S2:E47 Roofing Road Trips Live! With Tom Shanahan and Ted Ryan on Self Insurance - PODCAST TRANSCRIPTION

Editor's note: The following is the transcript of an interview with Tom Shanahan and Ted Ryan, of NRCA and Vault Strategies. You can read the interview below or listen to the podcast here.

Heidi Ellsworth:
[inaudible 00:00:03] We pre-record them and we send them out to the world through our podcast channels. But today we are doing something a little bit different. I'm pretty excited about it. My name is Heidi Ellsworth and I'm a RCS, owner and partner. And we today are with Ted Ryan and Tom Shanahan, and I'm going to let them introduce themselves, but they are here today to kind of, take over a little bit this Roofing Road Trip and give us some information, asking questions to each other, giving answers about the new NRCA health insurance program. This is revolutionary for our industry and it is so important. So I'm very happy that you're all listening today. And I want to, again, introduce Ted Ryan. Good morning.

Ted Ryan:
Good morning, Heidi. How are you?

Heidi Ellsworth:
I am very good. Thank you for being here today and Tom Shanahan with NRCA. Thank you so much for putting all this together.

Tom Shanahan:
Heidi, happy to do so. Thanks for the help.

Heidi Ellsworth:
That well, and Tom, you're going to kind of sit in my chair today. So you're taking over the questions, on this Roofing Road Trip. That's why this is so special, a live presentation, and also a guest interviewer. I have to tell you I'm very humbled because Tom has done a lot in the industry. He gives this so much and I just feel just honored that you're here today, Tom. So let's get started with you talking about the health care program. Maybe you can start us off, talk a little bit about how it came into be, and then start with your questions for Ted who is the expert.

Tom Shanahan:
Yes. Thanks so much, Heidi. So yeah, again, for those of you that don't know me, Tom Shanahan, I work with NRCA, I've been there 31 years, and I've been as their risk manager. So I deal with the health, safety and insurance related issues that face the roofing industry. And with that have NRCA in my role, for NRCA and for representing our insurance board of governors, have been looking at and offering health-related programs, over all those years. And it's taken on many different forms over the years and some have worked well and some haven't and throughout all of that, we've learned a whole lot about, well, not only navigating the laws and regulations that have to do with having a national program in particular, but also about understanding and appreciating, some of the nuances in terms of health insurance.

Tom Shanahan:
And that's one of the things that has me so excited about in particular. And I know our insurance board of governors feels the same way about both health strategies and how they're offering their services and products, now in particular to the roofing industry. So with that, I'll just start down here and just introduce Ted. Again, Ted if you could tell us a little bit about yourself and then I'll jump in with some questions.

Ted Ryan:
Sure. Thanks Tom. My name is Ted Ryan and I'm the executive vice president for business development for Vault Strategies. And I am the program manager for the NRCA health insurance program.

Tom Shanahan:
Terrific. And like I was saying Ted, I wanted to set this up a little bit uniquely because as we've been, over the last three or four months in full gear with the health insurance program and talking to contractors about it and getting out there and promoting the program, marketing the program, what I've noticed is that there is understandably kind of a lack of understanding about the different health insurance products and offerings that are available to roofing contractors and it's to no fault of their own let's face it. Everybody kind of hates insurance setup.

Tom Shanahan:
I hate to say that, but especially since it's part of my livelihood, but I get it every time I have to go shop for NRCA health insurance or the business insurance and all the work and effort that goes into that, you kind of think of it as having gone to the dentist once or twice a year. And that's not exactly the pleasant experience, but you've got to do it and you glad you did it when it's done and all that kind of stuff. So with that though, I thought maybe first we could start with, because I don't think there's a really good understanding between Vault Health Strategies, who it is as an organization and how it is unique in terms of its relationship to the other like we said, the Blue Cross Blue Shield and at that all those kinds of things.

Ted Ryan:
Sure. Vault Strategies is a health insurance company. Just like if you will, a Blue Cross Blue Shield, as well as a Cigna, United, except for we focus in the self-funding space that most of your members are probably very familiar with, Blue Cross Blue Shield or United or a Cigna or an Aetna. And they're used to essentially, writing a check every month, once they've decided, which of those health plans that they offer are the plan for their organization.

Ted Ryan:
So typically they would simply do their health insurance through one of those larger companies where we're a little different is we are yes, an insurance company, but we focus on self-funding and the difference between a fully insured product where you write, one check a month for all your employees that covers their claims, all of their healthcare, with us in the self-funding environment, some of the risk is taken on by the employers.

Ted Ryan:
So when you're dealing with a fully insured Blue Cross Blue Shield, Aetna, Cigna 100% of the risk is with those insurance companies. And that's why their premiums are more expensive when you're in the self-funding environment. The employer is taking on a portion of the risk. It is still capped by an insurance policy, but the employer is taking on a portion of the risk. And if the employer has a healthy population, then we're going to end up reducing their premiums that they're paying and thus the cost of their healthcare.

