Episode #548: Inside Solo Health Collective-Making Healthcare Accessible for Independent Business Owners

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1:04 This is Pete Moore on Halo Talks NYC. I have the pleasure of bringing on a fellow New Yorker hailing from Sag Harbor while we're in New York City, Kyle Morrissey. We're gonna talk about the health insurance paradigm for self employed professionals. Obviously, we have a lot of those in our audience right here listening to this. So we're gonna make you think differently and understand what your options are. And, obviously, insuring yourself is one of the most important things that you could do, for your business. You basically are the key man or key woman in your business, and, you know, being available as much as possible is, is your lifeline. So, Tom, welcome to the show. Thanks for having me, Pete. So I know you've dedicated your life to this. We're gonna talk about, you know, some of the, some of the trials and tribulations of of health insurance and how that whole ecosystem works that that you guys facilitate.

1:57 So you wanna just give a little background for our audience here on how you got involved here in the first place and, why you've dedicated your life to, to helping other people. Sure. Well, I started my career, Pete, with Cigna Healthcare back in '85. I spent twenty five years with them, just under twenty five years. Don't hold that against me. But great training ground. I sold in the middle market in New York. I was responsible for, employer coverages from anywhere from 300 eligible lives. My my segment was 300 to 5,000 lives, but I did a lot of national accounts work as well. And, that's when a broker or consultant was, owned an owned an account that was in the national account space, but I was I had the relationship. So got a lot of exposure there. After spending so much time with them, I had one foot out the door there for a couple years thinking about doing something different. And the different was we started a Healthy Business Group, fourteen years ago to really play into the small to middle market firms.

3:03 I learned at Cigna that these firms were underserved. None of the, you know, health improvement solutions, none of the cost saving solutions that the national accounts were getting exposed to were being given those opportunities down market. Created a deal with Cigna. We wrote, like, 300 plus accounts. That ended up getting morphed into Cigna, so Cigna ended up doing it themselves after a while. So then what we did was we we learned quickly that we needed to pivot, and we looked at the solopreneur space. We saw the growth. You know, it depends on who you listen to, but estimates are that there'll be 90,000,000 solo business, owners by 2028. I wanna say there's about 60,000,000 now. These are the guys these are the biz the business owners, guys and gals that own these businesses, I think, especially when they're young and healthy, are the ones that get screwed sorry. Pardon the expression, but screwed the most in health care. You know? All they really have access to is ACA plans. Most of those, especially here in New York, are, you know, limited networks.

4:13 They're commercial networks where the businesses that buy them that are larger buy the same health plans have a full health plan, but, you know, they water them down. They they tend to have, like, 60% of the doctors that they that they provide to the larger employers. So we decided to go out and and, especially since a lot of the solopreneurs cannot afford to be locked into locked in HMOs where they can only get care in New York or Ohio or wherever. We wanted to we're we wanted to create a health plan specifically for these folks that was based on a PPO instead of an HMO model. Could you explain to us the difference between a PPO and HMO? Well, HMO Health Maintenance Organization, it's more of a it's a group model. It's a it's a lock in model. It's it's usually confined by the market they're in. So if you think about New York, again, all the ACA plans except for maybe a couple with Oxford PPO are all HMOs. They are closed panels. They're, generally speaking, discounted more. The doctors are discounting their fees and services more than they do in a PPO. You know, PPO is wide open. The PPO we operate is all states across the country. And then and then what's the rationale for when when you were doing your 300 person and over company? Was this, you know, like, an eighty twenty rule, if you will, of, like, you know, go get the bigger deals, and we don't wanna really, you know, have to support, you know, opportunities that or,

5:46 you know, or a lot of clients, but but less revenue per client. Was that kind of the the threshold? That that was pretty much it. I mean, Cigna has, three three major segments. So they did have a down market under three hundred life segment, which is the one that when I exited Cigna that I, ran it. And we did really well with with the small to midsize employers, say, 50 to 300. But under 50, that gets into ACA. They didn't have a lot of opportunity there. And do they cut the are they cutting down the network because they're basically trying to, you know, have the lowest cost suppliers there so your aggregate exposure on usage is lower and they're basically taking some of the higher cost potential claims, you know, out of the mix?

6:34 You're exactly right. It's only you're only keeping they thin these networks down deliberately because they really only wanna keep the the the docs that are gonna allow for lower fee schedules. It's a it's a money saving technique. The carriers are making, you know, enormous amounts of money on the exchanges, and that's in part why. And and what you've seen in the in the health and fitness category, do you delineate between industry groups? Are you basically saying, look, there's 60,000,000 people that are, you know, running their own LLC or s corp Mhmm. And and any any of those people are, you know, part of our market opportunity?

