lauren e zoltek - sei_investments.fall2011
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Part I: Exposure Analysis for SEI Investments
Benefits Matrix
Loss Exposure Provided Coverage/Benefit Provided
Medical Expenses
Overall Medical Expenses(hospital, physician, etc.)
YesPPO (Plan A)PPO (Plan B)Medical FSA
Dental YesGroup Dental PlanMedical FSA
Vision Yes Vision Program
Prescription YesPrescription Drug PlanMedical FSA
LTC No None
Retiree Health Care YesCOBRAMedicare
Loss of Income: Death
Non-Accidental,Non-OccupationalDeath
Yes
OASDIBasic Life InsuranceGroup Life Insurance401(k)
Accidental Death Yes
OASDIBasic Life InsuranceGroup Life Insurance
401(k)AD&D
Occupational Death Yes
OASDIBasic Life InsuranceGroup Life Insurance401(k)Workers Compensation
Loss of Income: Unemployment
Unemployment YesUnemployment InsuranceSeverance Package
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Benefits Matrix (continued)
Loss of Income: Disability
Short Term, Non-OccupationalYes
Short Term Disability (STD)OASDI
AD&D
Long Term, Non-OccupationalYes
Long Term Disability (LTD)OASDIAD&D
Short Term, Occupational Yes
Short Term Disability (STD)OASDIAD&DWorkers Compensation
Long Term, Occupational Yes
Long Term Disability (LTD)OASDIAD&DWorkers Compensation
Loss of Income: Retirement
Retirement Yes 401(k)
Other Exposures
Educational Assistance YesDependent Benefits (AD&D)Work/Life Program
Work/Life Yes
Transportation BenefitsCounseling and Resource BenefitsAdoption Assistance BenefitsChildcare Benefits
Dependent Care Yes Dependent FSA
Property/Liability No None
Legal Expenses No None
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Summary of Benefits
Benefit PlanA.M.Best
RatingFunding Financing
Bi-weeklyPayroll
DeductionsEligibility
IndependenceBlue CrossPersonalChoice PPO(Plan A)
N/A Self-Funded Contributory
Employee $41w/ Child(ren) $76w/ Spouse $98w/ Partner $98w/ Family $110
Full-timeactiveemployeesand theireligibledependents
IndependenceBlue CrossPersonalChoice PPO
(Plan B)
N/A Self-Funded Contributory
Employee $28w/ Child(ren) $53w/ Spouse $67.50w/ Partner $67.50
w/ Family $82
Full-timeactiveemployeesand theireligible
dependents
FSA(ADP BenefitsServices)
N/A Self-FundedFullyContributory
Elected pre-taxcontributions dividedby 26
Full-timeactiveemployeesand theireligibledependents
GuardianDental
A++ Self-Funded ContributoryEmployee $3w/ Family $5
Full-timeactiveemployeesand their
eligibledependents*
Davis Vision(Subsidiary ofHighmark)
A Fully Insured ContributoryIncluded inPPO Plan As Premium
Full-timeactiveemployeesand theireligibledependents**
*excludes dependents on Active Duty in any armed forces.**only available to employees who have elected PPO Plan A as their medical coverage, not offered to PPO Plan Bmembers*** must be enrolled in either medical plans--insureds are automatically enrolled when electing medical coverage
Source of all A.M. Best Ratings: http://www.ambest.com
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Summary of Benefits (continued)
Benefit PlanA.M.Best
RatingFunding Financing
Bi-weeklyPayroll
DeductionsEligibility
Express ScriptsPrescriptionDrug Plan
N/A Fully Insured ContributoryIncluded in PPO Plan Aand PPO Plan BsPremium
Full-timeactiveemployeesand theireligibledependents***
Hartford LifeInsurance:Basic
A Fully InsuredNon-Contributory
N/AAllfull-timeemployees
Hartford LifeInsurance:Supplemental
A Fully InsuredNon-Contributory
N/A
Allfull-timeemployeeswithEvidence ofGoodHealth
Hartford LifeInsurance:AD&D
A Fully InsuredNon-Contributory
N/AAllfull-timeemployees
Hartford Life
Insurance:LTD
A Fully Insured Non-Contributory N/A
All
full-timeemployees
Hartford LifeInsurance:STD
A Fully InsuredNon-Contributory
N/AAllfull-timeemployees
*excludes dependents on Active Duty in any armed forces.**only available to employees who have elected PPO Plan A as their medical coverage, not offered to Plan Bmembers*** must be enrolled in either medical plans--insureds are automatically enrolled when electing medical coverage
Source of all A.M. Best Ratings: http://www.ambest.com
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Part II: Inventory of Benefits
SEI Investments is an investments services company headquartered in Oaks,Pennsylvania. It is a global provider of asset management, investment processing, and
investment operation solutions. They currently employ 1,994 individuals and cover 2,427
dependents, which is a total of 4,421 insured lives. According to the company website, SEI is
dedicated to helping clients achieve lasting success. 1
SEI Investments wants to provide the most comprehensive benefit plan to theiremployees in order to remain competitive and distinguished from their competitors. Eligible
employees are defined as full-time, active employees who work at least thirty hours per week.