Tom Shanahan:
So just for a second, just in terms of terminology, we're using the word self-funded and what comes to mind is the word that comes up a lot is self-insured or self-insurance. And I'm wondering if you could share with us the difference, if any, between those terms?

Ted Ryan:
There really is not much of a difference. Those terms are used to describe essentially the same thing when you're self... Again, when you're self-funding, is there still insurance involved and the insurance and the self-funding world is meant to cap the overall risk exposure of the employer. So in self-funding products, the employer is actually assuming part of the risk of their plan in essence, because they are paying out of their cashflow on a monthly basis, whereas in a fully insured product, the employer is not taking any of the risks 100% of the risk lies with the insurer.

Ted Ryan:
So, as an example, if your premium payments are $10,000 a month to cover all of your claims, all of your administrative costs, so on and so forth, and you're writing that check to a Blue Cross Blue Shield, for instance, you will never see that money again, whether you as an employer and as your employees, whether they ever use the benefit or not, that money is gone, and it's out the door in a self-funding product, you're only paying as you go, in a large group scenario.

Ted Ryan:
So in a large group scenario, most companies over a 100 employees, if they're in good general health, they should be looking at their self-funding options because you're going to pay for what you use under those plan designs. There's still insurance there that is involved that will cap you out of pocket, expenses on any given month with respect to a specific employee and their costs, or overall an entire plan year. But by moving into the self-funding space, you're actually paying for what you use.

Ted Ryan:
Now, when you... There are two different types of self-funding products, generally, there are essentially, the larger plans for groups that are 100 or more, with those plans that are a 100 and more, there is a stop loss policy in place that caps the monthly exposure per employee, as well as the aggregate exposure of the plan over a period of time with a smaller group, basically under a 100, you have what are called level funded plans. They are also a self-funded product.

Ted Ryan:
Those plans will look and feel a lot more like what your members are probably used to buying from a Blue Cross Blue Shield. It is a set monthly payment based on what is expected as the total number of claims that, that group is going to have over a year. So if it's expected that they're going to have a $100,000 worth of claims, there is, essentially, they divide, they add 25% just to make sure that there's enough money there in case it's a tough year or a bad claims experience for the employer and that capture risk. And they divide that by 12. So if it was $120,000, for the years, your expected costs, it would be $10,000 a month, for that employer now, because it's priced at 25% over the expected claims cost.

Ted Ryan:
If you don't use or you have a better year than you expect, right? And you don't use the portion of that $120,000 that is collected for your claims, right? And let's say you only use your claims under that scenario was essentially $80,000 and you only used $40,000 of that claims fund. You would get that $40,000 back at the end of your insurance run out period. So it's a way to hang on to your money, and to pay as you go, if you will. And you're assuming some of the risks when you do that, that's, what's the big difference between a self-funding product versus a fully-funded or fully-insured product, the employers taking on a portion of the risk and is paying out of their cashflow.

Tom Shanahan:
So just breaking that down just a little bit, just because there's a lot of terms there and a lot of... And I think a lot of people are very familiar with these concepts, but what I'm going to do is break it down just a little bit. And that is when you're talking about, the amount of money. So like, we call that the premium that an organization is paying, let's say in a level funded program that you just talked about. So for the smaller contractor, which would probably be pretty much the case for most of our members, not all of them, but most of them would be in that lower tier.

Tom Shanahan:
So they would say, whatever, like just using your example, let's just say, for example, it is $10,000 a month that they're paying and that would be their premium for the year. And then as you do you look back on the year and kind of say, "Hey, they only used X amount, they'll get so much money back." So is there a portion of that $120,000 that you talked about that is in the sentence that it goes towards. So there's always a percentage or so that goes towards the expenses of the program that bald has or could they get their whole $120,000 back?

Ted Ryan:
Right. So breaking it down like that. And that's a great question. It's a great way to look at it. So if you look at an employer, let's just say, it's an employer that is going to be spending $120,000 a year, in total expenses for their health plan for coverage of that, $120,000, a certain amount of that $120,000 is allocated for the cost of running the plan. And so those costs are the administrative costs of running the plan. So of that $10,000 a month in that scenario, about X percentage of that is let's say 30% of that is going to be used for the administrative expenses. It is expected that the remaining 70% of that, $10,000 or in this case, $7,000 would be allocated to the claims fund. These are for employees that go see the doctor, and then the insurance has to pay out the fees that are associated with the care that has been provided.

Ted Ryan:
So that's how that works. So let's say that you, as a group are going to spend $120,000 a year for your health insurance, roughly $10,000 a month. And that $7,000 of that money is allocated per month for claims. So if you take seven times 12, that's $84,000, $84,000 is what is expected that your group will spend on claims over the course of the year. Now in the event that you only spend $50,000 of that, that means $34,000 is still sitting in your claims bond. That's your money as an employer, that's money that you paid the insurance company for health coverage that was not used for claims now under a self-funded plan, like with Vault the employer, where after a nine month run-out period, because you have to make sure that all the claims are paid and some claims come late and months later.

