Captive Success Story: Horst Engineering's Path to Cost Control & Employee Wellbeing with Anthony Luis, Director of HR & Administration

Speaker A: Hey everybody. Welcome to another episode of Friends with Employee Benefits. You know, this season we've been focusing on how employers can help their employees live healthier lives. But we also want the employers themselves, um, organizations to be healthier. And this episode is going to touch on both, both of those things because we're going to talk about something called a Stop Loss Captive. We're going to talk about off of a fully insured environment where you have very little control and you're bringing very little value. Add programs to your employees to a self funded environment where you can actually join a Stop Loss Captive and bring to your employees into your organization solutions that are going to help people thrive and be healthier. Ah. And flow right down to your bottom line as well. So we're going to introduce now Anthony Luis, who's the director of HR and Administration at Horst Engineering. This is a great conversation because, uh, Anthony is going to bring some insight as to how an employer can make that transition and why an employer might want to think about making this transition from a fully insured environment to self funded with a Stop Loss Captive. So get ready for another great episode. Enjoy. Anthony, why don't you start by uh, telling us a little bit about yourself and Horst Engineering and what you do at Horst.

Speaker B: Yeah. So my name's Anthony Lewis. I've been working in HR for, for nine years now. I'm the Director of Human Resources and Administration at Horst. So I oversee everything to do with hr, employee relations, payroll, benefits, employee engagement, you name it. But I also oversee all of the front office administration. So um, that's any visitors coming in, building security, um, office supplies, merchandise. So it's a large role right in its size. But we are a company of 110 people, so that's fairly common to see. Um, but I've really enjoyed it. I've been there for a little over a year now. Before that I used to work at a private equity backed health care organization specializing in addiction recovery. And I worked there as their Director of People operations. And then prior to that I worked at UConn. That was my first job in HR.

Speaker A: All right, great. Well, I'm a UConn grad, so we've got. Yes. Yeah. You know what we're here to talk about today, as you know, is this thing called a Stop Loss Captive. And the reason people would contemplate a Stop Loss Captive is the alternative is to stay in a fully insured environment where an employer pays a premium to a health insurance carrier and uh, basically hands all control over their health care. Expense to that carrier, not sure how that money's being spent, not sure how much is going to claims, going to admin, going to profit, um, and where that money goes. And then every year it seems the health insurance carrier comes back with a 12 and a half, 15, 17, 22% rate increase. And what do you do? And so a Stop Loss Captive is an alternative to that never ending story of just constant rate increases without any understanding of why. And so um, was that basically the problem Horst was trying to solve when they contemplated a few years back?

Speaker B: Yeah, absolutely. We were seeing pretty large increases in our premiums, I would say around 10 to 16% year over year that employees were facing. Whether it was because of high claims, lack of visibility into what those claims were. Um, and they had a phased out approach in order to improve and why they switched over to the Stop Loss Captive. Exactly. So phase one was they went to a high deductible plan with that fully insured um, company that they were with previously. And then phase two of that was to move over to that Stop Loss Captive and they started off that plan with just a high deductible plan for employees. But over the years we've seen um, improvement, we've seen um, reduction in cost and we've actually now have two high deductible plans and a PPO plan that we offer employees. So they kind of had a phased out approach to help reduce those costs throughout their process. So I'm kind of entering that third year of the Stop Loss Captive with me joining Horst at the period I'm in. So I'm really seeing the year of. Wow. Everything's uh, really been improving the past three years and this phased out approach has really worked. So it's been an interesting journey but it's been nice to learn that process,

Speaker A: which is a great point to make is that you don't have to jump straight from a fully insured environment to a self funded. With a Stop Loss Captive you can, you can ease your way into it and often that's the way you need to do it is to prepare yourself as an organization to get to that ultimate goal. Why was, why was the Stop Loss Captive the ultimate destination though?

Speaker B: It was really that ultimate destination because it gave us more control over containing our costs. Right. We had that insight into what the healthcare needs were for our people that we didn't have previously. Um, it allowed us to really understand what our population was at the organization and what they needed from us, from even an engagement standpoint of what we could do to better Engage. Were we giving enough benefits to do with mental health if that was something they were looking for? Was our insurance able to do that? We didn't have that visibility before, so we really wanted to be able to tailor our insurance to our people at the organization and we weren't able to do that before. So that was a big factor for the team.

