For those who are not familiar with split directdeposit, it is simply a different version of payroll deduction thatchanges the "destination of the deduction" from the employer'schecking account to the policyholder's holding account awaitingpayment of the bill.  Below are the top five reasons thismodel works much more effectively than traditional payrolldeduction. And these distinctions are more important than ever,given the current economic environment disrupting payrolldeduction. 

  1. The billing process to the employeris eliminated:  The employer doesn't collect orremit funds and doesn't receive or reconcile a bill.  In arecent study, 53 percent of VB account defections cited "billingissues" as the primary reason for dropping coverage.  Nobilling issues translates into increased persistency and moreeffective competitive insulation. No bill to the employer equalshappiness for everyone.
  2. Immediate notification of no-pay orshort-pay:  In payrolldeduction, the knowledge gap from missed payment to carrierawareness is two months.  Let's say a policyholder stopsdeducting on April 3rd.  The April bill goes out from thecarrier on May 5thand the bill is paid by the graceperiod on May 30th.  Bythe time the carrier/agent/broker becomes aware of a misseddeduction, 60 days have passed and the policyholder is two monthsin payment arrears; not likely to be saved.  With splitdirect deposit, the policyholder and agents would have been alertedof the missed (or short) payment the very next day – even in themiddle of a billing cycle! Split direct deposit drasticallyshortens the knowledge gap  and gives you the knowledgeneeded to conserve your business. So if you had your book ofbusiness on split direct deposit, you would already know exactlywhich policyholders were being affected by the national shutdownsso you could move them to EFT before they are two months inarrears.
  3. Employer cannot withhold deductionsfrom carrier:  All too often, employers make thedeductions on behalf of employees and (especially in times ofeconomic stress) make the unilateral decision to defer or even notpay the bill.  Split direct deposit takes away the abilityfor employers to withhold the funds since the deductions areimmediately deposited into the policyholder's personal accountoutside of the employer.  Never again will you have toworry if the employer will pay the bill late or at all. Splitdirect deposit pays the carriers with a 99 percent on-timeefficiency, as opposed to 49 percent of the time for payrolldeduction – even in good times.
  4. Allows for easy conversion to EFTif needed:  Today,payroll deduction is being disrupted in an unprecedented way andsplit direct deposit allows for an easy switch to EFT if thesituation arises.  The policyholder already has a premiumdeposit account, they just simply change the source of funds fromtheir direct deposit to a bank account or credit card. The U.S. government just announced direct relief of up to $1,200per adult to compensate for missed wages, and that's great news!But, this cash will be deposited into Americans bank accounts; notinto their employer's payroll system.  So the money cannotbe used to continue to pay for payroll deducted premium, but it canbe used for an EFT payment. And some of these coverages such asshort-term disability and hospital plans are more important thanever right now.

No billing issues, immediatenotification of missed or short payments, eliminating the employerpayment risk, and the quick ability to convert to EFT for paymentmakes split direct deposit a model for the future.  Andall the process requires is a simple change in the "destination ofthe deduction." The "new normal" of voluntary benefits is upon us:phone enrollments, virtual benefit consultations and informationalmeetings, and more effective technology in terms ofpayments.  Stay safe! Stay positive! Stayresilient!

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