Tribal Gaming Life and Disability Insurance

Are the Tribe’s enterprise’s paying enough attention to these expensive employee benefits?

With Tribal Gaming health benefit programs costing Tribes an average of $10,000 to $15,000 per employee per year, coupled with the challenges the Affordable Care Act present, it’s easy to understand why group life and disability plans are taking a back seat. Life and disability benefits are an important part of an employee’s total compensation, making them a very valuable tool for attraction and retention of quality employees. Equally important, they are also a place to look for substantial cost saving opportunities within a benefit program.

First, let’s discuss the benefits of providing a standard group life and disability program. Most Tribal gaming operations provide some level of employer paid Basic Term Life Insurance. This typically ranges from a flat $20,000 benefit to one- or two-times annual earnings. The benefits of an employer paid life insurance benefit are obvious, but there is an often over looked benefit ­– being able to provide a voluntary (employee paid) Supplemental Term Life benefit. This allows employees to buy additional life insurance in multiples of $10,000 to a max of around $300,000 to $500,000. These plans will typically come with a guarantee issue of around $100,000 to $150,000 which allows employees to elect up to this amount without having to answer any health questions (through evidence of insurability) or do a blood draw for the carrier to get lab results. Often times, this allows employees who are not eligible for individual life insurance to purchase up to the guarantee issue in a group setting, no questions asked.

Second, most large commercial employers are offering some type of employer paid Short-term (STD) and/or Long-term (LTD) Disability. This is no different when you look at the disability benefit offerings of most Tribal enterprises. The most common layout in a Tribal gaming environment would be a base/buy-up scenario. This would be where the employer provides a basic benefit of 50% of the employee’s income (base plan). The employee would then have an option to pay an additional payroll deducted amount to purchase a higher benefit plan of 66 2/3% of the employee’s income (buy-up).

We find that many employers underestimate the value of providing disability insurance. Because of this, they under communicate the benefit.  When disability benefits are properly communicated to employees it not only increases the participation of the buy-up plans, but it also significantly increases the perceived value, by the employee, of the benefits being offered.

Now on to what you really want to hear. . .  How can my employer sponsored life and disability insurance plans provide an opportunity to save the Tribe/Enterprise money?

First, because life and disability benefits typically take a back seat to health benefits, they often do not get marketed as regularly as they should. Combine this with a soft market and flat renewals and most employers and their brokers don’t take the time to do the proper due diligence. In many situations, a simple RFP process will provide the leverage to negotiate your renewal below current or provide another carrier option with the same benefit with rates significantly below current. If the second option becomes the logical choice, this will also provide the employees with an opportunity to purchase supplemental life with a new guarantee issue amount.

Finally, there are Tribal employer trusts that specialize in offering Native American Tribes and their Enterprises life and disability insurance. These trusts are able to tailor the plans to meet the unique requirements of a Tribal benefit program. This includes, but is not limited to, specific communication approaches, no requirement to waive Sovereign Immunity and unique benefit design. In addition, these Trusts will negotiate with a select few carriers (who are willing to quote Tribal business) and use the entire membership of the Trust to receive longer rate guarantee periods, stronger benefit provisions and more competitive rates. Over the past couple of renewal cycles, we have seen trusts save the Tribes an average of $80-$100 per employee off their life and disability premiums and oftentimes this is with an enhanced benefit offering.

Tyler Moore, Raving Strategic Partner,  Benefits Management and Partner, Face Rock Enterprises — Tyler has an extensive background in managing benefits for Native American Tribes. He consults on many self-funded plans and continues to work with Tribal Organizations on their unique benefit needs. 

Tyler Moore
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