Eligible dependents are defined as any spouse under a legally valid existing marriage; any
unmarried child(ren), including any stepchild, legally adopted child, child placed for adoption, or
any child whose coverage is your responsibility under the terms of a qualified release or court
order; unmarried children, regardless of age, who are incapable of support because of mental or
physical incapacitation and who are dependent on you for over half of their support; a domestic
partner and their child(ren), as long as a domestic partnership exists; and newly acquired
children. Newly acquired children must be enrolled within 31 days of acquisition. Eligible
dependents vary in most of the benefits given, for instance, the dental plan excludes those
dependents who are on Active Duty in any Armed Forces.
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1 Source: http://www.seic.com/
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Medical Expenses
The Preferred Provider Organization Health Plan
SEI Investments offer medical benefits through their Preferred Provider Organization,Personal Choice. The plan is administered by QCC Insurance Company, a subsidiary of
Independence Blue Cross, which is presently not rated by A.M. Best. Employees are given two
options for their medical plans, PPO Plan A and PPO Plan B. These self-funded, contributory
plans are both Flexible High Deductible Health Plans. Insureds can maximize their coverage
through their PPOs network or any preferred provider who participates in the BlueCard PPO
program. Eligible employees include active, full-time employees who work at least 30 hours a
week and their eligible dependents, which were previously defined.
In PPO Plan A, the deductible for an in-network single insured is $750; the familydeductible is $1,500. The out-of-network deductible for a single insured is $1,500; the family
deductible is $3,000. In PPO Plan B, the deductibles are higher for both in-network and out-of-
network. PPO Plan Bs single insured, in-network deductible is $1,250; the family deductible is
$2,500. The out-of-network, single insured deductible is $5,000; the family deductible is
$10,000. For both plans, in-network, an out-of-pocket maximum does not exist. However, out-
of-network, out-of-pocket maximums do apply. In PPO Plan A, the out-of-pocket maximum for a
single insured is $5,000; for a family it is $15,000. In PPO Plan B, a single insured has an out-of-
pocket maximum of $10,000; the family out-of-pocket maximum is $20,000. Both plans do not
have a lifetime maximum. The primary difference between PPO Plan A and PPO Plan B is the
out-of-network coverage. PPO Plan A offers 80% coverage after the deductible is met, while
PPO Plan B offers only 50% coverage after the deductible. SEIs medical plan also has Stop
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Loss insurance. It is an experience-rated contract, provided by Standard Reinsurance for
catastrophic claims.
Flexible Spending Account
SEI Investments offer a fully-contributory Flexible Spending Account called the FlexibleSpending Plan for medical expenses. The third party administrator, ADP Benefit Services,
performs administrative services for SEI. Employees eligible for participation in this plan are all
permanent employees. Employees can participate in this plan on the first day of the month
following hire.
Under the Flexible Spending Plan, SEI offers the opportunity to participate in a HealthCare Spending Account (HCSA), which allows employees to contribute pre-tax dollars to pay for
certain healthcare or dental insurance expenses. The minimum contributionfor participation inthis plan is $26; the maximum is $3,000 per plan year.
An eligible medical expense is an expense that has not been reimbursed by anothersource, and any amount incurred to diagnose and treat a specific medicalcondition. The planrequires prescriptions for all medications, including over-the-counter (OTC) medicines.
However, no prescription is required for OTC insulins. Medical expenses that are not
reimbursable are health insurance premiums and expenses made during a qualified long-term
care service.
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Dental
Employees of SEI have the option of enrolling in SEIs self-funded dental plan on acontributory basis. Administrative services are provided by Guardian Life. Guardian Life is rated
A++ by A.M. Best 2 . This is the highest designation offered by A.M. Best. The bi-weekly
payroll deductions for the dental plan are $3 for an employee, and $5 for an employee and its
dependents. To be eligible for coverage, one must be an active, full-time employee. Eligible
dependents include an employees legal spouse; unmarried dependent children who are under the
age 19; and unmarried dependent children, ages 19 to 24, who are full-time students at accredited
an school. Dependents that are excluded are those insured by this plan as an employee, and
dependents on Active Duty in any Armed Forces.
