When Bob Cummings started out in benefits administration, health-insurance co-pays were $3, premiums were well under $100 a month, his office ran on MS-DOS, and it issued paper statements. Much has changed since then, obviously, but not his company’s success formula, based on personalization, creativity, knowledge of a complex and ever-changing subject, and what American Benefits Group prefers to call ‘enabling technology.’
Bob Cummings calls it his “acronym glossary.”
It’s aptly named, and those in his industry, known as benefits administration solution providers, really need one. Actually, it’s their clients that do, so Cummings and others at Northampton-based American Benefits Group, which he serves as CEO and managing principal, always have some on hand.
Comprehending what all those letters stand for will go a long way toward at least better understanding conversations involving benefits these days, he said, noting that there are no fewer than 60 acronyms listed on the two-page sheet.
They range alphabetically from AD&D (accidental death and dismemberment plan) to WHCRA (Women’s Health and Cancer Rights Act), with an alphabet soup of agencies, acts, products, and services in between.
There’s COBRA (Consolidated Omnibus Budget Reconciliation Act), EOI (evidence of insurability), HDHC (high-deductible health coverage), MSA (medical savings account), POP (premium-only Section 125 cafeteria plan), PCE (pre-existing condition exclusion), and PWBA (Pension and Welfare Benefits Administration), which, as everyone knows, is now called the EBSA (Employee Benefits Security Administration), which is obviously listed earlier in the glossary, in the ‘E’ section.
Got it? Of course not.
And Cummings and his team members, who collectively serve as benefits consultants, or advisors, understand that. They also understand that knowing what those letters and phrases, such as ‘Cadillac tax,’ stand for isn’t what’s really important. Rather, it’s being able to decipher which products add up to the best, most practical options for a company’s employees.
And because it excels at that basic mission, American Benefits Group (ABG — that acronym’s not in the glossary) is enjoying a period of profound growth and expansion of an already diverse portfolio.
“This is a really exciting time for us — we’re enjoying a major growth spurt,” said Cummings, who segued into benefits work in the mid-’80s after running a small insurance agency. “Hardly a day goes by that I’m not sending out new client proposals.”
Cummings attributed this growth to an intriguing blend of services — including ‘360-degree benefit-solutions packages’ and account administration — and operating traits that together add up to solid, dependable service that he categorized through early and frequent use of the phrase ‘customer-centric.’
The recipe calls for equal and generous portions of personalization, innovation (meaning investments in what the company calls enabling technology), creativity (more about what that means later), and knowledge, all of which translates into a single word (no acronym required): value.
To help explain his points on innovation and technology, which has been a staple of the company since the beginning in 1987, Cummings held aloft the so-called American Benefits Group Benefits Card, which was created in response to one of the most significant and far-reaching additions to that acronyms list, the FSA, or flexible spending account.
“This has been a real game changer,” Cummings said of the card, roughly 30,000 of which are now in circulation, a number that could rise 25% by year-end. “I can go use it at the doctor’s office, the hospital, the pharmacy, the dentist, the vision provider … it won’t work at a restaurant or a gas station — it’s a specially programmed card — but it will work at the MBTA [Massachusetts Bay Transit Authority] to buy my transit pass, and I can pay for my parking with it, too — any eligible merchant.”The benefits card, which acts in much the same way as a bank account, is just one piece of the equation, though, he went on, listing as just one example a mobile app that allows one to access their account through any connected device. But it’s an apt illustration of how this company has managed to adjust with the times to effectively serve customers and enable business owners and managers to more effectively navigate the complex issues involved with benefits.
For this issue, BusinessWest talked at length with Cummings and others at the company about the constantly and profoundly changing landscape of employee benefits, as reflected in that glossary, and how this firm has come to be a star performer on a highly competitive playing field.
Dollars and Sense
As he talked about the current benefits landscape, Cummings said it would be prudent to first turn the clock back nearly 30 years, when he first entered this field, and not long before he started writing a column on insurance benefits for a recently launched publication known as the Western Mass. Business Journal (WMBJ), now known as BusinessWest (no accepted acronym, although BW is gaining ground).
The benefits world was much different back then, of course, he said with a laugh, citing as evidence the $3 co-pays levied upon health-insurance policyholders, the emerging phenomenon known as the HMO (health maintenance organization), and the MS-DOS (Microsoft Disk Operating System) platform on the office’s computers.
“In those days, I was one of a handful of people who were actually doing group benefits and group health insurance,” he recalled, noting that he first set up shop on King Street in Northampton and chose the name American Benefits Group because he liked to think big and thought that brand reflected this philosophy. “And I can remember when group health insurance was less than $100 a month for the premium, and people paid $5 for an office visit and $3 for a prescription, so nobody thought twice about going to the doctor when they needed to. That was the world we lived in in 1987.”
That world soon changed, however, as the cost of health coverage increased in double-digit increments on a seemingly annual basis, and new products began to emerge along with yet another acronym that would eventually dictate the course of an industry — CDHC, or consumer-driven health care.
