Financial Leverage: Turning Employee Care into Profit with Jacob Guidi | DFS 404

[00:00:04] Welcome to the Destined For Success Podcast. I'm your host, Jennifer Takagi, and this podcast used to be called New Manager Media, Manage Right From The Start. Many of the concepts are the same, but there's a little shift. There's a shift because I know we are all destined for success, and I want to help you find the fastest, smoothest way to reach your highest best as a business.

[00:00:34] As quickly as possible. Join me in today's episode where you're going to come up with new ways to build your skills and influence others to make the impact you desire to make. I look forward to connecting with you soon.

[00:00:53] Welcome to Destined For Success. I'm your host, Jennifer Takagi, and today we have the honor of talking with Jacob Guidi. I got it right, didn't I? Yeah, you got that right.

[00:01:05] Oh, I love it when I get people's names right. I don't get offended when Takagi isn't quite right, but I like to get other people's names right as best I can. Today we're going to talk about financial leverage, turning employee care into profit. And before we dive deep into this, because I'm very interested in this topic, you're a cellist and educator, proud father, account director at Thrive Benefits Group.

[00:01:33] I want to talk about this cellist business. And the only reason I'm really curious is in fifth grade, major integration happening in Oklahoma, and I was bussed to the other side of town. And to get parents to allow their children to be bussed, they gave all kinds of activities you wouldn't have had normally in school.

[00:01:56] And one of them was a strings class. And I played the bass for like part of a semester, and then I got switched to the violin just because I thought a bass was awfully big. But then there was that beautiful cello that was next to me for however long. So I'm just curious, how did you end up getting into playing the cello? So music does kind of run in the family. My mom was an orchestra teacher. So I did.

[00:02:24] I was nursed in an orchestra room in between her classes. So I ran around there after school. I started playing my first instrument was guitar self taught by ear. But then, you know, school came along and we were doing the string class. Right. And I decided. I don't know why I did this. I knew I wanted to play the cello, but I was like, no, I'm going to play the bass, mom.

[00:02:51] And I tried out to do the bass. And Mr. Billup said, no, your hand, just play the cello. So, yeah, long story short, I went to college and decided to, you know, pursue that more seriously because everyone in the world plays guitar. And three degrees later, I have a doctorate of musical arts and cello performance.

[00:03:19] Oh, my gosh. And when I was in school, they had us put our hand out and we had to spread our fingers as far as we could. It was like as far as you can. And because I had a big gap between my index finger and middle finger, that's why I could play the bass, because you could make that next leap for the chords. But I took piano and played in the orchestra. You know, I didn't. I went to class. I was terrible.

[00:03:44] So I love it. So you made a big pivot, too. I've got a degree in French and Spanish and I've never used it. I mean, I sound great at a Mexican restaurant. I sound really good. And I went to school in Mexico, Spain and France. So I had a lot of cool adventures that other people didn't. And and then I made a hard right turn and, you know, got a real job in housing for many years.

[00:04:12] So you actually went way far and got a Ph.D. and then made a hard right turn, left turn, whatever, into financial. So tell me about that little pivot and about this financial leverage. Yeah. So it wasn't a hard pivot or not like I internally debate that, like it's not like I've abandoned it. My instruments right there. The case is open. I'm practicing. We have a concert this weekend.

[00:04:40] But when I was finishing my degree or in the middle of it, you know, I had a daughter on the way. And so responsibility hit like I could do it as a bachelor where I could freelance or I could teach and I'm driving around doing my thing and, you know, making money that way. But when you start to have a family, you know, things need to be reprioritized.

[00:05:06] And so. I had already kind of began working in insurance at that time. And so I saw the capabilities of working from home and what that provided with me for me.

[00:05:19] So I just slowly transitioned into it as a more stable form of work and income that didn't require the same energy from me in terms of just going places and then filling up my time with rehearsals and practice. And, you know, I still I still really do make an effort to practice, but the pivot was more out of.

[00:05:45] The necessity, so I could also be present as a father and as a partner, so, you know, because I could still just be that musician rolling around, just not here at all. And, you know, that'd be fine, too. But I do enjoy I do enjoy my family and being able to spend time with them.

[00:06:02] So, yeah, I you know, as I said, in the middle that I kind of was getting into individual insurance sales and my friend who brought me on in there, they had a company. They work in employee benefits. I had began marketing and doing sales on the individual side. And I said, hey, let me do some marketing for you. Let me generate some more lead and appointments for y'all.

[00:06:34] Began running cold email campaigns. I kind of worked for nine months, basically for free until some business started to land. And then they're like, all right, we want you on. And yeah, we've been I've been here for the last three years or so.

[00:06:50] We we focus a lot on helping nonprofits and assisted living facilities by giving them more power to not only save internally, but to give more benefits back to their employees. So it doesn't feel like feel like a financial pressure on them because insurance at the end of the day is kind of a luxury. It's one of those at least, you know, outside your health insurance.