The dental plan offers four levels of care: Preventive Care, Basic Care, Major Care, andOrthodontia. The in-network deductibles are 100%, 80%, 60%, and 50%, respectively. The out-
of-network coverages are 90%, 70%, 50%, and 50% respective to each level. A deductible of $50
applies to both in-network and out-of-network for an individual; the family deductible is $100.
There is an annual maximum benefit in-network and out-of-network of $1,000.
Vision
SEI offersemployees a fully insured, routine vision plan through Davis Vision, asubsidiary of HVHC Inc., a Highmark company3. Highmark is given an A rating from A.M. Best,
meaning excellent. The vision plan is only offered to employees and their eligible dependents
that are enrolled in PPO Plan A. The premium is included when the employee elects PPO Plan A;
therefore, the plan is financed on a contributory basis. The plan covers one routine eye exam
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2 Source for all A.M. Best Ratings: http:www.ambest.com/
3 Source: http://www.davisvision.com/Corporate-Structure/
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every two calendar years. Eye exams are covered at 100% of the UCR (Usual, Customary, and
Reasonable Amount). The plan also covers $100 towards the purchase of eyeglasses or contact
lenses every two calendar years.
Prescription Drug
Employees of SEI are offered a self-funded, Prescription Drug Plan through ExpressScripts. Express Scripts is currently not rated by A.M. Best. Employees and their dependents are
automatically enrolled when participating in either PPO plan. The premium is included in the
PPO plan premium, which is on a contributory basis. The coverage is the same, regardless of
which plan is chosen, and the plan cannot be elected as a stand alone policy. There is an annual
deductible of $25 for a single insured, and $50 for a family. They offer three tiers of coverage for
up to a 30 day supply. Generic medications are $5, Brand Name medications are $25, and Non-
Formulary medications are $40. Express Scripts offers an incentive through a mail order program
for maintenance medications. In this incentive, members can receive 90 days worth of
medication for the cost of a 60-day supply. They utilize a step therapy program, which requires
certification from a doctor. This certification states that a preferred medication has been used and
found ineffective, before paying for a more expensive medication.
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Loss of Income: Death
Life Insurance
SEI offers a Group Life Insurance Policy governed by Hartford Life, which is rated A forexcellent by A.M. Best. This is a fully insured, experience rated contract, and premiums are paid
on a non-contributory basis by SEI Investments. All active, full-time employees whowork atleast 30 hours per week and are U.S. citizens or U.S. residents are eligible, excluding temporary
and seasonal workers. They offer two levels of coverage, basic and supplemental. The minimum
amount paid in each levels will be no less than $10,000.
The basic amount of life insurance payable is equal to two times an employees annualrate of basic earnings, rounded to the next higher multiple of $1,000. It is subject to a maximum
of $200,000. The supplemental life insurance is provided in two ways. The first option is a
guaranteed issue amount equal to an amount an employee elects in increments of $10,000; thisis subject to the lesser of $500,000 or five times the employees annual rate of basic earnings
without Evidence of Good Health. The second option is the same benefit, without a guaranteed
issue; it requires Evidence of Good Health. Supplemental Life Insurance excludes suicide,regardless of the individuals sanity. Life insurance for employees decrease by 33% at age 70 and
again at age 75.
The plan includes Accelerated Death benefits, and Accidental Death and Dismembermentbenefits. Accelerated Death benefits are offered to the terminally disabled, defined as an
individual who has a life expectancy of twelve months or less. Insureds must have coverage for
at least $10,000. Insureds can request payment prior to death but the payment cannot exceed
80% of the life insurance amount and the maximum amount paid to an insured will be $500,000.
Accidental Death and Dismemberment is a loss occurring within 365 days after the date of the
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accident causing the injury and a loss resulting directly from an injury, independent from other
causes.
Loss of Income: Unemployment
Severance Package Required by law, unemployment insurance is provided for all employees. SEI provides aseverance package to employees in order to compensate for loss of income due to termination
and layoffs. The severance package amounts to a percentage of salary, multiplied by the length of
service, and is limited o a years worth of salary.