Speaker A: Yeah. Uh, the control. I kind of zeroed in on that as well. Take control of your healthcare spend. Um, and I think employers that move down what we call the funding continuum and end up in a Stop Loss captive tend to lean in and be forward thinking on cost containment and risk management strategies. So I have to imagine you're doing some pretty cool things at Horst around employee engagement, health and well being, stuff like that. M. Am I right on that?

Speaker B: Yeah, absolutely. At Horst, we do something every Wednesday called Wellness Wednesdays and on those Wednesdays we will do different things. Whether it's bringing in therapy dogs, yoga session, um, whether it's, you know, talking about a um, partnership that we started talking about through uh, One Digital with Mela Health. Right. That's a new um, partnership that we started with them where our staff could go find a therapist that matches their needs, either telehealth or in person locally. Right. So those are some of the Wellness Wednesday things we've been able to hone in on. And being part of the Stop Loss Captive, we've been able to see things like we have a high diabetic population at our workforce, so we know that when we're hosting events we need to be mindful of that. Right. Maybe we wanna do an event around health food options, um, taking care of yourself. Maybe it's, we want to bring in a fitness coach, something like that. We've been able to curtail even our engagement events with this insight through the Stop Loss Captive.

Speaker A: So the data. So now you have the insight, as you said, because you've got data and you're able to realize, do you also ask your employees too what's, what's most important to them and what you're valuing the most?

Speaker B: Oh yeah, we'll ask them all the time. We'll say, you know, is it easy to use? Um, right way to find out what's the better doctor to go to, to find out how to get your um, your prescription mailed to your home. Different stuff like that. We are always, especially during open enrollment time, surveying our employees to make sure that what we're offering them is working. And what we found throughout the past couple years is each year we've improved, added an additional benefit. Um, you know, we've even partnered with one digital to kind of be sometimes the guinea pig of new, um, new vendors that they want to introduce to the captive. And Horst is usually the first ones to be like, yeah, sure, we'll give it a shot and we'll let you know exactly when what went right, what went wrong and we'll make sure that it's successful so that when you are launching it to someone that you know kind of some of those kinks. And we did that recently with FedLogic and we've done a great program, um, called our Legacy Success Circle where we introduce FedLogic to them as a resource as um, adults facing the end of their career are preparing for things like retirement, maybe they have questions about enrolling in Medicaid and that's a great resource for them. So that was a huge benefit we added again because we're part of the Stop Loss captive. We have so much exposure to different resources. We've been able to curtail even our events to our team better.

Speaker A: I love the fact you're willing to try new things and you know not everyone is going to work and turn out to be the best thing but you give it a try. Uh, so that sort of proactive, forward thinking, innovative approach and I think it is more common with employers that do move down that captive road. It's interesting you started though, uh, engaging your people as better consumers before you even move to a captive by introducing a consumer driven health plan. So Horst understood that one thing we need to do to control our cost is make better consumers of our employees. Right, Exactly. It's constant education though, isn't it?

Speaker B: Yeah. You have to constantly educate them, give them that insight into what they're spending, what their claims are. Right. You know, having that visibility of even a high deductible plan, you realize, whoa, one visit to the doctor was 250. I still have maybe, uh, you know, 1750 left to go before I meet my deductible, whatever it may be. And it gives you that insight into those costs and what you may not realize.

Speaker A: Yeah. How transparent are you with your employees in terms of um, communicating to them that how they use their health insurance plan is going to impact the price of the health insurance plan. Do you get into that with them?

Speaker B: Um, I wouldn't say we necessarily get into it that deep. Right. We want it to be a benefit that people know they can go and use and if they're investing in it, that it's there for them. But I will Say we are transparent in you know, going over sometimes how some things may not be covered. Right. Maybe a big thing that we are always being asked about is you know, Manjaro, Ozempic, different things like that. We talk about how you know, if we included that in the plan your premium would go up. So we kind of offer that like education around um, what costs. You may see if this is something you did without really hindering them from not using the plan. Right. Because it's meant to be there for a reason to protect them. Right. Uh, but we do offer education in that way. And what's nice is we're always re emphasizing the use of right way and different um, those benefits so that they can reduce those costs on that bill. And we tell them, you know, our third party administrator will go through um, and help reduce those costs through Imagine360.