[00:07:18] It's one of those first things that will go. You know, I'll have this life insurance policy that it's kind of like a subscription. You don't need anymore. Let's cut it. And so we want to be able to empower people so that that pressure is is removed and so that they can have a more holistic view of their finances to where if something does go wrong, like keep that in place because it's not really a financial pressure for you right now. You know, so, yeah.

[00:07:48] Insurance is one of those things that, you know, it seems like a wasted expense until you need it. And then you're like, oh, thank goodness I have that. And I love the idea that, you know, you just kind of I'm going to say eased into this different chapter of your life because mine was I wanted a steady paycheck and benefits and I didn't want to be a school teacher. And those were kind of my my options, right?

[00:08:16] Like this makes a lot more sense for me now. So how do we turn employee care into profit? That's just an interesting title there. That was intrigued me a bit. Yeah. So when you offer employee benefits, there. There's a good way to do it. There's a bad way to do it. And there are different levels to the good and the bad ways you can do it.

[00:08:44] But, you know, the first thing that you can do and this is just going to like fit into structure in general. So beyond a certain point, it is legally required that an employer, I believe, like beyond 50 employees, the ACA guidelines require an employer to provide at least minimal essential coverage to employees match 50 percent of that.

[00:09:12] If there are any lawyers out there, please don't come scolding me because I cited that wrong. But so you at a certain threshold, you have to start providing benefits, even if like you're not at that threshold. And you want to start providing benefits because it gives you a retention angle or leverage on your competitors. You know, how do you do that the smart way? Well, the first thing that you can do is create or have an ERISA attorney draft a Section 125 cafeteria plan.

[00:09:43] So in a nutshell, what that does is it allows employees to pre-tax their benefits. Now, that might be something that you're just like, oh, yeah, I have benefits. Oh, yeah, it comes out pre-tax. But like nobody really like like why does that happen? Can you tell me, Jennifer, like why people pre-tax their benefits? Because that way they don't have to pay taxes on it unless they use it. Yeah, kind of sort of. You're in the right field.

[00:10:13] It helps you. It creates tax savings. So regardless of if you use it or not, and it's also for the employer's advantage. So regardless of if you use it or not, if I'm going to make this purchase, I can make the purchase pre-tax or I can make it post-tax. Right.

[00:10:28] By making the purchase pre-tax, an employee, if it's health insurance based on the average premium, you end up saving between two to three thousand dollars every year in taxes by pre-taxing it because your taxable wages go down. And that means you're paying less in federal, state, unless you don't have state taxes like Texas, Medicare and Social Security.

[00:10:53] Right. And so when you have less taxable wages, all three of those taxes go down because you pre-tax something. Right. And then for you as the employer. You have to match a part of those taxes. Right. Specifically, the Medicare and the Social Security. So you're always responsible for that. That's that's FICA. That's just how it is if you have W-2 employees.

[00:11:15] And so when you start providing benefits, hey, when you use a plan like this, a 125, you're allowing the employee to create tax savings. But you're also creating tax savings for yourself. Right. Because when your employees are paying less in taxes, when they're paying less in Social Security and Medicare, you have to match less in Social Security and Medicare.

[00:11:40] And so that's how you start creating that financial leverage is by reducing your FICA exposure. And this is normally way more technical than I'd normally get into. But like if you want the like details, like, yeah, that's like kind of like step one, like basic assumption. If you want to do it, turning it into financial leverage, that would be the first place I would go.

[00:12:04] OK, so I'm I'm an employee because I think many of my listeners are employees or entrepreneurs. That's kind of like the two bases that I that I attract for the most part. So I'm an employee. Are there certain things I need to ask or request of my employer or H.R. when I go in to talk about what my best options are?

[00:12:34] Because to be really honest, a lot of things, a lot of decisions I made and I had options were what other people in the office were doing. And for example, they came in and offered long term care disability and I had personal things happening in my within my family. And it was like, oh, my gosh, my husband and I need this. And a friend at work did an immense amount of research. I'm not the research girl in this equation.

[00:13:04] He did a lot of research and said, you know, most people are in a nursing home or need a lot of skilled care roughly three years. And so I'm only going to get three years of long term care. And I was like, OK, me, too. Me, too. So I have three years. Do I need more? I don't know. Thank God I'm not at that point yet. I don't know what I need. But so I'm an employee. And if I had been some might say more responsible, I don't know.

[00:13:33] So far, things have worked out OK for me. But if I had wanted to take more of an active role in this, are there some some questions, some things I need to know or ask about so that I make the best best choice for me and for my family? Yeah. I will speak specifically to what I can provide the most value in, and that will be the supplementals. So like your long term care, short term accident expense, hospital indemnities,

[00:14:04] the major medical, which is like one of those benefits that is probably the most confusing. And while I know about it, you know, I'm not going to sit here and pretend like I can lead you down the straight and narrow path, because in any of these situations, it's very like case dependent. I think let's be clear. Let's be clear. This is just a conversation. Yeah. Any advice. So we'll just put that little caveat in there. OK. I know that.