Loss of Income: Disability
Short Term Disability Insurance
SEI Investments automatically enrolls active, permanent, full-time employees working atleast 30 hours a week in a non-contributory, experience rated contract for Short Term Disability
(STD) insurance. This insurance is provided for both occupational and non-occupational
disability. STD insurance provides you with short term income protection in the event an
employee becomes disabled from a covered accident, sickness or pregnancy. Issued through
Hartford Life, which is rated A by A.M. Best, this coverage offers 70% of compensation, with a
maximum of $1,500 per week for up to thirteen weeks. An employee may return to work
proportionally disabled. A proportionally disabled employee is one who has recovered to the
extent that they are able to perform some job duties with the ability to earn between 20%-80% of
their pre-disability earnings. They receive a percentage of the difference between the pre-
disability earnings and the current weekly earnings. The AD&D benefit provided in lifeinsurance and an employees 401(k) could potentially provide coverage for a short term
disability.
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Long Term Disability Insurance
All active, full-timeemployees of SEI Investments who work at least 30 hours per weekand are U.S. citizens or residents, excluding temporary and seasonal employees, are provided
Long Term Disability insurance. This insurance is an experience rated contract and provides
occupational and non-occupational disability through Hartford Life on a non-contributory basis.
As stated previously in STD, Hartford Life is rated A by A.M. Best. This plan provides an
insured with loss of income protection, if an employee becomes disabled from a covered
accidental bodily injury, sickness, or pregnancy. There is an eligibility requirement of either 90
consecutive days of disability or the termination of employer sponsored STD benefits, which
must be satisfied before benefits become payable. This covers 60% of compensation, with a
maximum of $15,000 per month. Termination can occur when the Group Insurance Policy
terminates, no longer insures the class, premium payment is not paid, the employer ceases to
participate, or the day the insured is no longer an active, full-time employee. As stated in STD,
theAD&D benefit provided in life insurance and an employees 401(k) could potentially providecoverage for a long term disability.
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Loss of Income: Retirement
Capital Accumulation Plan
Commonly referred to as a 401(k), SEIs Capital Accumulation Plan provides employeeswith the opportunity to save for retirement on a tax-advantaged basis. This plan is self-
administered by SEI Investments through the Plan Administrative Committee. It is not insured by
the Pension Benefit Guaranty Corporation (PGBC) because the insurance provisions under
ERISA are not applicable to the plan. Employees who are excluded from this plan are leased
employees, employees in a union, certain non-resident aliens who have no earned income from
sources within the U.S., independent contractors, and interns. All other employees, other than
those previously excluded, will automatically be enrolled on their date of hire. Those employees
will automatically have 3% of their compensation deducted from their regular payroll and
contributed into the plan. The employee may specify their contributions to not be invested in the
default investment options.
The employee will always be 100% vested, meaning they that they will always beentitled to all the amounts that they defer. Salary matching or contributions made by SEI will
only be made if the employee completes a year of service and be actively employed on the last
day of the plan year. The contributions made by SEI will be either the total amount of salary
reduction the employee elected to defer, a matching contribution equal to a percentage of the
salary reduction subject to a maximum, or a discretionary profit contribution. If an employee
contributes up to 50% of pay on a pre-tax basis, up to IRS limits, SEI matches 60%, up to 5% of
compensation.
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Other Exposures
Educational Assistance
Employees are given the opportunity to further their education in SEIs EducationAssistance Program (EAP). The EAP is designed to assist employees in learning and furthering
their professional development through the participation in part-time degree programs. This
program is intended to mutually benefit the employees of SEI and the company. It provides
financial assistance to employees who successfully complete business and work-related courses
outside of the company. If an employee voluntarily terminates their employment within one year
of completing a course, in which they received assistance, that benefit must be repaid to the
company.
SEI Investments offers Educational Assistance Benefits, under the AD&D insurance planto the dependents of the deceased employee. Under its Group Life Insurance, governed by
Hartford Life, rated A by A.M. Best, the AD&D plan provides Education Benefits to the spouse
of the deceased employee. This is to ensure the spouse of the dependent employee able to obtain
an independent source of income. The plan also provides Education Benefits for the employees
eligible children, which are defined as post-high school students who attend a school for higher
learning on a full-time basis on the date or within a year of death. The benefit payable is the
lesser amount of the actual tuition expense for any one school year, 5% of the principal sum, or
$5,000. The plan will not pay more than one Education Benefit per student during any one school
year. If no dependent qualifies as a student, then it will pay $2,500 in accordance with the
beneficiary designation.
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Work/Life
SEIs Work/Life Program accommodates its employees with many benefits. This includesCounseling and Resource Services, Transportation Benefits, Adoption Assistance Programs, and
Child Care Services. These benefits are either directly funded through SEI, a salary reduction
arrangement, or a reimbursement arrangement.