7:15 Or do you see anything in the health and fitness industry that says, hey. Historically, the claims or the, you know, insurance cost is lower because of what these people do, and maybe they, on average, take better care of themselves? Well, sure. I mean, you're looking at preferred risk. When you're looking at I mean, just imagine if you put up, let's call it a hundred attorneys versus a hundred, physical physical trainers, the health quotient of the physical trainers is highly likely to be better than, you know, a comparative group of attorneys, just as an example. By the way, we do business with all of them. You know, we've got quite a few attorneys on our plan, you know, doctors, attorneys, all sorts of professionals, but we do quite a quite a bit of, work in the in the health and wellness space. And then would you take a look at, you have a relationship with Aetna as of now? We don't.

8:11 Oh, okay. That was was that prior? We we had, yeah, we had a once we sunset Cigna, we we worked with Aetna for a bit, but we realized pretty quickly that this is where we wanna be. The opportunity is immense. We've got a very unique I wanna say the only organization doing it quite the way we are as ourselves. And, you know, part part of the, program is that the differentiator of of Solo Health Collective is that this it's sometimes it's easier for me to talk about what it's not. So we are not an ACA individual health insurance plan. We're not on the ACA. We're not off market because there's plenty of carriers that are working off market for the same audience, but we are not that. It's not like you're buying individual health insurance. The key distinction is that with Solar Health Collective, your business, it's a form of business insurance. Your business, you must have an EIN number. If you don't have one, we can help you get one. But and it's free, obviously. But the key differentiator is that you need to have an EIN. Your business is joining. You're a business owner without any employees, and you're joining our health plan with your you and your family if you have one. And the other distinction is that you go through a short form medical underwriting. Takes about probably three to five minutes to go through. We'll give you your quote with five quick questions, date of birth, gender, home ZIP code. You know, do you need, spousal coverage or,

9:44 partner coverage, and do you need your children on the plan? Then we're gonna give you, what our quote would be for three different plan designs, only varying by their deductible. Plans are exactly the same, but there's three versions. We have a $2,500 deductible, a $5,000 deductible, and then a $10,000 deductible. And then another key part of the program is once you pass the medical underwriting and you get the plan, there is no coinsurance. So your deductible is your maximum out of pocket. So put simply, we've got about, let's say, 45% of our population in each of the 2,505,000 deductibles, then about 10% of the population's in 10,000. But that's your maximum out of pocket. So for the person who buys a $2,500 deductible for their family, as soon as the individual reaches 2,500, the plan pays a % of covered expenses. And then on a family with a $2,500 deductible, your maximum deductible is 5,000, and that is also your maximum out of pocket. So once you hit that deductible, it's all a %. And I should mention, all preventive care is covered in full. So we follow the ACA guidelines of in preventive care measures that are recommended.

10:59 So it's exactly the same. We follow the same protocols that, for covering preventive care in full, no deductible. This is Pete Moore. I wanna let you in on a little secret. There's this company called Promotion Vault, and what they do is they give out rewards from retailers that allow you to incentivize your members without having to do zero down and one month free or giving away shakes or giving away t shirts. What you wanna do is build a rewards program that lasts, that people value, and that doesn't discount your own products and services. So here's the deal. There's something called rewards vault. The rewards vault is going to allow a member to set up their own profile.

11:43 They are going to answer questions. You are gonna get those answers. You're gonna be able to target those members, and you're gonna reward them inside your club, inside your spa, and outside of the club, and outside of the spa to get them to become loyal, to get them to pay their monthly dues, and to be rewarded properly for the actions. A lot of companies are cutting back on rewards. You shouldn't be. Promotion Vault's your answer. Trust me. This is real. Obviously, a lot of people are are taking their their health as more of a self care type of plan. If I look at, like, your $10,000 deductible, and I kind of view it as, like, catastrophe insurance, and not necessarily you know, a lot of people go to the doctor all the time. Like, I I I don't go unless there's a serious issue. So when you say preventative care is covered, what is what is preventative care, you know, encompassed now? And what are some of the material changes, you know, over time, whether that's fitness classes, massage, acupuncture? Give us a list of what what people have access to. It's really your it's really it's not your acupuncture and all that stuff. It it should be, but it's not. And it you know, one day, in terms of plan design flexibility, we will get there. We're a relatively new health plan. I'll talk about that a little bit later. But the for preventive care guidelines, it's really your age and gender appropriate screenings. So it's your colonoscopy at a certain age, it's your routine physical physical exam. We are going to pester

13:15 you on Solar Health Collective to make sure you're getting your all your routine preventive care done so that we can spot anything that might be coming up and take care of it before it happens. And that doesn't go against your deductible? Correct. Gotcha. And then what, what are some of the success stories or, you know, savings that you've seen, that you kinda, you know, latch onto and say, hey. This is the the here's the, you know, cash, you know, differential, not only you know, and also just the quality of care. Well, because because the member is setting up, it's not a fully insured plan. It's technically, it's a self insured business plan.