“By 2002, we saw the creation of health savings accounts [HSAs] and health reimbursement arrangements [HRAs],” Cummings went on. “Of course, no one knew what they were, just like no one knew what a flexible spending account was in 1988. I knew what a flexible spending account was in 1988, and said, ‘no one knows what this is, but I have the feeling that eventually, every employer will want to offer these to their employees.’
“So in 1988, in the MS-DOS world, I put my big toe in the water — actually, I put everything in the water, and I started administering flexible spending accounts,” he went on. “And I was one of the first people in New England, maybe on the East Coast, to do that.”
He started with a handful of clients based in and around Northampton — Florence Bank, Hampshire College, Mount Holyoke College, AAA of Pioneer Valley, among others — and gradually built the portfolio.
Before he could administer a company’s plan, however, he had to educate the employer — and the employees — about the specifics of the plan and its many benefits. It was a huge part of the equation, and it remains so today.
Indeed, while technology, products, the amount of the deductibles on the health plans, and much more have changed exponentially since Ronald Reagan patrolled the White House, the basic assignment for companies like ABG hasn’t, he went on.
Indeed, success still comes down to those four qualities listed earlier — personalization, innovation, creativity, and knowledge, said Cummings.
When a Plan Comes Together
The company’s customer-centric approach, along with all that aforementioned technology, including cloud-based systems, has in many ways leveled the playing field when it comes to TPAs, or third-party administrators.
This phenomenon, coupled with the company’s partnership with NFP (National Financial Partners), one of the nation’s largest distributors of financial-services products, has enabled ABG to greatly accelerate its growth pattern over the past decade or so.
Over that time, the company has expanded the portfolio of FSA administration from 40 employers and 1,200 participants to hundreds of employers and more than 30,000 participants, said Clodagh Parker, ABG’s director of Flexible Compensation Services, adding that the firm has gone from four or five employers to more than 30 in that period.
That portfolio is diverse, she went on, noting that it includes major employers across several sectors, including carmakers Fiat, Mitsubishi, and Ferrari North America (she jokes that Ferrari let her sit in one of its vehicles once), and Wall Street giant Cantor Fitzgerald.
But its core business, its sweet spot, if you will, is smaller companies with dozens of employees, rather than hundreds. Such businesses usually don’t have large human-resources departments (or even an HR person) and, thus, do need a partner and benefits-solutions provider and, quite often, an FSA administrator.
“I know that every small-business owner is majorly challenged today with just trying to figure out what they’re supposed to do,” Cummings said. “The average small-business owner needs help — they don’t have a full-time department to do all this stuff. If they have a bookkeeper or office manager, he or she is also wearing the double hat as the defacto HR person. These companies generally need to know not just what they’re supposed to do, but how they’re supposed to do it. And that’s been the biggest change from what I guess I would call the good old days.”
The process of serving these companies — and all other clients, for that matter — begins with that aforementioned 360-degree benefits solution, said Cummings.
“It includes strategic analysis for the client and helping the client design a program that’s going to meet their cost objectives and diverse employee needs,” he told BusinessWest. “It also includes providing all of the communication and the carrier negotiations — the pricing-market negotiations with insurance carriers; providing the technologies for the administration of the program, including the web-based, paperless enrollment and communications technology for the employees; and the administration services we offer on a national level, with the FSAs being the biggest.”
Elaborating, he said many of the clients the company has added over the past several years already offered benefits, obviously, but didn’t believe they were getting adequate value when it came to what was being offered and the prices being paid.
With the advent of mandated healthcare coverage, first in Massachusetts and then nationwide, there is considerably less room for negotiation on price, he went on, so the value comes in finding the right set of products for the employee group in question.“Maybe we go to the $2,000-deductible plan, and we implement an HSA, so we send less premium to the insurance company, and we use some of that savings to help cover some of the out-of-pocket expenses for the employee participants,” he said, offering one example of where the quest for value may take a business owner or manager. “If the client is of sufficient size, we can look at other strategic funding alternatives, including what’s known as partial self-funding, where we might use insurance to protect against more catastrophic risk, and have the employer fund the claims up to that limit.
“We would look to first develop a strategy in terms of the benefits program and looking at the existing benefits program and doing an audit,” he said. “Compliance is a very big issue these days — there’s so much more compliance today than at any other time in history, and it just got much, much bigger. In many cases, employers don’t even know about the regulations, let alone how to comply with them.”
In a nutshell, ABG analyzes a client’s data, needs, budget, and more, and comes up with a solution in the form of what Cummings called an “employer benefits HR web portal,” a platform solution called Employee Navigator, which eliminates paper and provides considerably more efficiency when it comes to enrollment, communication, and other facets of effective plan administration.
Letters of the Law
Summing up all that’s happened over the past three decades or so, Cummings said long gone are the days when companies in this industry were called upon to do little more than get quotes on insurance coverage.
“The bar has certainly been raised for insurance brokers and people working in the employee-benefits marketplace,” he explained, adding that companies aren’t looking for quotes, they’re looking for comprehensive, cost-effective solutions.
By becoming proficient at providing them, ABG is enjoying a period of profound growth triggered by still another acronym it’s been providing from the beginning: ROI.
And every business owner and manager knows what that stands for.
George O’Brien can be reached at firstname.lastname@example.org