SEI offers Counseling and Resource Services through Carebridge EAP (EmployeeAssistant Program) for all regular, full-time U.S. employees, working at least 30 hours a week.
The Counseling Services provides three free confidential counseling sessions for all employees
and their dependents, 24 hours a day. The counseling encompasses marital relationships, alcohol
and drug problems, grief and loss, and depression. The Resource and Referral Services are for
family/parenting issues, day care referrals, relocation, school selection, college planning, and
personal financial management.
Transportation Benefits include commuter highway vehicle benefits, transit pass benefits,and qualified parking benefits. All full or part-time employees of SEI are eligible for this
program, pending a one month waiting period. The Commuter Highway Vehicle benefit offers
transportation to and from work in a vehicle that seats up to six adults. The Transit Pass benefit
offers passes, tokens, fare-cards, vouchers, or similar items that employees will use to travel on
mass transit. Qualified Parking is parking provided to employees close to a job site or their
employers location.
SEI offers full-time employees, benefits to assist them in the adoption process. Thesebenefits include; financial reimbursement, adoption leave of absence, and resource and referral
services. The adoption benefit has a maximum reimbursement of $4,000 per adoption.
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SEI offers childcare to their employees who have children between the ages six weeksand twelve years old. SEI recognizes a need to offer solutions to their employees when such
benefits are not accessible in the commercial marketplace. They offer two choices of care in their
Family Center.
The Back-up Care program offers childcare to an employee when the primary source ofcare is unavailable. These primary sources of care may be unavailable due to a sick caregiver,
school holidays, and snow days. However, they do not care for children with illnesses. Infants
through kindergarteners are limited to twenty days per year. School age children, defined as first
grade to twelve years old, can attend twenty days during the summer and twenty days during the
school year. A $20 per day fee applies at the time of service.
The Good Start Care program offers childcare to help an employee transition back intothe workplace, and the child to transition into commercial childcare. This is only eligible to SEI
employees who have elected medical benefits and gives priority to first time users. The costs of
the Good Start Care is $100 per week, defined as five days; $20 per day for part-time users.
Dependent Care
SEI Investment offers a Dependent Care Savings Account (DCSA) under the FlexibleSpending Plan to assist employees in reimbursements for eligible day care expenses incurred. A
participant may choose a reimbursement amount up to $5,000 per year. Eligible day care
expenses must be incurred during the plan year. An expense is incurred when the service or
treatment giving rise to the expense has been performed and not in advance of the services.
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Part III Decision Making and Benefits Plan Design Analysis
Introduction
SEI Investments is an investments services firm headquartered in Oaks, Pennsylvania.
Founded by Alfred P. West, it provides innovative business solutions to approximately 7,000
clients. SEI Investments assists their clients in managing their personal and business wealth.
Currently, they service private banking businesses in twelve countries, deal with 27 currencies,
and trade on 53 exchanges.4 In 2011, SEI was named Service Provider of the Year at the
annual Money Management Institute Advisory Solutions Industry Leadership Awards. SEI was
also selected as one of the Healthiest Employers of Greater Philadelphia by the Philadelphia
Business Journal and UnitedHealthcare.5 They have close to 2,000 employees with primary
offices located in United States, Canada, Hong Kong, Ireland, the Netherlands, South Africa, and
the United Kingdom. The average employee age is 34 years of old; over half of the employees
have dependent families.
Originally, SEI Investments operated under a formal setting, composed of a hierarchy
with intervening management between each level of the organization. However, Al West believed
a more untraditional approach would be more beneficial to the workplace. Therefore, as CEO,
West flattened the company, which dissolved the vertical structure of SEI Investments. Al West
has continued to utilize an unconventional method in not only his organizational methods, but in
the benefits he wants for his employees. Previously, SEI participated in an HMO plan. However,
once it was no longer mandated, SEI elected to drop HMOs because of the restrictions. In place
of the HMO, they maintained the PPO plans that were already in place. SEI has continued with
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4 Source: http://seic.com/enUS/about/281.htm
5 Source: http://seic.com/enUS/about/284.htm
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this open-area office environment which now has unit leaders and teams. This type of
environment applies to everyone except for the Benefits Administration Department. In lieu of
the Human Resource Management Department, Work Force Development was erected. The
Benefits Administration Department is an entity of SEIs Work Force Development Department.
According to Charlotte Elko, Al Wests philosophy in a horizontal approach to an organization
will be more productive when it comes to communication and decision making.