13:57 So we can underwrite very specific to age and gender. We've got there's about a million rates that for the variances on ZIP codes, gender, and and age. So we have plans that are 2,500 and and $5,000 deductibles. We've got a couple plans. People, younger, males are, generally speaking, paying less because of the pregnancy age factor. So male we've got some males that are spending less than $300, sometimes less than $200 for a $5,000 deductible plan. And that's based on, like you said, you're you you the three of us are older, but the that young guy that's 26 years old that's not on his parents' plan is, you know, really only gonna have routine physical care. And then to your point, it's really sleep insurance. It's for the catastrophic care. So, you know, we never really highly recommend a a $10,000 deductible.

14:53 And that's not just because the person's young and doesn't have any claims, but it it doesn't allow the individual to set up a health savings account. So we prefer to have you go to the 2,500 or 5,000 so that you can this is a long term decision. You see, it's a long term buy that you're making, and you can start putting dollars away in a health savings account for when you're no longer 26, 20 seven, and you're 35, 40. And, you know, claims might be coming. You might be an athlete. You might, you know, need a you have a knee injury, whatever the case may be. You could have enough money socked away in your HSA to cover your deductible for two and three years once you're five, six years into the plan. So what's the what's the maximum that you can put into an HSA? And can you talk about how did this change in the IRS, code? Or it seems like there's been a loophole that's been opened where people can use their HSA, FSA, you know, even, like, Duane Reade. I'll see it on, like, a DoorDash checkout. You know, use your HSA, FSA card, or, we work with a company called HigherDose. You can buy an infrared sauna blanket Sure. With that. So has that materially changed usage? Because I I understand it's, like, a hundred and $50,000,000,000 that's kinda, like, accrued in these plans that are not really being accessed accordingly. Yeah. You do know the difference between FSA and HSA. Right? So FSA really very different than HSA. FSA is you use it or lose it. So you gotta spend those dollars in the year you're in. We

16:26 we recommend HSAs because we're running high deductible health plans. They're the way to go. But you're right. They have opened up, and and there's, you know, given the, Internet and all the apps that are out there, give you an example. I I I'm a big SoulCycle aficionado, if you will. Way, man. I do a lot of SoulCycle. And bike right there. There you go. Do you have the SoulCycle? Okay. Yeah, I do. I'm not bragging. I'm just glad you're staying Well, hey, you're staying part of the cult. You're staying in good health. Yeah. It is a bit of a cult, isn't it? But listen, I, I found through the app on my phone that I could work with SoulCycle to have, my SoulCycle classes go through my h HSA. So when I buy, you know, 800 or $900 worth of classes, they're they're I'm paying for those pretax. Yep. Yep. It's pretty wild the what's going on in terms of, you know, what's legal to go against an HSI. Yeah. These companies that are out there, you know, one called, TrueMed that we've worked with, or spoken to, one's called doctor b, which I think does the HSA Yeah. Processing for SoulCycle, and they give these letters of of medical necessity. Is there any risk to that program, or is that, you know, pretty much mainstream now? I think it's mainstream. I mean, I did it. I I to be honest, I was kind of surprised, and you're right about the organization, that does do it. But I

17:56 think they're legit. You know? It it could it be, looked at as, like, you know, a loophole and maybe they they, stop allowing it? But I don't think you're at any risk, doing it in the year you're doing it. I think if anything, it would be curtailed by regulation. They'd have to stipulate that that type of, the classes like that aren't covered. But, you know, in the spirit of keeping people healthy so they don't hit the catastrophic side of health care, we're all for it. Let's keep it going. It's it's wise use of money. Yeah. So just explain to us, if I become a member of of Solo, or if I become a member of, you know, talk about Cigna or Aetna or Humana, Is there any risk that I'm taking as a patient or or a member, being part of one of those larger brand networks, versus being part of a, somewhat newer plan? Like, is there any balance sheet risk or is there anything that would be a differentiator or it's really just, hey. Look. We provide this plan. The money that you pay in goes into effectively an escrow account, or you've got a a back office provider that that's bonded in that? Just explain to us. Well, the the key is that, it's all about the reinsurance. So Solo, specifically, we have partnered with a captive insurance company called Vault.