Ted Ryan:
But once that run out period is done that $34,000 is the employer's money that goes back to the employer, either in the form of a check, they can reallocate it towards the cost of their ensuing years coverage. There's a number of things that they can do with that. But I think the key difference is versus a fully insured carrier. You would write your premium check and you would never see it again. So let's look at this in terms of all things being equal. All right, let's say that Vault health insurance on the level funded small group plan, which is most of your members, let's say that we are exactly the same cost at a very similar plan structure as a Blue Cross Blue Shield.

Ted Ryan:
Why would you choose us over them? You would choose us because two things. Number one, you have an opportunity to get your money back. If you don't use the claims and you have a good claims year. Number two, you're not going to pay any more than you paid Blue Cross Blue Shield, right? Number three, you actually own your claims data. So if you ever tried to get information from one of those larger companies, they won't give it to you. How can you make informed choices as a consumer of healthcare when no one is telling you what you're paying for? You need to understand what your health experience is so you can understand what benefits to offer.

Tom Shanahan:
Excellent. So, again, there's always so much information here that we're sharing which is great. One of those people that I say, "Ted's forgotten more about insurance" and I'll ever know, it like oracle comes with, so let's break it down a little bit. And that is, as you were talking about, so just again, just to break it down. So for example, if in our example, a minute ago, you talk about the $84,000, that was set aside the 70%, right, the $7,000. So just theoretically, I know this wouldn't happen, but just say, theoretically, you had a company that used none of that. Nobody went to the doctor, everybody was healthy. It just was a great year. So theoretically they could get their $84,000 back.

Ted Ryan:
Yes.

Tom Shanahan:
Okay. So that's about... So I just wanted to underscore that the difference between the typical health insurance, that almost all of us buy where we sync our, we call it some costs, right? The $10,000 a month premium is something you spend it, it's gone and you're living in this world where you think, Oh my gosh, that's great. I got a good deal this year. But I'm still sending out $10,000 now with Vault, if you qualify.

Tom Shanahan:
So we'll get there in a second for a self-funded program, then the difference is, and why somebody should be considering looking at those is because there is the opportunity for having the exact same coverage and at the same premium or possibly less, or possibly more than you'd want. But still the thing is you have to consider, even though the premium is more, is that if you understand your claims experience, you would be getting some of that back and therefore year over year, if you balance those two things out after that nine month period, you could still be spending quite a bit less than you would even know up front the premium was lower.

Ted Ryan:
That's absolutely correct. And so, for a lot of people moving from what they're familiar with to a program that looks and feels a lot like what they're used to, but they know is different. They don't recognize the name, Vault Health. These are big decisions for companies. But what you described is actually, very accurate. It is still insurance. These are all ACA compliant plans. We have to comply with that. And in the case of small level funded products, we also have to comply with state rules as well. So there's a number of things, but I want everybody to understand on the call that, while you may not be familiar with Vault Strategies or the Vault health plan, we are an insurance company and we are regulated by the same departments of insurance that regulate all of the other names that you're all very familiar with.

Heidi Ellsworth:
So I want to jump in here just real quick, because being a small business owner myself, one of the questions that is in my mind right now, as I'm listening to this, which is really fascinating, but one of the questions is in my mind is what if we spend more, what if we spend more than the $84,000, what happens then?

Tom Shanahan:
Great question.

Ted Ryan:
You're still protected because that is, there's an element within the product. So all products are, when I say an insurance product, what makes up an insurance product? Well, it's the administration, right? It's your pharmacy benefits. It's your major medical benefits, your primary care provider, and covering their expenses. It's your, hospital and covering the hospital. So all of those elements go into a insurance plan. And the insurance part of the insurance plan is called Stop-loss insurance.

Ted Ryan:
Stop-loss insurance is exactly what it sounds like, stop the loss. It is essentially it governs your exposure and it caps your risk as an employer. So typically when an insurance company is rating a group or a rate. They'll look at the experience of the group. If they have data, if they don't have data, they'll look at things like your age, your gender, your zip code, right. Things like those things that we're all familiar with. And then what they will do is they'll say, what does this group, what do we expect this group based on that information to spend next year? And they'll put a number on it, and then they'll add 25% to that number.

Ted Ryan:
And that's where they set your rate app so that it is capped so that this is what we really expect you to spend next year. It's a $100,000, but we're going to plan for $125 just in case. And if you don't hit that then great, you have a chance of getting money back. But in your instance, Heidi, if you spend more than that and more than we projected, don't worry about it. There's insurance for that. And you paid for that[crosstalk 00:21:48] do not spend you're guaranteed not to spend any more than what they tell you.