Speaker A: So you're, so you're, you're engaging your employees to be better consumers and to be thinking about how, how they could uh, uh, better utilize their benefits to their benefit but also to the benefit of the plan. So what are the, what have the results been since uh, joining the Stop Loss Captive in terms of annual cost increases or not?

Speaker B: Yeah, so I do know the past two year renewals have been zero increases to the employees and we've been able to provide them education around that why we've been able to do that. You know, what the move to the self insured plan has done for the organization. So we've offered a lot of education to them about like why we moved to the self insured plan and now they've seen that benefit and this past year we did have under a uh, 1% increase which we received zero backlash on. A lot of people were actually like wow, you know, my spouse's Plan went up 7%, 12%. Like this is great that we're not getting a huge increase. I think I'm going to switch over to ours. We saw a lot of that this year too. So overall we've definitely seen savings to the organization which we've been able to use those funds for other employee benefits. Right. And making that investment in FedLogic, um, or other enhancements or even other employee engagement events. Right. We've been able to now utilize those funds elsewhere.

Speaker A: Um, so Anthony, there are employers in your size range with you know, 50, 60, 70 employees enrolled in the health insurance that think they're too small to go self funded, uh, let alone leverage a stop loss captives. And so what would you say to those smaller employers who are hesitant to explore to even explore self funded or stop loss captives.

Speaker B: So I would start by saying, you know, I've always believed in servant leadership. That's my leadership style. And I would say that you have, you would be doing your employees an injustice by not even taking the time to ask. Right. You are there to serve your employees, provide them the best benefits. When somebody's looking for a job, they're looking at compensation benefits and PTO are usually the top three questions you get. Right. So if you're not offering the best benefits premiums on the market, that's something they're gonna consider. Right. And that's huge. So you were doing them an injustice and not serving your employees the best you could by not researching things like this. Right. There's resources out there, there are different brokers you can talk to. One Digital's a great one, we use them. Right. So I think you do need to take that step and ask about it because you most likely will be eligible and you most likely will be surrounded by other organizations your same size investing into that stop loss premium to help protect you when there's a year that maybe you do have a high claim.

Speaker A: Is that helpful to you to be in this captive with like minded employers? Does that feel like a support system for you?

Speaker B: Totally, yeah. I recently just went to the captive symposium in the Atlantis, Bahamas and I met so many people that are in my captive that I didn't know about. But it was so interesting as I talked about, you know, the Wellness Wednesday events, we're doing the educational seminars. So many of the employers are like, oh, we do that too and we do this. So you're like, oh, nice. So I'm not the only one that wants to do stuff like this. There are other companies doing that. Right. That are really going that extra mile. And that's that principle of servant leadership I was talking about before. I find that people who take the time to invest in a program like this, it's because you truly do want to serve your employees the best that you can.

Speaker A: Well, I think, you know, you've had zero or very low single digit increases. And so when you can avoid those 12, 15, 18, 22% premium increases, that allows you to make those investments in things like right way and mental health and etc. That gives those employees that support that they need and that they want and shows that you are serving them, you care about them.

Speaker B: Exactly. That's exactly the benefit. Right. And obviously there's the overall cost savings to the organization that is will come back in terms of, you know, Bonuses to your employees, potential higher merit increases, potential cost of living adjustments. Because your budget is now no longer being pushed in a different direction when you could really contain those costs, you can really make your employees healthy. And if you have a healthy workforce, you have people who are going to show up and do the job.

Speaker A: Uh, I'm curious, when you're contemplating introducing, uh, kind of another vendor partner solution, how important is ROI there? Or do you just kind of go on gut a little bit and just believe that if you're offering something to your employees that's going to help them navigate through the system more effectively, there's going to be value to it? Uh, it's a valuable investment for you.

