TriNet Group, Inc. (TNET) Earnings Call Transcript & Summary

Thank you for joining us today for our webcast on bridging the health coverage gap. Before we begin, I'd just like to cover a few housekeeping items. The webcast console you are looking at can be completely customized. You can resize or move any of the windows that you have open. At the bottom of the audience console are some application widgets you can also use. We've posted additional information in the resource list widget at the bottom of your screen. This webinar is being recorded. The replay will be available approximately 1 day after the webcast and can be accessed using the same link that we sent you earlier. Finally, if you are experiencing any technical difficulties, please visit our webcast help guide by clicking on the question mark below in the presenters window. Now I'd like to pass it over to Ed Griese, Senior Vice President for Insurance Services at TriNet.

Hello. So we're here today to talk about bridging the health care coverage gap. And with me today is Jeff Smedsrud. And Jeff started at healthcare.com in 2013. And then he became the CEO and Founder of pivothealth.com in 2016. And so Jeff will be here to provide information about the health care coverages and the gap that are out there and what might be available to our clients and the audience in general. So our agenda today is the coverage gap. What are the coverage options? How do the coverage options compare? What considerations impact election decisions? What's changing as a result of COVID-19 related legislation? And resources for TriNet customers. As most of you know, approximately 50% of the United States receive their health care coverage through their employers or roughly 156 million people. The premiums that are paid, approximately 67% are paid for by the employer and 33% paid by the employee. Some of the big areas of coverage are where we have large populations, clearly, New York, Texas, and California. As you may know, approximately 3.3 million workers in the U.S. filed for unemployment in the week of 3/16. It was an all-time record. In California, the daily unemployment filings were up 3,000%, in New York City, the daily unemployment is up 1,000%, which is putting a lot of people in a difficult position, especially when it comes to their health care coverage. With the unemployment rate rising from 3.5% in February to 5.5% in March, we're here today to talk about the health care coverage gap and what might be out there for our customers and the audience in general. So loss of coverage triggers loss of job, company closure, reduction in hours or even a furlough. So Jeff, what are the options for workers that lose health care coverage?