Heidi Ellsworth:
I think that's so important on a small business, because you want to be able to plan monthly how much you're spending. And then, do live a healthy life, because I know when I was working at Carlyle, the good employers do a lot to keep everyone healthy, all of the benefits of education and all of that. So it really incentivizes the company to take care of safety, health, helping to make good decisions. So it seems to be quite an incentive to get that money back.

Ted Ryan:
Yes. And I want to go back to something that Tom said earlier, this is a strategy, okay, I'm going to Blue Cross Blue Shield, Aetna, Cigna, going to those large companies. You should absolutely shop your insurance year over year. And you should look at those companies and the options that they offer, some groups are just unhealthy groups and they're not candidates for self-funding.

Ted Ryan:
Self-funding whether you're a large group or small group is for the group that knows they have a generally speaking good health experience, and they don't want to participate in the mass pools with those other large insurance companies who are simply taking all the bad risks and pulling it with the good risk. Right. It's fair to say that if you are a healthy group, and you have, another unhealthy group that you're in the same bucket with that other group, in order to remain competitive, the insurance company is going to put rates out to that other group, knowing they have a healthy group that helps supplement the cost of that unhealthy group.

Ted Ryan:
This is a way for your healthy group members to look at their own insurance. And if they know, they're a healthy group, generally speaking, they could save anywhere between 15 and 30%. This is a long-term strategy. It's not just a short term one year strategy like Tom alluded to earlier, if you stay in your self-funding program and space, you will over time, not just save over one year period, but you will over a lifetime using the strategy. We'll say tens of thousands, if not hundreds of thousands of millions of dollars over a timeframe.

Tom Shanahan:
And let me just underscore that again, because in your example, Heidi, of the small business owner who had, let's say the bad year and also kind of tying in and [inaudible 00:24:29] is not here a little bit is the idea of a strategy makes them expensive, which is why I, as a risk manager, I'm so excited about this offering because you know what we don't want to do, basically the way we buy insurance and I'm doing it as well. Because that's basically what's been offered to us, is you basically are shopping price. You're looking at product, but you're... And in you're kind of weighing benefits of the program against that price. And what can my staff tolerate in terms of their deductibles and all those kinds of things, right? So you're weighing all of those different things, but it boils down to it's pretty much a price decision.

Tom Shanahan:
But in the Vault approach here, again, even if you don't initially qualify the reason to be really considering if you're in that frame, and we'll talk about that in a minute, is that because even if you have that bad year that you were talking about, let's say you went over 125%, you were at 150. Okay. So then what happens next year is your rates will go up, right? Because at some point you got to take care of that extra amount.

Tom Shanahan:
And that's how the insurance industry does it well in the typical market, when you're going in there, that's why you shop because you've got these rates. But if you know that, for example, the way that the data has run this year, or the experience that you're having over time, but we are one or two year thing while continuing to invest this way, then allows you to start participating because you can start getting money back.

Tom Shanahan:
It's offsetting the upfront costs, you get it back later. And so that's where this idea of a strategy is so important and it's in your name. And so it took me a while to kind of figure that out as well. But the idea that you really want to make sure that you're having a much longer view about your health insurance and as we do about its safety and all those kinds of, I don't know where to look at it as an immediate thing. We want to look at it as a long-term thing. So anything, Ted that I miss characterize anything in there, or was it?

Ted Ryan:
No, I think that was very, very well said. It is a long-term strategy. So typically a group, is going to have a bad year, every one to five years. But as Heidi, you asked the question, what happens in that year? You have insurance to take care of that. Now, if it's a whole bunch of little things that are, one type of event, your rates probably won't be affected very much the next year. But if it's an ailment, of course, the insurance company will have to price that in. But it's still as a long-term strategy. It is the best strategy out there.

Ted Ryan:
And if you look at the large insurance carriers, meaning the Blue Cross Blue Shields of the world, most folks are experiencing a seven to 10% rate increase year over year. That is compounding, with our programs, generally speaking, we're looking at anywhere between two and 5% increases, so it's lower. It is a long-term strategy. And I think that's the key Tom, that is absolutely the key.

Tom Shanahan:
Awesome. Okay. So now we've been talking about a level funded product for lack of a better word. And the reason for that is because you were saying that's generally the bucket, if you will, for the product offering for the companies that have a 100 or less. And I know you've talked before about that, depending on the group, it could even be dropped as low as 50. Yeah. I mean, in terms of the self, and maybe you have to correct on this, but in a self-funded program, which is for the larger contractor, so just let's say, right, I'm just keeping examples straight over a 100 employees. So how would the self-funded program then different?

Ted Ryan:
All right. Let's go back just a second and clarify, so that in a self-funded program, an employer is taking on a portion of the risk, whereas in a fully-funded insurance program, the employer doesn't take any risk. All of the risk lies with the insurance company, because all of the risk lies with the insurance company. That's why you pay more in premiums to the insurance company. And so in a self-funded plan, the employers taking on a portion of the risk. Now there are many types of self-funded plans, okay? But two basic categories are as follows.

