A New and Efficient Way to Insure with A&C Management's Danny Nessim

Insurance! Hate it or love it, insurance continues to confound mere mortals. That’s the precise reason that has led Danny Naseem to the shores of success as founder and CEO of A&C Management Group.

Danny started A&C Management as a consultancy in the health insurance market. There surely must be a more efficient way to go about health insurance, he thought. The company now focuses on educating small groups of clients, accountants, CFOs, and HR consultants – basically centres of influence.

When A&C engages with companies, it’s typically 2 – 100 individuals at once. The goal is to inform and orientate them into a niche market of around 100,000 people to get superior health insurance.

A small company may have 20 or so employees working on an independent contractor status. But, this leads to high staff turnover because the big companies who offer better benefits and perks are always poaching. Danny agrees that one or two plans from a small company aren't mind-blowing. Compare that with a fleet of 6 to 10 plans from a Fortune 500 company, then you'll understand the gap is enormous.

Medical fleet plans may include dental vision plans, disability plans, life insurance, and so forth. So, finding a way to get the sub-50 people at a company to be in a market (not competing) of another 100,000 enables them to leverage certain benefits. The way it happens is to use a professional employer organization (PEO) that embraces small groups and attaches them to small- and medium-sized companies.

Each small group can now access HR services, compliance, and retirement. The payroll tax ID number helps to conceal a master policy for all the companies in the pool. Doing the payroll for these maybe 60,000 employees spanning hundreds of companies allows them to access benefits they'd not otherwise have.

The Process

Like everything else in life, the insurance cost and affordability Danny Nessim believes that benefits should have zero connection to employment. It also bothers him that while individuals can purchase home insurance independently, they rely on their employer for health insurance. The real problem is that it's a kind of lease that the employer gets, and health policy sellers would rather not sell to individuals due to the high risk of that individual getting sick.

There’s not enough risk-sharing in selling insurance to a 30-man operation, for instance, through the corporate structure. If one or two individuals have claims, they’ll need the other twenty-eight premiums to counterbalance those claims.

Let's now consider the case of one person, say you, buying insurance directly. It's a risky proposition for insurance companies. It's the reason why many of them started to leave the state exchanges – the risk is much more than they can bear. But, a business exists to make a profit while minimizing risk.

Employees can get a tax deduction in the corporate market – a significant benefit – that's a big carrot that employers dangle to attract talent. The would-be employees always want companies to go beyond the basic 401k. The thing with benefits, though, is that employees pay for benefits. Naturally, it matters to them to get plans costing twenty to thirty percent less. A New York resident paying more than $1,000 a month for a single fund individual plan is a decent deal. However, can it be $700? This significant difference becomes major if you’re buying it as a large group rather than as a small one.

What and How Employers Can Benefit

Since health insurance came to be part of compensation around WWII, employers have steadily looked to the upside therein. Not all employers do it this way, but that’s the case for most. It features as part of the compensation, and they get a full deduction.

It also happens when an employee takes advantage of the benefit. They don't have an obligation to pay the FICA. The absence of a FICA match is a plus. Today's reality is that employers now make it a part of a benefits package. It also happens that they may pay more in premiums but the compensation a tad lower.

Danny understands the 1942 Stabilization Act that limited employers' freedom to raise wages while competing on pay grounds for scarce workers. The Act succeeded in getting employers to offer health benefits as incentives. Government meddling seeks to protect the people, but eventually, healthy people want more than they currently earn, so they end up moving. Therefore, companies with an average employee age of 45 or less for health insurance will likely do well.

Besides age, the gender ratio is another crucial consideration that A&C Management requires from companies. Then, there's the question of whether anyone has a disability due to some major illness. If the answers to all three questions are positive, professional employer organizations will serve the company well. The ROI is simply mind-boggling. It's okay to point out here that a professional employer organization offers good plans for less than the open market.

Employees (especially those in management) usually negotiate plans when they go for jobs. It’s easier for employers to pay for a single instead of a family. However, professional employer organizations offer a wide range of plans to suit many specific situations. The lowest plan could cost around $450, while the highest single band would likely not top $1,000. The former plan is appropriate if a company only gives $450 – 500 towards health insurance. Quite simply, the employee can’t afford any expense out of their pocket. The plans band matters more when there’s a family to cater for.

The Ideal Client’s Requirements

Clients are often at a loss on how to go about health insurance. That's why they seek a consultant, someone who can break down the fuzzy concepts and eliminate their confusion about what they're paying for.

Danny Nessim also recommends comparing all options on the table. When you're savvy about that, it's easier to get concessions. The key is understanding the market and knowing where to go. Regardless of the competition's size, a consultant can help make sense of everything, especially when it comes to professionals employee organizations.

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