Well, I look forward to walking through what some of those options are, and I'm very grateful for the opportunity to address this audience and try to be as helpful as possible in this tumultuous time. The good news is there are a number of options for individuals who are displaced in some way because of the pandemic and the events that are taking place. One of those options is COBRA. COBRA is available to any employer-sponsored, group health plan for -- that has at least 20 employees, full-time and part-time. You can enroll if you were laid off or terminated for any reason, except misconduct, and you can keep a COBRA plan for up to 18 months. So you could start that plan very, very quickly, have it for 18 months. There is a number of states that have mini-COBRA plans available as well. And the good thing about COBRA coverage is that it continues essentially the plan that you're on now with the same providers and the same network, and if you use part of your deductible, you would continue to benefit from being on essentially the same plan. The bad news is that COBRA can be very, very expensive. Average yearly premiums for a family are almost $20,000. And at this time, unlike a financial crisis in 2008, Congress has not provided any subsidies for COBRA. So summary on COBRA can be good, particularly if you want to stay with the plan that you're on, if you use part of your deductible and don't want to start a new plan with a new deductible, but unfortunately, it can be very, very expensive. So with that, maybe let's look at our second option. There are plans available through the Affordable Care Act, also known as Obamacare. And those plans are available at 13 state-based marketplaces, which are also called exchanges and at 37 exchanges operated by the federal government at a website called healthcare.gov. Anybody who has had a disruption such as a qualifying life event, job-based change can apply for ACA plans. Those plans meet what are called minimum value coverage requirements, which mean they provide maternity benefits, wellness benefits, an array of very comprehensive benefits. Most of those plans have high deductibles. And often, there's a very narrow range of providers. So the benefit from ACA or Obamacare plans is that they're available to almost everybody who's in a qualifying life situation. And in 11 states, including California and New York, have also created a special enrollment period for any individual for any reason. You can keep them for as long as you'd like, by state, by plan, and especially by the premium subsidies, which are based on the federal poverty level, and basically, that means that if your income is above roughly $49,000 for individual or roughly $90,000 for a family, you don't really get any subsidies to buy these ACA plans. And these plans can be very expensive. But if your income is lower, you can start to get subsidies and those subsidies can make the plans quite affordable, notwithstanding the fact that you'd still have some very, very high deductibles. You can see here who is eligible. You'd have to have a household income from 1 to 4x the federal poverty level, which, as I mentioned, is nearly $50,000 for an individual, right around $100,000, excuse me, for a family. You can't be eligible for coverage through Medicare, Medicaid, children's health program or other forms of public assistance. You have to be a U.S. citizen, have proof of legal residency and not have access to coverage through an employer, including your spouse's employer. So there are some benefits from ACA plans. They are guaranteed issue. They cannot deny you coverage for any health status condition. They can be affordable if your income is low and receive a subsidy, but they can be quite expensive for those whose income and household income is at a higher end. So that's -- there's a lot of possibilities with ACA plans. They're a good option for some of the people. So let's look at our third option. Short-term medical has been around for many, many years. It's major medical, except for a temporary period of time. It provides protection against unexpected medical bills. It provides a fair amount of insurance stability. It shouldn't be looked at as a permanent insurance product. And people who enroll and look at short-term medical plans need to understand that pre-existing conditions may not be covered. However, testing for coronavirus is included at no cost to the insured. Our plans also include visits with Doctor On Demand, or virtual telemedicine company that's highly respected, and we reimburse people for visits to Doctor On Demand. These plans are available in 38 states. They're not available in California, New York and a few other states. You can keep these plans for as short as you want or up to as long as 36 months, depending on the state, and the advantage of these plans is, they tend to be very affordable, about $100 a month for a single, $250, $300 a month for a family. So when you look at the these 3 coverages, the thing to think about is COBRA is the most expensive; ACA plans are slightly less expensive, particularly if you are in a lower-income; short-term medical plans are very affordable, very easy to enroll in, but may not be for everybody. So the good news is there are choices available. The process is, you need to shop, you need to think about what fits you and what fits your budget. And so with that, let we bounce it back to you, Ed, if you have any questions or if there's anything I had missed?

Sure. I think you covered a couple of things, Jeff. So let's assume I'm 63 years old. I've just lost my job. How would short-term medical help me on in good health?

Well, you could buy a plan that we call Bridge To Medicare, that would essentially bridge you over a 2, 3, 4-year period from that time that you started enrolling in the plan until you're eligible for Medicare. So in that situation, our Bridge To Medicare plans would cost somewhere in the neighborhood of $400 to $500 a month versus an ACA plan that may cost $1,000 to $1,200 a month.

Thank you. If I was looking at an ACA plan, I think we hit on a couple of things that our audience would find interesting and to make sure their research is, one is make sure you look at your deductible and where you're at in your deductible whether you decide to go with COBRA or move to an ACA plan. But also note that in the ACA plans that they have narrower networks across the [indiscernible]. And so as we look at those, we got to make sure that our doctors and hospitals that we want to see are [indiscernible].

Yes. And that's an important thing to remember is, particularly at this time, your doctor is very important to you, and you don't want to make a move to a plan that doesn't include your providers and those that you trust. Our short-term medical plans that we make available, most of them have an open network, meaning any doctor, anywhere. We do have very broad relationship with Cigna for a provider network. So it's very important to be thinking about your provider at this point. And that might be a good transition to telemedicine and virtual providers because one of the things that we're seeing and understanding is how important it is, particularly at this time when it's hard to get to see a doctor, the importance of telemedicine and virtual video engagements between patient and provider. We believe that, that is going to be such an important going forward part of health care and really want to encourage it in every way possible. The good news is many of the health plans that consumers would be looking at, includes certain telemedicine coverages, but even if your plan doesn't, you can buy these types of programs at a very reasonable cost, some of the stand-alone telemedicine costs are $10 a month, $12 a month. So it can be very affordable and, particularly at this time, a wonderful way to get the diagnostic and also the behavioral and mental health therapy and counseling and advice that is so important.