Ted Ryan:
The small group plans, which are groups generally under a 100 people. The product is designed in a manner that they described as being level funded, the employers, especially those smaller employers, like you alluded to earlier, want to know what they're budgeting every month, they're smaller companies, their cashflow goes up and down. It has ebbs and flows. They need to know what their healthcare costs, which is often the second largest operating cost on their expense budget.

Ted Ryan:
They need to know what they're spending on healthcare. So the product is designed to take their total health costs for the year and divide it by 12 and every month they will fund 112th of their entire year's healthcare costs. So in the case, we used earlier $120,000 is the cost for the year they'll know, their budget is $10,000 a month. That's all they need to write a check for that will cover their benefits throughout the entire calendar year. At the end of the calendar year, if they haven't used all of their claims fund, they will get some money back. They'll get 100% of their unused claims dollars back. Now, if you look at the other self-funding products groups, over a 100, we categorize those as large groups.

Ted Ryan:
Those larger companies typically have more cashflow, there's more consistency with their cashflow, et cetera, et cetera. Those larger companies don't necessarily need the budget. They don't need that number every month of what we're going to spend. They can still budget for it internally that way we'll still tell them, Hey, as a company of 300 employees, you're expected to spend $100,000 a month. And they can budget for it internally, but the way a group like that's actually going to work.

Ted Ryan:
And what check they'll write at the end of every month is a little different. So a group of like say 300 employees that has a $100,000 cost of health insurance a month, they're going to spend a portion on administration costs that it's going to be a consistent number every month, but guess what? They may have zero claims in any given month. And if they do, then they don't have to write a check for claims, right? That's the single biggest difference between a level funded small group plan and what we call a traditional or partially self-funded plan for the large group in the small group space, they know exactly what to spend month over month, and it's capped, they will spend no more than that over the course of the year.

Ted Ryan:
If they spend less, they'll get money back in the large group space, they will get accounting every month of actually what they spent on claims or what is due on claims. And they will write a check for that amount. Some months, it may be $10,000, some months it may be $30,000. Okay. It fluctuates a little bit more and because in the group product an employer is literally paying for claims as they go, okay, because they're doing that. They don't get money back at the end of their plan years because they're only paying by the drink for what they use.

Heidi Ellsworth:
Mm-hmm (affirmative)

Ted Ryan:
So I think what's important is we're getting into some of the mechanics and the elements of self-funding. And I don't expect any of the audience to understand 100% of it, but these are elements and the ingredients that go into health plans and they go into the Blue Cross Blue Shield plans. They go into our health insurance plans.

Ted Ryan:
These are just the elements of a plan. How will you put those parts together for your plan audience, meaning your employers and their employees. It's a little different, that's all, but mechanically. It's all of the same parts. It's just that we take that motor apart. We put it back together again, and we build our own engine, that works for the small employer in the self-funded marketplace.

Tom Shanahan:
So in that again, just to kind of break it out a little bit, just to be hopefully very clear for the audience is that, so when you're in the fully funded product or that larger group, as you were talking about there, so they're paying as they go. So unlike the level funded group where it would be nine months after the year and looking back and you still get it back, but you just get it back later, they get it as they go, because based on their experience, is there a mechanism, you mentioned stop-loss coverage for the smaller group. Is there a stop-loss feature for the larger group as well?

Ted Ryan:
Yes, there is. So in any given insurance plan, you're going to have a pharmacy benefit and a pharmacy benefit manager. You're going to have a TPA, which is the Third-Party Administrator. That is a third party administrator that pays the bills essentially on your behalf. Then you're also going to have the carrier, the stop-loss insurance piece. That is the piece that is the insurance element of a health plan. And that is the piece that perhaps the risk for the employer. Okay. And so in all insurance plans, whether it's a level funded product, whether it's a fully funded product, like the Blue Cross Blue Shields, or whether it's a traditional self-funded product, which is just a fancy way for saying large group self-funded, they all have the same elements.

Tom Shanahan:
Yeah. So, each cost [crosstalk 00:35:22]

Ted Ryan:
And that's the other fourth major element. They have a network, right? So funded plans, we use Cigna as the network. So generally speaking in almost every state, Cigna is going to have the same coverage as Blue Cross Blue Shield or Aetna or United has. Now there's no one carrier or network that covers 100% of doctors in the United States, but we all know that Blue Cross Blue Shield, Humana, Cigna, Aetna have virtually similar coverage across the country.

Tom Shanahan:
So in a minute, I just want to kind of go back to that just for a second. But then we're going to pivot to those organizations that are good candidates for the self-funding market. So for a moment though, I just want to highlight that very important point. So for example, if somebody would go with Vault Strategies for their health insurance, you mentioned the third-party administrators and the way you plug into other services, for example. So you're using, primarily you said the Cigna outlet.

