee for the PEO that is usually embedded in all the other fees. So you have, they will not just going to give it to you. It was North of $90,000 plus a bunch of other fees or fee for this. So yeah, it was about $8,000 a month. The wreckly save to the bottom line for the um, employer. Wow. That’s just so amazing. And what weight, what would be the reason to get into it other than, or maybe in this particular set I can completely see on the workers comp you need to get up lower.
Speaker 4 45:45 Moderate. Yeah. So we can even sell PEOs. For example, I can put it a PEO in place for help with all the shirts companies. Um, the only time I’ve ever seen them be useful really is a really bad workers’ comp rate. And then you’re not going in to an entire PEO with all, with everything inclusive. Generally it’s where you’re going to go in and get, let’s say payroll and workers’ comp. Okay, so you’re not, you’re not doing the full PEO taking on all responsibility. Correct. But you got to go with eyes wide open. I mean that’s what you have if you have your finances in is a plug for us. Right. If you haven’t finances, right. You will know the different indicators and how much each line item is as a percentage of you and your revenue. Right. So auto, there are some industries that are high, you know, in fact there are insurance brokers who we love going after the construction companies because of the workers’ comp high premiums.
Speaker 4 46:41 Right. And if your mud, which is your mot experienced rate for workers comp, exceeds the one to one. And I’ve seen clients at one 50 and one 70% and in your, you know, all of a sudden you can be paying half a million dollars worth of workers’ comp. Oh yeah. Roofing industries. Correct. Right. And where we’ve, where we’ve made our practice and kind of one of our specialties is dealing with con contractors because generally you have a high workers’ comp rate liability, these things and, and in prevailing wage you’re dealing with both of your base rate and your fringe case. Please explain for inlay, what is prevailing wage? Yeah. So when do you get involved in that? Yeah, so prevailing wage project is when a contractor has a funding on a project from both a public entity and maybe a private or just the public. So, for example, here in California, this is government work, the one we all know, high speed rail speed rail.
Speaker 4 47:32 That is public works. Yeah, exactly. So I said federally funded was a state funded. It can be either, right? So you’re doing math, correct. There’s Davis, bacon and then state prevailing wage. Um, so either way you have what’s called your base rate, right? And then your purview and then your fringe. So what happens is in the Mark in the marketplace, what contractors will pay their employees the entire rate, both the base and the fringe is cash. And when they’re doing that, they’re, they’re subjecting all of that fringe, which depending on the industry, can be 20, 30, $40 an hour to workers comp, GL, payroll, taxes. So what we do is we use qualified benefits, taking all of that money, putting it in through qualified benefits, saving the employer, sometimes, um, 10, 15, 20% on their payroll. So to give you an example, we’ve just picked up a client recently. Um, they were doing, we showed them how to with their fringes, um, offer health insurance insurance to their employees, which they had not previously been doing. Um, and in the process of doing that, save about, I think it was 70 to $80,000 a year. So they even after paying the premium, so they were going to have health insurance and still come out six grand a head a month. Wow. See this,
Speaker 1 48:49 this is exactly why you need to meet with your resources at the end.
Speaker 4 48:52 You are who you hang out. I always say that, you know, you need to have, I always dim up and this is such a great thing. We know our partnership with BRS is like I need to have the qualified, I mean going in as a team, I’m the quarterback, I’m the CFO and I want to have the great law firm, uh, who is going to make sure that our clients are sustainable for the long run. You’ve got to have the great insurance, you know, the, the, the basically the, the, the player in the insurance who actually going to be telling me the real story. And, um, you know, the pros and cons in terms of the client will understand you. You got to have all these people, you know, you’ve got to have the tax, the tax accountant, you and we are the accounts. It takes a village to run a business. But what is the end result? You have a profitable business if you do your, if you do it right, you need to invest. It takes money to make money, right?
Speaker 1 49:41 But these things, um, and it’s important for people to know that these things don’t just happen overnight. And these employers that you’re referring to didn’t just walk up or wake up one day and I’d say, yeah, I think I want that. I want that scenario. You gradually, you grow, you add a few more employees, maybe your pet plane payment plan or your plan changed. And then it’s because that you ha you haven’t been kind of monitoring it and all of a sudden you wake up and you go, well, we need to make some changes because we’re really overpaying over here. Um, and so that’s why it’s, it’s that, that regular check-in that is so important and I think insurance often gets left out of it. Tax people are first on the list.
Speaker 4 50:20 Phil check-in. Okay. Before I forget, we got two minutes, two, two and a show. Why choose BRS? Yeah. Um, and I, I the opportunity to plug ourselves a little bit, so sell it baby. no, I mean that’s plugin. I think in some ways this is just, um, maybe some good advice for employees or for owners, right as they evaluate this. Right? So one is if your current broker isn’t showing you options, if they’re just coming in every year saying, Hey, you know, here’s your blue shield, seven, eight, nine, 10% increase, that’s the best carrier. Um, really evaluate that, that that’s generally not the case. Um, and that’s just kind of the way we get compensated. Um, they don’t want to make changes cause they end up making less money and extra work for less. So that’s one thing. So make sure you have someone you really trust who’s really you think is giving you the best advice that they can.
Speaker 4 51:08 Um, so that’s one plug for us. I, I don’t, I’m not worried about the carrier that I put you with in terms of I don’t have any loyalty to anybody. I want what’s best for our owners that we work with. Um, so that’s one. The other one is, you know, health insurance is just expensive. That’s just the reality. Um, so don’t be afraid to leverage your partners for some of the other benefits that they can offer and maybe reduce your costs that way. So for example, um, for all of our clients, we offer think HR. Um, it’s an HR platform at no cost that we let them, uh, they can call in and ask any questions they want to the HR platform, we can call for them. Um, so they can build their handbook online, they can do job descriptions. So what we find is that if we can help some of these questions that maybe you would have had to talk to an attorney or hire an outside vendor before, no offense, Claudia worries now, but if we can limit some of those conversations, we can reduce the cost.
Speaker 4 52:01 So you may not save in health insurance, but you can save. And some of the other areas we have great broker partners that we work with on the property casualty liability side that offer, um, training, you know, OSHA, things like that. So, yeah. So don’t be afraid to ask what resources you have with the brokers you work with and understand the bigger you are, this is just kind of the reality. The bigger you are, the more access you’re gonna get to some of those things. Um, but there are people out there who just, who want to help you even as a small business owner and, and succeed, right? Some of our best clients started as as one employees that are now almost 50, and we’ve been with them the whole time, so awesome. So if I can say this one last thing is, uh, what I appreciate the most of anybody I partnered up with is their responsiveness right then and then Matt in their team hyper-responsive.
Speaker 4 52:49 You know, and a lot of the clients that I work with are lower middle market. You know, the 22 to $20 million. Those companies that have fast moving, they’re fast moving targets. They got a lot going on to get somebody like that. So thank you, Matt, for for that and for being a guest on our show. Uh, I have a feeling that it won’t be the last time. We’ll love to have you maybe once a quarter, and it’s just good to know. So hopefully this has been helpful. If you are a business owner out there in California, you need to be paying attention to that. And since the insurance is a cost that you have to deal with my as well, go with eyes wide open. Right? So you gotta, you gotta pay attention. So thank you so much. It’s being great. I’m wishing everybody a happy Saturday. We’ll talk to you next week.
Speaker 0 53:30 .