Speaker B: Yeah, I think that ROI is important when you make any investment. Right. I would start by saying that I think that it's definitely a factor that plays into it, but I think we really start by doing an assessment of really the needs of the employees. Right. We're not going to get ROI if people aren't going to use it. That's the biggest thing. So If I survey 100 people and one person say that they want to use this new program, the ROI will never exist. So I mean, you may get like these great rates of you will get X back in dollars if you go through us, but if your people aren't engaged and it's not something they're into, you need to have that assessment before you can make that call. And I think that's the biggest ROI you're going to get is that actual engagement. And you have to constantly be educating employees.

Speaker A: It's a great point. If they're not engaging in it, then they're not feeling the value of it. And part of a return on investment is the value that the employees feel from whatever you're paying for. So.

Speaker B: Exactly.

Speaker A: I think that's a great point. Um, so how is being self funded and unbundled meaning you have separate contracts and agreements for basic claims administration and service and the pharmacy benefit manager and stop loss? How, how is that different from fully insured from an HR benefits professional standpoint?

Speaker B: So it's definitely a little bit more burdensome to the HR professional. Right. So there's separate logins that you have to go in when you're maybe terminating an employee. Right. You need to go online to the dental insurance and terminate them. You need to go online to the medical and terminate them. So there's some additional administrative clicks. I would say the auditing process as well can definitely be a little bit more time consuming because you're not just auditing one single program. You're maybe looking at multiple. Um, so. But honestly, it's such a good experience and gives you so much more knowledge and an upper hand as an HR professional that you don't receive from a fully funded plan. Because you're talking with so many different vendors and brokers, you're actually learning and saying, hmm, wow, this vision insurance is really easy to work with. Right. I really love what they offer during open enrollment. They sent us free glasses, eye cleaner wipes. Right. There's some of those little perks that you don't really see through a fully funded plan. And so it kind of gives you that upper hand as an HR professional to say, well, you know, I've worked with that broker or that insurance plan, and I don't think employees really enjoyed it. They didn't cover as much. We should really invest in something else. So you see a little bit more insight into what companies really could offer your employees this way. So, yeah, maybe it's going to take me five extra clicks to terminate someone from the medical benefits, but I have knowledge that, uh, is going to give me an upper hand as a candidate in the future. And that's something that is irreplaceable.

Speaker A: It's interesting. You turn you, you know, uh, that you, you turn that into, uh, you're making, uh, lemonade out of lemons. Right. So there's a, there's a little bit more work to be done. And yet you're taking that as a development and learning opportunity for you, uh, someone who's involved in the purchasing of the benefits, and that's making you a, uh, better HR leader.

Speaker B: Exactly right. You know, there's, um, there's. There's obviously, uh, certifications. Right. The SHRM for HR professionals. But when you're in the field and you have that first employee come to you to complain, there's no, like, math equation that's going to solve the employee's problem. So you need to, you fully usually live on experience or the experience and knowledge of others. And this is a prime example. Benefits. Until you've been exposed to it, it's a beast. And you gain so much knowledge as an HR professional with this type of model.

Speaker A: Yeah. So if you want to get off what we call the hamster wheel of being in a fully insured program where you're just every year getting that 12, 14, 16% premium increase if you want to take control of your health care spend, um, to be honest and eyes wide open, it does add some administrative complexity to it. But Two questions around that, Anthony. Number one, how important is the broker relationship in managing through those complexities? Number one? And number two, is it worth it?

Speaker B: Yeah, I would. So to start with a broker relationship, it's 100% key, right? So because you're working with so many more vendors, there's more room for error, Right. It's not just one rep that you're usually talking to. So having a good relationship with your broker and knowing that your organization is doing the best they can to m get the best ROI from this program is key. Because if there's ever a time that you need support or you're having trouble contacting someone, I know I could message my two reps here at OneDigital and they're back to me within 24 to 48 hours with an answer or they've escalated it. And then I think your second question was, is it worth it 100% for the resources, professional development and protection that your company gets from this? It's 100% worth it. Because if I try and think of where we would be if we didn't make that investment, I would say that we'd probably be at a point where we didn't have the insight to be hosting this many events, to be curtailing our employees. We probably wouldn't have been able to retain certain employees at the organization. Overall, we wouldn't have that insight into what type of events employees are looking for or what their health risks currently are. We may be providing them with something that isn't going to actually be making them healthier or their workday better. So if we didn't make this move, I think we could be at a place where we have a lack of engagement from our employees and high retention.