Tom Shanahan:
So in other words, if currently I had this Cigna, if I have my insurance through Cigna, they have the stadium networks and the BPOs and all that stuff, all those networks and everything Vault would still, for example, then plug into and use for example, that network as well. So for me the employee, it could look exactly the same, if I had Cigna in my current employer, at where my employer rather, and that next year we went with Vault and Vault uses that Cigna PPO plan, would it look the same? Or could it look exactly the same? And I would really as an employee know no difference?

Ted Ryan:
Yeah, it would look virtually the same in that instance that you described. So it's possible that again, all of these elements that make up and comprise a health plan, the pharmacy benefit manager, the TPA, Third-Party Administrator, the network, whether it's Cigna contracted doctors or Blue Cross Blue Shield, contracted doctors, all of these elements exist in every insurance plan, whether they are a fully insured plan, fully funded plan or self-funded plan, they're all the same elements.

Ted Ryan:
But in your instance, if we had somebody that was using the Cigna, fully funded product today, and they wanted to look at a self-funded product. They would still have Cigna as their network. So none of the employees doctors would change. So the employees would still carry an insurance card that has Cigna logo on it. The 800 numbers would change. If they have a question about claims or coverage, it would ring to the TPA that we use. And their pharmacy benefits by and large would stay the same as well.

Tom Shanahan:
Terrific. So let's pivot if you don't mind, I'd like to go to who is that in terms of a roofing company, for example, roofing NRCA member, what would prompt them to consider, the self-funded, self-insurance market offerings that Vault has to offer?

Ted Ryan:
Yeah, so a couple of things there are three basic questions. I think every, employer should be asking sort of themselves. And that is who is reviewing their claims today, in their current plan, are they relying on Blue Cross Blue Shield or Aetna or Cigna to look at the claims that are being filed for their employees and audit those claims for accuracy? Did the physician office or did the facility actually bill them correctly for the services provided? Okay.

Ted Ryan:
And then the next question I would ask is, what is the value of the discount that is being provided by your current PPO? What does it benchmark to? Hospitals will charge sometimes 700% of Medicare. So Medicare is paying $100 for a procedure and the hospital is charging $700 and Blue Cross Blue Shield may get 200% off that bill charge, right? Those are all things that an employer should ask because that's, what's happening in their current predicament, in their current fully funded products. Nobody's kind of watching the henhouse for the employer. Okay. And the employers don't need to ask. So you asked me, why would somebody look at Vault? First of all, it's a long-term strategy. It's a way for the employer to get control over their data and their plans, so they can make smart decisions going forward.

Ted Ryan:
But it's also because we do all those things. We audit the bills. The TPA's that we use audit the bills for accuracy and make sure that in fact, the contracts and the discounts are being applied correctly, things like that, those are the people that are in place. When I say the TPA, they're a fiduciary for the plan. When you are a self-funded plan, the employer owns that plan, the people that they hired to run the plan Vault, the TPA, the pharmacy benefit managers, those folks are all fiduciaries in the operation of that plan, unlike the others.

Tom Shanahan:
So earlier, you had talked about a group that has a currently good experience versus a currently bad experience. And that self-funding may not be the right option for them at the moment. So I'm trying to understand, what is the tipping point? I mean, should everybody get a quote from Vault and just see how it kind of how it goes and then think about it, in the way that I was describing before, Hey, this is a long-term thing. And if it's higher, great, we're going to take that risk from the risk manager, because we know that if it's one-off.

Ted Ryan:
Sure the typical health care consumer or employer, NRCA member in this instance, will rely on their broker to go shop the market for them and the typical broker, unless instructed to do so will go to the major market, the typical broker or employer. We'll look at Blue Cross Blue Shield, Aetna, Cigna, Humana, and United health. And they'll put it on a spreadsheet and they'll bring it back to the employer and say, here you go, take your pick of the lowest cost plan. After you look at the plans and the benefits. And if assuming you're comparing an Apple or an Apple, an employer typically is going to do the same thing year over year. They're going to not like what they see, and they're going to pick the cheapest plan. That is not a strategy because all we're seeing is that in employer's premiums are going up, what's called trend in the industry is going up on an average of seven to 10% year over year with no solution in sight.

Ted Ryan:
All employers need to look at all of their options. And if you have a broker that is unfamiliar with self-funding products and all they know how to do is shop the larger insurance companies. We're happy to educate your broker. We know you have brokers and you have relationships with them in your local marketplaces, but brokers don't always know everything there is to know about self-funding. We're happy to work with your broker. We're happy to talk with them and let them know what we need in order to produce a viable and a bonafide quote for you to consider the NRCA health program as part of your healthcare evaluation every year. And like you said, Tom, not an employer that does not have a good experience, may not be a good candidate for self-funding that particular year, but they should be coming back year over year, because one of the years, they're going to be in a good spot to look at self-funding as an option.