Jeff, at TriNet we've been lowering the co-pays for telemedicine over the last 1.5 years. In fact, our last carrier move down [indiscernible] October of 2019. So our co-pays within your range $5 to $10 now versus the $40, which would be the older version of going to an urgent care center as an example. So we've been promoting the telehealth, but with the COVID-19 going on, we are seeing a big uptick in the use of telemedicine, obviously, with everybody working from home or a sheltering place. But let me -- my personal belief is, we're going to see kind of a new way of health care being delivered through virtual visits, whether that's e-mail or pad or telephone or video. What are your thoughts on that going forward?

Well, I think it's a trend that knows no boundaries. And we expect to see more telemedicine covered by more and more insurance plans, and we believe that it will help bring down cost and improve the consumer experience. There's a number of great companies out there. I know we both worked a little bit with Doctor On Demand, but there's a number of other very, very reputable companies that do a tremendous job for people and provide them the care they need in a quick, efficient, safe manner and all of that is going to be a larger and larger part of our future. So what are some of the -- in summary, some of the options, the pluses and minuses of what we talked about. COBRA, expensive, subsidies not available. Eligibility, a qualifying event such as termination of employment. Scope, it's the same coverage as your existing plan. And so again, as we talked about it, you have a $3,000 deductible and you've already used up your deductible, even though COBRA is expensive, it might make sense to stay with COBRA because, essentially, you have no deductible going forward. ACA marketplace, you would start a new deductible. The cost is affordable generally for those at a lower income who can receive some form of subsidies. The eligibility is a qualifying event. But in states like California and New York, anyone, right now, can apply for coverage. It's a very broad scope of coverage, but it has some limitations in terms of provider networks. Short-term medical, very fast, very affordable, easy to enroll in. There's no subsidies available. Anybody can apply. But remember, pre-existing conditions aren't usually covered and certain types of services, such as maternity, is excluded, although complications from maternity would be covered. And then telemedicine fits and complements to all of those. It's inexpensive. It is a great way to take your health care dollars farther and get better counsel and advice in a virtual setting. So we're all strong component -- believers in telemedicine. And last, we shouldn't forget, and it's important for people to consider Medicaid. Medicaid is very inexpensive. It can be heavily subsidized, but it's regulated at the state level. And every state is going to be a little bit different. For the lowest income strata, Medicaid is certainly an option, but I encourage people to reach out in their state and learn more about their state program. Ed?

So Jeff, I -- when I look at this summary again, the one thing that we should remind the audience of is, make sure you check the network for your participating doctor and your participating hospital as some of these products can have a limiting factor and specifically the ACA plans may have smaller networks and so people should take that into consideration. But I appreciate that.