19:23 They Vault created this back in 02/2017, working with the North Carolina insurance department's captive division. They got it approved, allowing for solo business owners and their families to take this form of business insurance. And the way it's set up is it's not fully insured. You're you're setting yourself up with what is deemed a self insured plan. Don't wanna make sure we don't scare anybody off with that because it's that's a technicality. It's self insured. It's called level funding. So your entire rate is known as a level funded rate where if you're paying, let's say, $500 a month for a single at the age 40, 40 five maybe, a portion of that, call it 20%, I'm making these numbers up, but would go towards administrative expenses, and the rest of it would go to setting reserves and and going to the claim liability. And so your that the dollars that are meant for claim liability, you as a solo owner or as a solo member are actually a pro rata owner in the captive. Okay.

20:27 So we're required through Vault and they they they go through this every year where it's more than likely in the history of Vault, they have always had a surplus at the end of the year because they're underwriting it such that you're the rates that go for the certain ages and genders are created to cover expected claims plus a corridor or a surplus liability, sort of a safety net. And the idea is that every year, that would need to be returned to the customer. Now it's not returned in terms of cash dividends. Some of the larger employers, like back in the day at Cigna, wrote a lot of level funded business where the surplus was returned in part. Cigna would keep two thirds. The employer will get a third back.

21:12 This is a % returned, but it's a returned in the way of rate increase mitigation or plan design enhancements. It's not it's not dealt with in cash. But getting back to your original question about risk, the the other important piece of this is that the under the bulk captive, Odyssey Reinsurance company out of Stamford, Connecticut, they're a plus rated on Standard and Poor's and AM Best. They have the risk for every dollar over the complete exposure of the captive set at the rates that I just mentioned individually. So we've never had we've never had an aggregate stop loss claim, meaning the in the entire pool exceed the claims exceeded the entire pool. That's never happened. There's been some specific stop loss claim issues where a large claim, call it a 2 or $300,000 claim, that would pierce the individual stop loss level, and then Odysee re kicks in and pays everything over, in this case, a hundred and $50,000 of the claim. So if you have a $250,000 claim, Vault pays $1.50, Odyssey Reed picks up the other hundred. Gotcha. So, hearken back to, SoulCycle for a minute. A lot of the instructors there who, you know, I, used to follow them around, pre COVID, wherever studio they were, they were at Mantis was, was my go to. He he he stipulated to me that, look, one of the reasons why, you know, I stayed as a SoulCycle instructor and I signed that exclusivity, was because they gave me benefits, and there's nowhere else I can get insurance

22:46 benefits. So from a from a standpoint of of a group like SoulCycle, is that a target for Solo? And then could they just add on to their account, these instructors, or they basically promote that we've got a relationship with Solo? We'll pay your deductible, and you're basically like a direct member, Or or how does that work? I wish that could work. But, no, the the individual, like, all these instructors, more more than likely, I I know a lot of them are doing sidebar stuff. Right? They're physical they're trainers plus they're doing SoulCycle. So if they're getting benefits through SoulCycle, SoulCycle is more or less going out like an employer would in getting securing coverage for eligible participants. They're probably funding some of the rules where you have to fund at least 70% of the cost. Ours is the business owner, that sole cycle instructor that maybe maybe they're in their waiting period or maybe they're just not eligible based on hours. That sole cycle instructor could set up a solo plan using their EIN and their the business that they're running. X y z. Got it. And you you did a deal recently with the Freelancers Union. Is that correct? Yes. That's been tremendous.

24:00 Freelancers Union, we're really impressed with them. It took a good year. We started Solo, late two thousand twenty four. So we missed the January 1, big enrollment push because we really didn't have our stuff together, if you will, until, like, October, November '20 of '20 '3. So for 01/01/2024, we didn't write a ton of business, but we started talking to organizations like Freelancers Union. We've got 600,000 members, all right in our wheelhouse. They're all independents. Rafael Espinat, the director of Freelancers Union, great guy. They they they do a phenomenal job with their benefits package. They they're offering ACA plans. They offer us, and they offer a company called Opolis, all three of which are kind of worth exploring. But as an organization, they've been an incredible, and I think it's an endorsement for us because they took a little while to end up partnering with us after kicking the tires pretty hard. You know, one of the things that we are up against is brand. We don't you know, we're creating a brand from scratch, so that takes a while. So we're gonna be relying on the, you know, 500 plus businesses we wrote for January 1 to refer us to their friends and families, business owners. We'll be relying on the freelancers union to push us out further based on reputation. So that all helps. But that's been a great partnership so far.