Heidi Ellsworth:
Ted, one of the things too. I just think that is so important is to have someone like you and your team who you can bounce these things off. I know you and I have been talking about Roofer's Coffee Shop and different things, and I'm just been incredibly honest of this is the state we're in. We're very small. This is we're a little bit older. We also have some very young people. And so, you've been, I think, great in saying, okay, well, let me look at what you have. And then let's talk about that and see if this makes sense for you right now. That is something that is missing overall when I feel when you are dealing with health insurance and it's very confusing and needs someone like that to help.

Ted Ryan:
Yeah. And so part of our role with NRCA is, we're not here to sell anything, right? We're here to assist members in evaluating their current healthcare benefits. We have products and services that will be great, matches, great fits for a lot of the members. And we can help members save a lot of money. There are those members, quite frankly, that we would just won't be able to help, but those members will get the benefit of the advice, right?

Ted Ryan:
They'll get the benefit of understanding, Hey, you've looked at your self-funded option today. You're not really a good candidate today. Here's why. Right. And then they can at least check the box. They know they're going to come back next year, hopefully, and they're going to look, but also they can rest assured that 100% of their energy should be focused in the major market with their broker shopping for the best plan. Right.

Ted Ryan:
And I've even had instances where, we've offered a very competitive offer and an employer has chosen to stay with their existing carrier because that carrier, while they were going to go up 10% on the employer, they decided that they didn't want to lose that employer. And it actually had the benefit of improving that employers cost with their existing health plan. I don't want people to shop us that way, but the fact of the matter is it is a benefit, right? The more you shop and the more competitive folks are, and in sharing that information, you're naturally going to be the beneficiary of that. So keep in mind, in many instances, we've matched the rate that we put out, and I was still trying to make the argument with the employer that, Hey, all things are equal. But with us, you get a chance if you have a good year of getting the money back, right.

Ted Ryan:
That particular employer, had waited just a little too long. And it was an easier pathway for them to actually just renew with their existing carrier. And that's fine, that's their decision. They know what their resources are and all of that, but I'm certain that the next year, well, a lot for a little bit more time. And if we're assuming we're competitive, again, even not necessarily saving money, but matching an offer, there is a still a compelling reason why you would want to go with us over that other carrier.

Tom Shanahan:
So to be clear for most of contractors and most of the NRCA members, the gateway to the insurance markets are their brokers. And so just want to underscore that, brokers are, that's how this program works too. We work through your brokers, and they are made whole the same way. They're made whole in any other relationship with any other insurance company. So, that's not a... So just want to rest assure that somebody is not concerned that their broker, who they have a wonderful relationship would not be welcomed. That's the opposite of that. They were very welcome.

Tom Shanahan:
And in fact, like you were saying, Ted, I think one of the things we want to make sure though, is that you, as the NRCA member who brings purchasing this is pressing your broker, whomever he or she is to be asking about the self-funded world. And if they don't, or aren't familiar with it, to be honest with you about that, because at this program can help educate them on that as well. So that they're offering you our member, a product that really might be significantly better for you, than just being the typical fully funded world that we've been talking about.

Ted Ryan:
Yeah. And as you know Tom, healthcare is changing, all the time and there's a lot to keep up with. So if your broker is not familiar with self-funding options, we work with a lot of brokers who will say that they're calling us and say, "listen, I really don't know much about self-funding options. You're going to have to educate me a little bit about your product so I can educate my client." We're happy to do that.

Ted Ryan:
We are an insurance company and we welcome brokers. Nobody has a better relationship with their client than they. They are also more familiar intimately often with the business itself and the needs of the client, the personalities, all of those things. And so we see great value in working with the existing brokers, trying to come up with a solution that best fits that employer.

Tom Shanahan:
Awesome. Well, that's great. I feel like we're kind of at a point maybe to kind of summarize, what we've been talking about here, Heidi.

Heidi Ellsworth:
Yes.

Tom Shanahan:
And maybe I could ask you if you don't mind me putting you on the spot for a second and just ask you, for example, as a small business owner yourself, and a huge supporter of NRCA and a member of what have you learned about self insurance through this process?

Heidi Ellsworth:
That is a great question, because I've learned a lot, and I'm just going to be very upfront. I'm not a fan of insurance. Never have been, probably never will be sorry, Ted, it's just one of those things you have to do in the world, and I dread it every year. And so in being able to visit with Ted about it and kind of really looking at as Roofers Coffee Shop has grown, how can we start bringing on, looking at different types of insurance?

Heidi Ellsworth:
And it really has helped because when I first heard self-funding, I was like, absolutely no way that will break us. We can't do it. Right. And it's like, no, that's not what it means. That's not what it's about. And so to really be able to hear the differences even today, between fully funded, level funded and self-funded, that starts to make sense to me, I'm really starting to kind of understand how that works.

Heidi Ellsworth:
And I would encourage on the contractors to find out more about it. And to even, like I said, be honest about what's going on because through, looking at our core group of people who were looking for insurance, we probably may not be a good fit, right. We're definitely not a fit for self-funded because we're too small, level funded has opportunity in the future. And so we need to... But we may need to do some things in our business to be able to get there and to be able to work with Ted on that.