We had the opportunity to work with Charlotte Elko, who is SEIs Benefits Program
Manager. She began working at SEI Investments in 1983 as a Business Analyst; eventually, she
transferred to the Benefits Administration a few years into her employment. She and her team
work with a broker of Owens and Dowling to get quotes from other carriers as needed and
strategize on plan designs and cost controls. They meet with the broker three or four times a
year before and during the annual contract renewal to review their claims history, review cost
projections for next year and plan any benefit changes.
Employee Benefits Plan Design Considerations and Objectives
Goals/Objectives of the Plan
SEI Investments strives to offer a high quality, comprehensive benefits package to their
employees. High quality is very important to SEI, and Charlotte believes it to mean using the
best practices at all times and using vendors who use best practices in their business models.
Their current health plan utilizes the largest PPO network in the area and receives the deepest
discounts. Charlotte says, if no quality exists, then they will switch [to a different provider]. In
addition to attracting and retaining human capital, SEI truly wants their employees to have the
absolute best care in the industry. The main consideration in designing the plan is being
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competitive in a cost-effective way. As much as SEI wants to provide all types of benefits to their
employees, they must keep in consideration the costs in order to stay within its budget. Charlotte
has multiple meetings a year with various employees requesting a certain type of benefit.
However, due to the low number of employees wanting a specific benefit, she cannot always
implement these requests into action. Each year, SEI arranges meetings for employees to come
and discuss what changes or additions they would like in their benefit plan. If enough members
vote to participate, then Charlotte and her team will take the steps to find the discounts available
in order to utilize the benefit.
Funding and Finance Considerations
SEI Investments provides a mixture of self-funded and fully-insured benefits in their
plan. The Medical Plan, Dental Plan, and Prescription Drug Plan are all self-funded plans.
Charlotte states, we chose to self-fund those plans because it would save us money. The cost of
fully-insuring those plans, especially the health plan, would be catastrophically high. We are
banking on the fact that our average employee is 34, who is relatively healthy. If our workforce
were older, our demographics would be different, as would our costs. The plan utilizes a
General Asset Plan as the funding vehicle. The self-funded plan provides protection to a specific
amount; then SEIs Stop Loss Insurance will be activated to cover catastrophic losses. Standard
Reinsurance, previously known as Marlton Risk, provides coverage to SEI Investments in an
experience rated contract. They place money in reserves at the stop loss carrier, and also have
money in reserves at Blue Cross for up to 2-3 months, depending on the contract.
Besides Medical, Dental, and Prescription, all the plans are fully insured. Due to the ever-
increasing healthcare costs, SEI finances the Medical, Prescription, Dental, and Vision Plans on a
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contributory basis. SEI contributes 80% of the plans costs and the employees pay for the
remaining 20%. For a company the size of SEI Investments, a larger contribution on the
employers part would be economically unfeasible. Although, they experienced difficulty due to
the rising costs of healthcare, SEI has managed to keep their contributions at 80%. Due to these
increases in the last year, they had to shift costs. They implemented a shift of costs through an
increase in an employees deductible. Since SEI did not want to hit the employees in their
paychecks, they were approved to keep payroll deductions the same. The Benefits
Administration Department believes it is extremely important SEI contributes 80% of the plans
costs because they believe it will keep employees satisfied. SEI Investments finances their
employees Life, AD&D, and Disability Plans on a non-contributory basis. These benefits are
provided free of cost to the employee because SEI wants to ensure that employees receive
adequate coverage. Also, due to its young workforce and work environment, SEI did not see
any negative impact of covering these benefits with no employee contribution.
Problems, Issues, Concerns, and Considerationsin the Design of the Health Benefits
PPO vs HMO
Currently, SEI self-funds their medical benefits through their Preferred Provider
Organization, Personal Choice. Employees are given two options for their medical plans, Plan A
and Plan B, which has an NCQA Accreditation status of excellent.6 Employees maximize their
coverage through the PPOs network or any preferred provider who participates in the BlueCard
PPO program. Employees who participate in the BlueCard program have access to all providers
across the United States enrolled within this program. Employees are required to call the Blue
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6 Source: http://reportcard.ncqa.org/plan/external/plansearch.aspx
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Cross number on the card in order to find a preferred provider in their area. There have been
some recent changes in the process of this program; before, emergency visits would be covered
as in-network, but now they are rejected unless it is a true emergency.