25:24 This is Pete Moore. Here's the last tip for you of the podcast. We are partnered up with a company called Higher Dose. Higher Dose dot com. They are the leader in workout recovery products, infrared technology, LED light masks, neck enhancers, and other products such as PMF mats and sauna blankets. If you have not gotten on the workout recovery train yet, your time and your stop is now. You gotta get these products in there before these workout recovery and spas end up saturating your market, having your members walk out of the club and going into one of their locations for $200 per month where they're paying 39 to you. Let's become an expert in workout recovery if we are already the authority in workouts. Higher dose, check it out. There's a wholesale code, and we look forward to helping you augment your products and services to meet the demands of your members. And, hey, let's get people happy, healthy, and sweaty, and the recovery should be just as good as the workout.

26:35 So so when you look at our, you know, halo sector, health active lifestyle outdoors, you take a look at, you know, massage therapists, acupuncturists, you know, personal trainers, you know, all these, like, wellness coaches that are out there now that are are that are basically, you know, independent operators. What are some of the targets that we should be thinking about or someone listening to this podcast saying, like, this is a vital part of a cooperative or a union or a, you know, collective that we have that that we need to provide solo because this is one of the things that, you know, a lot of our members, you know, that's probably one of their biggest stress points. Sure.

27:16 No doubt. Listen, I I I don't often get a chance to talk about the long term play of solo. Usually, we're talking to business owners in the year they're in. We're talking about the savings we're generating for them on rates and premium and and design. Design being important because that PPO, no boundaries across the country internationally, no lifetime benefit maximum, no annual maximum, and you're talking a full on plan. But I think the biggest value proposition of what we're doing today is the long term sustainable approach. It's that we expect, and this was evidenced by what Vault did for 01/01/2025 in terms of renewals.

27:57 The renewal indexes were far below what the industry averages were both for larger employer paid stuff and ACA plans. So what you're doing is you're buying in you're getting in, you're filling out a health questionnaire. You're healthy today. You're passing. You don't have any heart issues, organ issues, you're not on, any of these ridiculously expensive drugs. So you're able to self insure your plan, but then you're joining this collective. And together, we're managing a risk of healthier people that over time is going to index if at in at inflation rates that are less than those that aren't in the same boat, the the more catastrophic claimants.

28:40 Got it. So, so in in closing here, being an entrepreneur, you know, being like, you know, a little over a year end, knowing pretty soundly and cold the fact that this is somewhat of a no brainer, decision. How do you manage your own progress and and and and know that this is you're playing the long game and that there's an education process that you're kinda fighting through every day? It's a great question, and we are learning. So, you know, we're a we're a eight person organization right now with the intention certainly to grow as we grow, but we've got a phenomenal team of people. David had, mentioned it earlier. Service crew is fantastic. And they are we did 600 plus consults with three or four people doing all that work. We all pitched in in the December crunch time, but, you know, getting the job done. And then what we've gotta get really good at and we haven't even really started yet is getting to our existing memberships to spread the word and to keep it going.

29:44 Because anybody that share any existing solo member that shares that solo with somebody else, first of all, there'll be a referral program. And secondly, they're helping us scale, which again is gonna cut cost out of the equation for them. Right. Well, we'll have all the info on real quick. Pete, real quick. I just have to add, Thomas. For people listening to this, I came across your company on Instagram. Not normally something I would would, you know, put my own health insurance into. And after speaking to Michael and Christine and doing a good deal of research, it was, okay. What's the catch? This is too good to be true. What's the catch? What's the and and there was none. Right? So I I signed on as as a business owner at EIN, and it's potentially game changer for the trainers, the massage therapist, etcetera, listening to this. And I I I I wanna do everything we can to help you get the word out for sure. Listen.

30:42 That's very much appreciated. So, we'll do it together. Absolutely. Alright, man. Well, welcome officially to the Halo sector. Thanks for doing what you're doing, and, we'll try and bring this on, to our, entire network in The US and, look forward to doing a, update check with you guys, a year from now. Fantastic, Pete. Thanks, David. Thanks, man. Much appreciated. Bye bye, guys. Go halo.