Heidi Ellsworth:
And so Ted is like comparing right now and looking and say, okay, felt fully funded level funded. What should you be doing? I think that's all you can do as a business owner to really be able to understand. And I think the other thing that is really important to me is understanding what the costs are. I can remember. I mean, for how many years did I just go in? You need an X-ray great. Just go do it well, do I really need it? And how much does it cost? We don't ask those questions. And so I think what NRCA is doing is really making a big difference in opening to us to ask more questions and see what the opportunities are. And it's always, I mean, it's not the benefit of NRCA across the board.

Tom Shanahan:
Awesome. Well, thank you. What a great answer. I'd like to underscore just a couple of things here, and that is, like we mentioned, this program works through your brokers. If you don't have a broker, you can call us and we'll hook you up with Vault in that you can use one of their brokers. So there's no barrier to entry here, use the entry that you currently have, and if you don't have one, we'll help you. So don't worry about that. And the idea of just to underscore again what Heidi was saying is that, and Ted in particular will say, it's even in their name, Vault Strategies is that from my role as your risk manager, representing you from a NRCA standpoint in my department.

Tom Shanahan:
The idea that you consider this risk, that you have this exposure that you have, and you apply a strategy to it, that is more long-term and thinking is a really good business question to be asking and decision to be making and Vault can really... This program, like I said, at the very beginning of this, is very, very excited about offering this, because like I said, over the 37 years I've been in NRCA, this is the one program that I finally feel like we found a great fit. Ted, is there any parting thoughts that you'd like to share?

Ted Ryan:
No, I think you both summarized it brilliantly. I do think that, I want all of the members know that we're here to help. And we are, willing to work with your brokers we welcome that. We just want to put you on the best path forward. It is a longer-term strategy. There are some short term gains that can occur of course, if you're saving money right off the bank, but I can also tell you, and that's really going to be your entry point, right? You're not going to buy a Vault product unless it's competitive with what you're doing today. Understand that these are all plans that are ACA compliant. And also know that this is the only long-term strategy is to take control of your own data, so that you can be a smart healthcare consumer and your employees can be better consumers under your plan. Those are all long-term strategies that will help you defray the costs of health coverage, over the years to come.

Heidi Ellsworth:
I love it.

Tom Shanahan:
Heidi, I just to kind of address your and my too, annexed about buying insurance and going through that is I think one of the reasons we feel that way, and generally people feel that way is because you generally feel like you're at the mercy of the insurance companies.

Heidi Ellsworth:
Yes.

Tom Shanahan:
There's a lot of control and you're just like, okay, I have to do this versus like what Ted is saying here gives you a sense of control over these things and having, like you were saying, Heidi, a chance to really be considering whether or not getting that X-ray makes sense or not. So you really have a stake in this. So then your insurance becomes much more of a business tool. Then it becomes something that is just a vector that you have to deal with every year. So I think that's a great way of kind of answering our hanks [crosstalk 00:55:55]

Heidi Ellsworth:
That's what we need. We need as small business owners. And the thing that what I really see throughout the whole roofing industry is that's what we're made up of small, mid size and a few really big, roofing companies. So to be able to have all these different options, I think, and to have NRCA bring that to the market through Vault and Ted and Vault Strategies. Thank you very much for continually give back and to really make the professionalism and the opportunities in roofing, so much more than it's ever been before. And Tom, you've done that in risk and Ted, thank you for bringing that to our industry.

Ted Ryan:
You're welcome, Heidi. And if you need anything from us or you have any other topics that you'd like to cover, know that we are here for you and your members and your audience, and we want to be successful. And it requires obviously the members to help support us to do that. So we're here for you.

Heidi Ellsworth:
I think that's a great idea. I think we'll maybe look at that Tom on doing other types of topics. I would love to hear more about preventative. I think preventative healthcare is so important and how is that going to work out? So maybe throughout the year, we can bring some of these topics forward, Ted and Tom, and really kind of talk a little bit more to help educate our industry.

Tom Shanahan:
Sounds great.

Heidi Ellsworth:
Well, thank you. And thank you everyone for listening today to our first live Roofing Road Trips, this was pretty fun. I really enjoyed it and this would even be split up into some to parters or possibly, some even small tidbits so that people microburst that, you can all learn, how you want to learn. And that's what this is all about on Roofers Coffee Shops.

Heidi Ellsworth:
So please listen to this on your favorite podcast channels, tell other people about it and definitely visit our Read, Listen, Watch section at Roofers Coffee Shop, where you can read it. You can listen to it, or you can watch it. And most of all, you can learn about how to improve your business, especially on the world of insurance. So thank you, Ted and Tom again, and thank you everybody for listening today. Have a wonderful day.

Tom Shanahan:
You as well.

Ted Ryan:
Thank you.