Absolutely true. So our next slide. We want to talk just a moment about some of the considerations. Remember, it's your choice. You get to decide which type of plans are going to be best for you. COBRA, ACA plans, short-term medical, maybe even Medicaid. Some of the things you need to think about, the deductible. How much -- have you met your deductible? How large of a deductible can your family budget handle? Health insurance plans can be inexpensive with very large deductibles, but some people begin to question whether or not they have good insurance if they have $10,000, $12,000 deductibles. As Ed has mentioned, providers, you really want, at this time, to know the providers that you're going to be working with and know that you're -- they're part of your network. And also think about how long you're going to need coverage. If you expect to be back added in a couple of months, in most states, short-term medical might make a significant amount of sense. Depending upon your income, you may be eligible for premium subsidies. At the very least, you ought to look at that as a viable option. And then let's never forget that we all live on budgets. We have other expenses, housing, car payments, all of those things. So you have to find a plan that fits your budget. If you have preexisting medical conditions, your plan choices might be a little bit different. You might pay a little bit more in premium or stay with your COBRA plan or an ACA plan. But you know that you're not going to have massive amounts of expenses that wouldn't be covered because of a deductible or other types of events. And then also anticipate what you're going to need. If you're planning a child, that leaves you in one sense -- in one direction. If you're not, that leaves other options for you. And then finally, remember, even though different companies cover COVID-19 slightly differently, it's covered. Testing is free. The doctor office visit is free. If somebody tells you it's not, let us all know about it, because it is. It's included as a result of a number of government mandates. So COVID-19 coverage and testing is included at no cost to you. I think our last slide talk about the impact of some of the recent legislation. As I mentioned earlier, 11 states, including California and New York, have opened up their state exchanges. New York doesn't have short-term medical plan, but they have a wonderful program called Essential Care, and we'll probably work with TriNet to get more information available about that. All the plans now cover COVID testing and initial visits at 0 cost. It's important to remember as part of the stimulus packages that your HSA, if you have one, ways that you can use your HSA has been expanded. It can cover telemedicine options. It can cover over-the-counter medications that previously would have required a physician's prescription. So health savings accounts have been expanded in their scope and their utilization. There's been legislation that part of the stimulus bill that waives withdrawal penalties in retirement accounts for COVID-19 related health care. There's a number of other good news about tax and incentives for individuals. But I want to end on the fact that no subsidy at this time has been provided for COBRA. There will be a fourth stimulus bills expected sometime in April or early May, it may or may not include subsidies for COBRA. So I wouldn't count on it, but it's a possibility.

Okay. Thank you, Jeff. So let's move into resources for TriNet customers. So clearly, we offer our clients health insurance and as part of that COBRA administration have been preparing some notices within 14 days when our work side employee lose coverage through the work terminations or something similar. The employee then has 60-day to make a benefit plan selection. Usually that -- in TriNet, that would be selecting the same benefit plan. The employee then has 45 days from election to make payment. And then that guarantees the customer that they will have the COBRA coverage. Regarding telemedicine, we have worked with a company called New Benefits and NFP had put out a telemedicine product. It's a stand-alone virtual care discount program. The base option is $9.95 per month. It allows access after for $0 co-pay plus there are discounts on prescriptions, dental and vision services. In addition, we've added a product, an enhanced option with New Benefits. It's $15.95 per month for health services for $0 co-pay and additional discounts. And these are products offered by New Benefits and NFP, and you can reach out to them via info.newbenefits.com/trinet or call 877.240.3850. And let me just say, again, that the TriNet benefit plans and the caters all have telemedicine built into our health insurance products. But the large segment of our work side employees do not take health insurance through TriNet. So they may not have access to telemedicine. And so this kind of a product would be available to them. Additionally, those that are leaving TriNet via client exit or a lay off or furlough, our recommendation would be that they look at the products that Jeff has gone over today, COBRA, ACA plans, short-term medical and telemedicine products. So Jeff talked about short-term medical. Pivot Health is available in 38 states. For the states that do not allow short-term medical, such as California and New York, a bit helpful recommend ACA marketplace solutions or other plans, such as the Essential Care Plan in New York-New York. Once again, you could find out more about this at trinet.pivothealth.com or call 76365011. So that concludes our webcast today. I would like to extend a big thank you to Jeff Smedsrud, the CEO of Pivot Health, and our audience and clients for listening today. And before we close up, Jeff, do you have any closing remarks?

No. Thank you, Ed, for the opportunity. Your company show a great leadership. I encourage people that it makes sense for to plug one more time to trinet.pivothealth.com or call this telephone number. It's a toll-free number. But most of all, remember, in this time, get insurance of some type, protect your family, protect yourself, protect your future, and you have a lot of choices, and all of us are here to help you make the choice that best fits you.

Again, Jeff and to our audience and clients, we wish you well. These are difficult times. And we hope this webcast was beneficial. Thank you.