The Sticky Subject of HR Compliance

Will embedding compliance services in health plans drive client decision-making?

In 2021, compliance—staying informed and on top of it—ranked second only to mitigating healthcare costs in a Zywave Broker Services Survey asking employers to identify their top challenges related to HR and employee benefits.

There is no doubt we’re in an unprecedented time of compliance, where it is overwhelming for the average employer to understand all the things that they need to do to keep in compliance—whether it’s parental leave, COVID-management policies, or just training individuals who are working remote,” says Michael Turpin, USI executive vice president.

For small and midsize businesses with few resources, the pressure is formidable. And keeping up with compliance can take away from larger business goals, such as overall organizational health.

The term organizational health was coined by McKinsey and defined as an organization’s ability to align around a common vision, execute that vision, and renew itself through innovation and creative thinking. McKinsey has found that companies that score well on measures of organizational health also deliver stronger financial returns.

For many small businesses in which the person handling HR wears many other hats, it’s enough of a struggle to meet the bare-minimum requirements of state and federal laws and regulations, says Vince Murdica, chief revenue officer for Mineral, the HR compliance platform formerly known as the combined entity of Mammoth and ThinkHR. Only once employers reach that compliance threshold can they focus on human resources initiatives that make for a healthier and more productive work environment, such as building a culture that fosters a good work/life balance, creating a compensation strategy that attracts and rewards talent, and developing a strong succession plan for the future.

“Smaller companies are spending more and more time and more and more money to keep up, and the reality is they are falling further and further behind,” Murdica says. “It’s reached that level of ubiquity where you can’t separate the conversation about the health of the organization from the health of the employee. And that brings us smack dab to where we are today, of insurance companies now including HR or compliance offerings in their health plans.”

Murdica is referring to the fact that employers with two to 300 employees that buy certain UnitedHealthcare plans in 10 states now get compliance tools and access to expert advisors from Mineral. Bright HealthCare, an integrated healthcare and financing startup, is also embedding Mineral into its employer plans, which are offered in five states. Murdica says other insurers include the service with their small-business health plans, but those carriers declined to be identified for competitive reasons.

With Mineral, employers have access to an HR compliance library and professional advice on HR questions. Alerts and guidance identify changing laws and actions required to comply. A library of information covers topics ranging from health protocols and leave policies to wage laws and employee termination practices. Employers can use Mineral to create and update an employee handbook, develop employee notices and educational flyers, build job descriptions, and provide training courses on sexual harassment, worker safety and many other topics.

HR compliance goes hand in glove with employee benefits. What’s different now is that health insurers are finding material impact on their business through persistence, broker differentiation, member growth and client stickiness.


Carrier Value-Add

Mineral was first embedded in a health plan in 2019, as UnitedHealthcare tested it in plans offered to customers with 51 to 99 employees in south-central Texas.

“Over time, we’ve certainly expanded it as we saw success,” says David Milich, chief executive officer of UnitedHealthcare for Texas and Oklahoma. In 2020, he introduced it to the Lubbock area and then the north Texas region, which includes Dallas and Fort Worth. Last fall, UnitedHealthcare started offering Mineral in fully insured and level-funded health plans throughout Texas for employers with 51 to 99 employees and for level-funded plans for employers with five to 50 employees in both Oklahoma and Texas.

“We opened it up again because of the success that we have seen with it in terms of employers and even our distribution partner brokers who are really seeing the value in it and liking it,” Milich says.

Overseeing UnitedHealthcare’s commercial accounts for Nebraska and western Iowa, Matthew Milam knew the small businesses buying his health plans were struggling to keep up with fast-changing laws and regulations, even before the COVID-19 pandemic exacerbated the challenge beyond anyone’s imagination.

When he heard the pitch for a way to bake third-party compliance services into his small-business health insurance offerings, Milam was primed to give it a try. Using the Texas experience as a template, Milam incorporated Mineral into fully insured health plans for organizations with 51 to 99 employees in Nebraska and western Iowa in the fall of 2020. On April 1 of this year, he expanded it to level-funded plans for employers with five to 300 employees.

“UnitedHealthcare offers many, many services that I would deem differentiators,” Milam says. “I just thought this was a value-add that customers badly needed.”

Perhaps it’s not all that surprising that health insurers might follow the lead of brokers, payroll companies, professional employer organizations (PEOs), and HR-related technology companies in trying to differentiate themselves by offering to meet the HR compliance needs of small businesses. USI senior vice president James Olney, an employment law attorney whose team provides HR services for the brokerage’s clients, finds precedent for the idea in the property/casualty industry, where insurers have long bundled risk management and safety compliance programs into commercial policies.

“I think there really is a big need for this, and one of the reasons for that is that employment law compliance is getting increasingly complex, in no small part because of multistate employment,” Olney says. “It takes a big player to be the first to do it, and I think a lot of the other carriers are already sitting in the wings, watching and seeing how this rolls out.”

Jeremy Hertz, senior deputy general counsel and director of HR consulting for Acrisure, agrees that the demand for HR services from small employers might encourage other health insurers to get in the game, making HR compliance software a baseline offering, like employee assistance programs (EAP). But even if they do, he adds, the offerings will run parallel to, and not replace, the hands-on HR consulting services that brokers offer. “As good as that product is,” Hertz says of Mineral, “90% of the people who have access to it end up calling my team anyway. They want to deal with one person. They want to build that relationship.”