Previously, SEI participated in an HMO plan because of government regulation. Once the
HMOs were no longer required to be offered as a benefit, SEI chose to withdrawal the HMO
plan. Al West did not agree with the managed care philosophy. He was adamantly against the
referral process of HMOs. Charlotte did not believe it was a good option for SEIs size, since
[they] are a larger employer and self insure. SEI Investments wanted their employees to be
consumers and to have the ability to decide where and when they were going to get care. With
the PPO Plan, employees still receive a discount. In addition, they have the choice of networks
that HMOs do not offer. This strategic move proved to be good savings for SEI and their
employees. The PPO Plan is very popular among employees. The discounts they receive from
Personal Choice are better than any of the offers SEI has been given by other insurers. Charlotte
states, there is no perfect provider. In the event that another program fits SEIs needs better
than Personal Choice, they would consider the offer. However, she has not seen anything better
for a long time.
Prescription Drug Plan
SEIs current drug coverage is through Express Scripts. In early 2011, Walgreens and
Express Scripts were unable to negotiate a contract renewal for 2012. Consequently, Walgreens
and Duane Reade pharmacies will no longer be in Express Scripts network of covered
providers.7 In order to deal with the possibility of insureds not having adequate access to covered
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7 Source: http://www.ichoosewalgreens.com/issue-at-a-glance/
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pharmacies, an account representative ran an analysis of covered lives. This analysis found that
only three insureds would have to travel more than one mile farther than their existing pharmacy.
Cost Inflation and Rising Costs
Cost inflation is a continuous, contributing factor to the concerns of the design of health
benefits. SEI Investments experiences a 6% to 12% increase in the plans cost each year. This
increase of costs are attributed to a combination of utilization, inflation, and new treatments. Due
to costs increasing each year, Charlotte has the job of trying to keep the costs down for SEIs
employees. This year they had to make some changes in their health plan, but they were able to
keep the payroll deductions the same. Instead, they increased the deductible by $100, which they
found to be an easier transition for the employees. The only issue they have with this is that
employees do not understand what the deductible is and what discounts they are receiving.
Charlotte says they are aware of what their competitors offer in their benefits packages through
recruiters and surveys. This allows them to keep tabs on what is being offered outside of their
company, and how they can compete with such places like Vanguard for attraction. In order to
contain costs, SEI educates its employees on healthy lifestyle alternatives and implements
wellness programs as a loss prevention technique. They are thinking long term, and are
focusing more on prevention rather than treatment.
Long Term Care
One benefit SEI Investments has not included in its benefits package is Long Term Care.
When it came to providing Long Term Care, Charlotte said it was too expensive. In addition,
the average age of employees is 34, so the coverage is rarely in demand. She claims that the
way those plans are written, you have to pay into it for a period of time before you can utilize the
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service, and even though some employees may have the need for it, there hasnt been enough
interest. Even though they havent received an adequate amount of interest, they still conduct
surveys every year in order to see if employees have changed their minds and want the coverage.
Problems, Issues, Concerns, and Considerations in the
Design of Other Types of Non-Retirement Benefits
Flexible Benefits
SEI Investments offers their employees the opportunity to enroll in a Flexible Spending
Account. SEI took advantage of this because of the tax benefits. Earlier in the year, the Benefits
Administration Department had an issue with the Dependent Care FSA. This FSA had a problem
arising in discrimination testing. Too many highly compensated employees were taking
advantage of the DCSA. As a result, the Benefits Administration Department had to make
adjustments to employees contributions in order to stay compliant. In order to pass
discrimination testing, they had to calculate the percentage that needed to be deducted from
HCEs contributions. After calculating this figure, the Benefits Administration team members
had to individually contact the employees and notify them that they were not able to fully
contribute up to the $5,000 limit. They made it clear to the employees, that it was not them in
particular but the results of the test.
Communication
The communication of benefits is imperative to accomplish. Charlotte says that
employees often [do not] understand the value of their benefit and therefore tend to ask
additional explanations. The Benefits Administration Department has a very difficult time trying
to communicate the value of the benefit employees are provided. Charlotte wants SEIs
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employees to know the true value of their benefits. Specifically, how much is being spent on
them and how much money is available for them to spend.
This year during open enrollment, the CEO and CFO created a video message for the
employees. They thought that a message coming from the top would make employees want to
pay attention and read the materials provided. Al West opens up the video thanking his
employees for their efforts in making healthy lifestyle choices. He says, those choices you make
have a direct impact on the cost of health benefits to both you and SEI. Healthy lifestyle choices
are an investment in your future and consistent with the principle of doing the right things
right. Dennis McGonigle, CFO of SEI Investments, follows West and outlines what will be
provided the upcoming year for employees and any changes that were executed. Other tools they
use to convey the financial value is through slideshows, videos, and booklets. For new hires,
Workforce Development runs orientations, where speakers come in throughout the day and a one
hour slideshow presentation present the benefits.