Speaker A: Well, I'm glad you mentioned protection because the other, um, you know, you get relatively smaller employers who think, well, I can't take on that risk of being self funded. You know, it's too risky. There's too much potential downside to it. Do you, do you. Are you losing sleep at night thinking, oh, uh, boy, you know, do we bite up more than we can chew? Or do you feel that level of protection that you really do need and that peace of mind?

Speaker B: No, I definitely feel that level of protection. Right. We have a great team. They're constantly updating us on how we're doing with the stop loss, you know, where we're at, what we can expect year, um, over year based on incoming claims. And that's the best part, is that we have constant visibility. So, you know what's coming up. Right. A fully funded plan. Sometimes you get eight months and then you're like, oh wow, we got a 17% increase and we're just finding out now what are we gonna do? Right. Um, sometimes organizations make decisions to lay off employees, terminate them. Right. But this, we have that insight way in advance where we can say, hey, we need to plan for what may be coming. And we haven't felt that though.

Speaker A: Great. Any final thoughts? Anthony, you want to share with our listeners regarding stop Loss Captives and uh, your experience with one digital Stop Loss Captive?

Speaker B: Yeah, I feel like I want to break it down into four, um, different categories. The first one is cost savings. Right. So it keeps underwriting profits and investment returns all in house with um, being part of that Stop Loss captive. You have all those insights into how much you're investing and putting into it. Um, stability. Right. It's going to reduce our reliance on those commercial insurers and their pricing volatility. Right. We kind of have way more insight. Exactly. Into who we're going to be using and having a stable relationship with them. Customization is my next category. I would say we have more control over our coverage terms and our overall risk management strategy. And my final point, I brought it up earlier too, is data access. We have that better insight into our claims and overall utilization. So if I were to tell anyone what are my top four reasons it would be that cost savings, stability, customization and data access.

Speaker A: I appreciate that thoughtful answer. And frankly, uh, you could be a stop loss captive, uh, sales rep out there because you just nailed it. Those are exactly the reasons that any employer should at least contemplate it. But in all seriousness Anthony, that word stability is the one that jumps out to me and I want to stress the fact that when an employer is contemplating moving from fully insured to self funded, uh, with or without a stop loss captive, it's not a short term decision. You can't think of it in what is my immediate savings going to be? It's really a long term strategic decision to take control of the health care costs and as you said, uh, drive that stability in the pricing. Because if you stay fully insured for the next 3, 5, 7, 10 years and you stay on that trend line at an average of 12% a year versus you move into a self funded environment and control that cost and flatten that trend line, you got to think of the 5, 7, 10 year savings over time, uh, and the impact that it's going to have downstream. Year one savings might be minimal. That's not the point. The point is to take control of the healthcare spend and to achieve that stability and that long term cost containment.

Speaker B: Absolutely.

Speaker A: Uh, Anthony, thank you so much. Uh, before we go though, I have some rapid fire questions for you. So we get to know you a little bit more personally. Nothing too crazy. Got me? Okay, real quick, uh, what was your very first job?

Speaker B: My very first job was working at a pizza place.

Speaker A: One thing you'd bring with you to a deserted island.

Speaker B: My phone.

Speaker A: If you could travel anywhere in the world, no issues, no time constraints, no money constraints, where would you go?

Speaker B: I think I would go to Japan.

Speaker A: All right, uh, what's something you could eat every day of your life and never get bored of?

Speaker B: Greek food. Oh, my gosh. Love Greek food.

Speaker A: And finally, uh, Anthony, at, ah, OneDigital, we're celebrating 25 years of what we call building for better with our clients, with our partners and teams. What's one way you can build for better? Um, in 2025.

Speaker B: Build for better in 2025. I need to drink more water in 2025. Personally. That's my build for better. And I have a bottle right here.

Speaker A: Yeah, you're on the right track. All right, awesome. Uh, thanks again, Anthony, for joining us. We do appreciate your time, and thanks to those of you tuning in. This has been another episode of Friends with. Ra.