Turpin also questions how much value clients will place on the service, even if they do use it. He says including HR compliance with a health insurance plan could improve retention, but he doubts it would become a significant factor in a client’s buying decision or that other carriers will rush to make a similar offering. “Essentially, what they’re doing is giving them tools and capabilities that make the business stickier,” Turpin says.

“So to the degree that you could get them a kind of a virtual HR assistant or something that has virtually everything they need in a single repository, it’s going to be of keen interest. But I don’t think it’s a game-changing thing that is going to boost retentions by 20% or stop the client from leaving if the price isn’t right. And I don’t think it’s going to be the first of a series of changes where carriers are trying to provide more and more HR services.”

Leg Up For Small Brokerages

Small agencies and brokerages that lack resources to invest in HR support for their clients might benefit the most from a health insurance offering that includes a self-service HR compliance platform like Mineral, brokers say.

“Agencies over time will continue to migrate toward being able to provide HR and compliance solutions, but it’s an expensive solution to come out of the agent’s pocket,” says Kerstin Williamson, president of Benefit Concepts, a Houston-based brokerage acquired last year by Alliant. Even though her firm offers clients access to Zywave’s HR360 platform, producers still really like being able to show clients the UnitedHealthcare plans with Mineral embedded.

“One of the great things about Mineral is that it really does help check that box and provide amazing support with HR and compliance,” she says. “I do think UHC has taken a step in a different direction that differentiates them, but I’m not sure I agree that all carriers will follow suit.”

Robert Slayton, owner of Robert Slayton & Associates in Naperville, Illinois, licenses Mineral and offers its service to all of his clients, who take advantage of it for training, creating employee handbooks, and answering specific HR questions.

“I use it a lot because it saves us time,” Slayton says. “We don’t have to go research something for a client. They can either ask themselves, or if they come and ask us, we put in the query. You need sexual harassment training? You can find it there. You need OSHA training? You can find it there. So it’s a really nice extra added value that an average broker doesn’t give.”

And because most brokerages don’t offer that level of service, Slayton says, the inclusion of Mineral will increase the appeal of a UnitedHealthcare plan.

“From a positioning point of view, I think they’re incredibly smart to do it,” says Slayton, author of The Healthcare Manifesto. “All things being equal, which would you prefer—plan X with a different carrier or plan A that includes unlimited HR support? That’s easy, isn’t it? I think it’s going to allow them to sell more business over this next year than they would have, because it’s an important differentiator.”

I think there really is a big need for this, and one of the reasons for that is that employment law compliance is getting increasingly complex, in no small part because of multistate employment.


Under the Radar

Filice Insurance Services, a Bay Area brokerage that became part of Acrisure in 2017, saw a need for these services years ago, and in 2006 Filice established a service to help employee benefits clients that had a single person—if that—handling all of the organization’s HR responsibilities.

“Oftentimes it was the office manager turned into the HR manager, and they had a really tough time navigating,” says Dawn Alvarez, Acrisure executive vice president of client services and compliance. The compliance team conducts audits to ensure employers have the right policies in place, reviews handbooks, and helps deal with issues like managing leaves of absence. While the HR experts answer compliance questions, they stop short of providing legal advice.

Even as Alvarez promoted the personal service her team offered, producers clamored for her to add Mineral (then ThinkHR) to her department’s toolbox because clients were asking about it, and she did. Clients love the training Mineral offers, Alvarez says, but still usually call her office for compliance questions they could, in theory, ask Mineral on their own. “While our clients have access, I would say 90% of them don’t access it,” she says. “They still come to us, and we access it internally.”

Shawn Simme, a producer with Benefit Concepts, found that small employers didn’t recognize the value of Mineral in their health plan until they needed it. He has heard from employers that used it to get information about COBRA, to get help with applications for the Paycheck Protection Program early in the pandemic, and to communicate with employees about COVID testing and vaccination requirements. One client told Milam that getting access to these services was “like Christmas in August,” but it takes a while for many employers to start taking advantage of it, Milam says. Since the rollout in Nebraska, just over half of employers asked for a demonstration. Employers used Mineral to complete about 90 HR courses and to resolve nearly 40 HR compliances cases. The system tracked almost 600 views of information in the compliance library. “We’ve had a host of them complete employee handbooks that they never had,” Milam says.

Who Wins the Client?

Among UnitedHealthcare leaders in other states, the idea has been catching on. This spring, Mineral was embedded in the insurer’s small-business health plans in Minnesota, Illinois, North Dakota and South Dakota. Mineral expects its product to be embedded in health plans in all 50 states by the end of 2023.

“HR compliance goes hand in glove with employee benefits,” Murdica says. “What’s different now is that health insurers are finding material impact on their business through persistence, broker differentiation, member growth and client stickiness.”

That small businesses need help with compliance is clear, and filling that need is a value-added service from whoever provides it. As benefits brokers and carriers face greater demand for services from their clients, the ability to solve for more than just medical coverage may attract, and retain, employer clients. And while cost still seems to be the major driver in health plan choice, helping to improve employers’ organizational health—and thus their bottom line—may be a competitive advantage.