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Benefits Agency Riding a crest of benefits sophistication Re-established benefits division thrives on wellness and retirement services By Len Strazewski
When Johnson Kendall & Johnson, Inc., in Newtown, Pennsylvania, split from its progenitor agency the Johnson Companies in 1992, executives envisioned a property/casualty insurance specialist that might accommodate the benefits needs of its customers with some simple brokerage services. Managing Partner Bruce R. White says almost everybody thought the task would not be too difficult. "In those days, a broker would fax a carrier the request for renewal and the company would fax back the new rate and premium," he says. If there was any competition among health plans, the agency could help the client decide whether to go with the lowest bid or a familiar incumbent. But rising health care costs and increasing complexity quickly brought an end to those simpler days, he notes. And JKJ changed with the times, building an employee benefits practice that offers strategic support as well as brokerage services and an array of specialists who can support strategic planning and 21st century approaches to benefits management. White says the agency re-established its employee benefits practice in 2000, "with a whole new style" and "today, employee benefits is a major part of our business." The firm's benefits division, JKJ Benefits, Inc., provides life, health, dental and disability insurance products, and employee benefits consulting as well as wellness and compliance services. Separate divisions JKJ Retirement Services, Inc., and JKJ Financial Services, Inc., provide retirement plan consulting and personal wealth management. JKJ & H International, Inc., provides international expertise to assist employers with workers overseas that need to coordinate with the benefit requirements of foreign countries and the special needs of frequent international travel and international operations. The agency has about 80 employees, 15 of whom specialize in employee benefits, White says. Employee benefits generates about 20% of total revenues but continues to increase as the economy continues to rebound. "We a saw a dip in benefits revenues for the first time in 2007 and 2008 as the recession hit and some of our client employers reduced their workforce. But the economy is clearly coming back and with it, so is the volume produced by employee benefits," White says.
Clients range in size from small employers with 50 or fewer employees to large groups of 1,000 or more employees, White says, but the defining characteristic is sophistication. JKJ client companies are united in their need for more sophisticated strategies that provide better ability to meet business goals. "'How do we control our costs?' That's the big question our clients are asking," adds Julie Bartl, vice president of group benefits. "It's not just about what benefits to offer or what insurance company to choose." She says employers "have run out of options to control costs with changes in deductibles and coinsurance. They are looking for long-term strategic plans that address the underlying health causes of their costs. "Bartl says employers also have had to rethink their delivery systems as well as their administration in order to comply with increasing compliance demands, some of which have sprung from new health care reform regulations. Health plans have improved their own services to meet evolving needs, she says, but employers are demanding more flexibility. "As a result we have begun providing more diverse tools and resources that allow employers to engage in their own management and allow us to assist them in more sophisticated ways. "We have become much more active and engaged in the life of our clients. That is probably our key differentiator." The largest health plans in the area include Aetna Health, United Healthcare and Independence Blue Cross. However, the agency also provides self-funding options, including a Tennessee-based benefits captive insurance company managed by Pareto Captive Services LLC in Philadelphia. Bartl says employers with as few as 50 employees could participate in the captive funding design but, whatever their size, they must be committed to taking better control over their cost factors. Claims analysis, more sophisticated plan design and participation in wellness management are essential. Wellness and health services have become a prominent new component of benefit services. The firm employs three wellness specialists who are certified Wellness Planners as well as life and health agents who design custom wellness plans for clients and work with local health plans in delivering combinations of services that meet employers' strategic goals. The firm is also providing behavioral health services, partnering with Health Advocate, an employee assistance program in Plymouth Meeting, Pennsylvania. Wellness Coordinator Amy Powell says the agency began to aggressively target health and wellness strategies for employers in 2009 with the hiring of its first wellness coordinator. "Employers were coming off several years of health premium increases ranging from 15% to 25%. It became important to the agency to offer their clients some long-term strategies to help lower their rates." Powell says the agency's broad client base posed some early challenges. "When we started, our intention was to create an off-the-shelf wellness program that could be applied to any or all of our clients. But we quickly learned that would not be feasible. Our clients run from A to Z, all forms of industries including health care and assisted living companies, manufacturing and business services. Each one has somewhat different needs and challenges." However, Powell says employers are more interested than ever in wellness approaches, at all levels, from the "C-suite" of executives through human resource management, which encouraged the agency to provide a program. The result was a trademarked proprietary program, "Health Matters," which provides a strategic plan for each client and tactical programs that meet special needs. JKJ was the test market for the service, rolling out and experimenting with rewards and incentives with its own employees first. Now, among the various approaches, the wellness program helps employers assess the current health of employees and seeks to understand their future wellness needs and interests, develop an internal wellness committee and select incentives that will drive employee participation and promote campaigns and challenges. The agency then provides wellness educational materials including monthly newsletters, "lunch and learn" programs and seminars, and develops fitness and nutrition programs that fit within the strategy. The specialists then help employers track and evaluate program participation and results. The wellness specialists also assist clients in coordinating their health incentives with aspects of the health benefits program, including claims data, prescription drug benefits, and chronic care management. The coordinators also assist employers in choosing from among the best in class of local health providers that can conduct biometric screenings and health risk assessments.
Retirement services is the newest division of the agency's benefits operations—or possibly its oldest. Johnson Companies Benefits Consultant Ted Benna created the first 401(k) retirement savings plan in the early 1980s, taking advantage of a little-known provision in the tax code enacted in 1978. JKJ did not retain the retirement practice in its spin-off from the Johnson Companies but as the agency reestablished its benefits practice, executives began to incorporate retirement benefit consulting into its comprehensive services. In 2011, the agency opened JKJ Retirement Services, the result of a merger with a small retirement services company, notes Ben Hall, vice president and managing director of the division. The merger brought the firm back into the 401(k) and defined contribution plan business, but not exclusively. "The vast majority of our clients have 401(k) or 403(b) defined contribution plans, but what sets us apart from other consultants is that we don't do only defined contribution plans. We also consult on defined benefit pension plans, hybrid programs such as cash balance plans, and non-qualified deferred compensation plans." Defined benefit plans may have lost some popularity since the introduction of 401(k) plans, but many employers still maintain the traditional pension plans. "Defined benefit plans have been an under-serviced area of retirement benefits and for many clients, they have been a real pain point," he explains. As a result, some clients require plan tune-ups and maintenance that are not generally available from local agents and brokers. The retirement services division provides a wide range of support services, Hall notes. Retirement specialists can assist employers in analyzing their retirement strategies, developing an investment committee to support plan design, provide plan design consulting and employee education as well as ERISA compliance recordkeeping. Hall says the division can serve as a co-fiduciary to support compliance and provide administrative support as needed. "Many brokers provide a generalist experience—a single account executive who has a general knowledge applicable to the most likely problematic issues, but JKJ is an agency of 'experts' who can team up to respond to sophisticated benefit challenges." The firm has a "culture of cross-selling," he says, and executives from the various divisions maintain their discrete niches, "but run in packs," working in teams with clients as needed. Hall says the retirement clients overlap the agency's health benefits and property/casualty insurance customers. The agency specializes in small to medium-sized employers generally with fewer than 1,000 employees and retirement plans typically with $2 million to $25 million in assets.
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