Regulatory Compliance
COBRA
The Covered Omnibus Budget Reconciliation Act of 1985 allows employees and
beneficiaries of group health plans to extend coverages up to 36 months after an employee is no
longer deemed an eligible employee. COBRA encompasses medical expense plans, dental plans,
vision care plans, and prescription drug plans. SEI Investments outsources their COBRA
administration to ADP. ADP handles payments, notices, election packets, and cancellation
notifications.
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Enrollment is a frequented problem of COBRA, due to a delay in mail carriers and online
services. The database participants are manually added and deleted. Under COBRA, the former
employee pays 102% of the plan cost, rather than the 20% deductions during employment. ADP
charges a 2% administration cost to the former employee and the other 100% goes to the cost of
the plan.
HIPAA
In order to stay HIPAA compliant, the Benefits Administration Department cannot be in
an open area environment. The files that are in Charlottes care are kept in locked filing
cabinets and does not contain any employment information. This ensures that all PHI (Protected
Health Information) remain confidential. If a member of Work Force Development needed
employment information, they would not go to Benefits Administration. In addition, the benefits
websites have automatic time out periods, in which the member is logged off due to inactivity.
ERISA
SEI Investments offers employees the opportunity to participate in a defined contribution
plan. This defined contribution plan is a 401(k). Kevin Johnston of the Investments Committee at
SEI Investments holds the Fiduciary Responsibility for 401(k) plans. In addition to providing
electronic SPDs, SEI communicates vital information to employees through monthly
orientations. In order to adhere to federal laws, SEI has a number of methods to ensure their
compliance. For example, SEI Investments utilizes ADP for information on employees 401(k)
contributions. When SEI requests an analysis of employee contributions to 401(k)s, ADP will
return a report stating whether or not their plan is non-discriminatory. As an additional measure,
SEI will run their own analysis. If the plan is deemed discriminatory, the Benefits Administration
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Department will contact the highly compensated individuals and notify them that their
contributions will be decreased in order to stay compliant with federal regulations.
Recommendations
Consumer Driven Health Plans and Health Savings Account
In recent years, SEI Investments has been looking to implement a Consumer Driven
Health Plan in the form of a Health Savings Account for cost purposes due to Healthcare
Reform. We recommend that the Benefits Administration Department should consider CDHPs
because with HSAs employees would still have the tax advantages, plus they could put money
into the account and carry it over to the next year. In their current FSA, employees must spend
that money or forfeit the balance at the end of the year. A CDHP would allow employees to save
funds through high deductible plans, and they would have more freedom to determine the types
of benefits they wish to receive. It would also force employees to be better consumers of
healthcare goods, much like traditional consumers. Since employees would be in control of what
they receive, they would have the potential to save money. The downfall to that benefit would be
employees not receiving care because the costs of the treatment would appear higher than if they
were choosing a PPO. These plans are the new direction, but SEI and the Benefits
Administration Department want to wait until they see what exactly happens with Healthcare
Legislation.
Retiree Healthcare
With the current number of employees SEI employs, it is surprising they do not provide
Retiree Healthcare. Their current stance is that since their employees average age is 34, SEI
does not need to provide it. However, we see it as a tool to retain employees for a long term.
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Retiree Healthcare benefits are slowly disappearing and being cut by employers. In order to gain
a competitive edge, now is the time to introduce these benefits to SEI employees. Having the
ability to offer secure retirement healthcare benefits is a major advantage for SEI. It would be an
incentive for employees to continue to work at SEI, and create an atmosphere at work that would
promote productivity. In essence, SEI would be investing in their employees.
Opt-Out
Currently, SEI Investments does not offer an opt-out option for the medical plan. If an
employee is covered under their spouse, or chooses to retain any medical costs incurred, the total
compensation received by this employee is 80% of the plans costs less than an employee who
chose to enroll in these benefits. We recommend they offer this to their employees to offer a
menu of benefits. To implement this option, we recommend they perform a cost analysis to
calculate the administrative costs associated in offering an opt-out option.
Conclusion
SEI Investments has a strong and attractive benefits package. Charlottes experience at
SEI has gave her extensive knowledge on what employees need and want. She is able to balance
this with the constraints given to her by budgets and regulations. SEI continues to offer
competitive benefits to remain attractive to new and existing human capital by analyzing new
trends in healthcare.
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www.ichoosewalgreens.com/issue-at-a-glance/
SEI Investments. (2011). Retrieved December 1, 2011, from http://www.seic.com/
NCQA Report Cards. (2011). Retrieved December 5, 2011, from http://reportcard.ncqa.org/
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