[00:14:31] But let's make sure all the listeners know that you're just sharing in general information. I think in general, I'll just get that one out of the way. If when your HR department releases a benefit summary benefits package and it goes over the different health care,

[00:14:50] like medical insurance options, give that to an AI and then request it to ask you questions about what your most utilized prescriptions are, how many times you go to the doctor a year, what kind of services you need, like what your family looks like, who is going to be on the plan, how accident prone they are.

[00:15:14] And then that will do the best job, honestly, in terms of pointing you to the plan that you need without you needing to become a professional. I do believe that. And so like with that one out of the way, as the employee and wanting to take a more active like role in your benefits, I think one of the first things you can ask your employer is. Are these portable? And so what does portability mean?

[00:15:39] Portability means you have the option to take this coverage with you, whether you remain with this employer or not. And so why is that important? So you said you're an employee. Are you an employee at the place that still provides the long term disability or is that at an old job? That's an old job. So I guess it was portable because I'm still paying the premiums and I still have the benefits. Right. Is that portable? I didn't even know that was the thing.

[00:16:09] Look at me. I made a good choice there, Jacob. Yeah. So that's and I would say it's kind of silly if you got long term care if you're not still paying for it. Sometimes you sign up for something and you take it into like your bigger insurance like strategy. And you're like, oh, well, I have this critical illness policy. And, you know, when something happens to you after you've changed jobs and you didn't like I like that benefit because you thought, oh, well, I got this insurance elsewhere.

[00:16:39] You know, it's not there. And so what portability means is that you are the owner of the policy. A lot of the benefits are employer specific. Right. So like your health insurance, you don't keep the health insurance from employer A when you go to employer B. Right. You don't keep the same 401k from employer A to employer B, but it is in like your account. So you can transfer that money.

[00:17:06] That's kind of the same nature with those accident critical illness life insurance plans. You have the option to take it with you or you might need to just repurchase it at the new employer. Right. And so the other thing to consider with that, another question I would ask, you know, are these plans guaranteed issue? It doesn't matter, you know, which way, if they are or they aren't.

[00:17:34] But what guaranteed issue means and what you especially find as someone or as you're getting older and, you know, you start experiencing more health problems is when you have to get something approved. And they have to go through your medical records. Well, if you have to go through my medical records and saw that I had a stroke last year or that I have, you know, diabetic neuropathy, then you can get declined.

[00:18:00] And so that's where, hey, I actually have this policy from my old employer that was issued to me when I was healthy or was guaranteed issue. If it's portable, I can carry it with me. I don't have to worry about the policies at my new employer. And so this is this is the other thing. You know, it's kind of that long term thinking that, you know, most people don't really care about because, you know, it's it's only important when you need it.

[00:18:26] But so guaranteed issue, would that be like pre-existing? Is that would that fall under that? It overlooks anything, any pre-existing conditions. It doesn't care. You're getting issued. You're approved for coverage. Well, and just side note in the U.S., we've made lots of changes in the last 10 years to all of this.

[00:18:55] And I have a friend who all of a sudden couldn't get health care at all because the pre-existing conditions. Oh, what's the word I'm looking for? Requirement that you had to allow pre-existing conditions was taken away. And so all of a sudden he was uninsurable. A hundred percent. He had zero health insurance. And then it kind of came back. So those are the kind of nuances.

[00:19:21] It's not an issue when you're healthy, but you have a heart attack and all of a sudden it matters or you get cancer and all of a sudden it matters. Whereas, man, when I was 30, none of this mattered. Right. And now it's like. Yeah. That would be the other. That would be my last bit of advice is if you're young and you're healthy or you're relatively young and healthy and you've kind of, I think of them like baseball cards or like collectibles.

[00:19:51] If you have a handful of good collectible cards, the benefit of getting them through an employer and on a group plan is that they're generally cheaper. And if they're portable and guaranteed issue, then you got those cards. Those are valuable cards. Just hold on to them. It's kind of like real estate. You know, it's.

[00:20:12] It's not going to hurt you, you know, $50 a month, $60, $70 a month, all combined for what could be hundreds of thousands of dollars in potential relief in the future. So, you know, while it might seem like a. You know, a quick budget fix out. Well, this will pay for my Netflix and a extra Big Mac a month.

[00:20:34] Like, seriously, like it's the financial stress you'll be in later is not worth it for like what you could just like save and plan for today. So you you said several things that were, you know. Big key things for me. And one is you have to look towards the end. My parents were very financially. Well, they were dirt poor for many years.

[00:21:00] But as they started accumulating a little bit and they they were very wise with their money and they made choices very specifically. And I can remember as I don't know, I was in my 20s, early 30s. And they were hitting that retirement age. And some of their friends had the exact same opportunities, literally.

[00:21:24] Job offers at the same place and turned it down because they could not see the value of the benefits. It was just like, oh, no, I don't want that paycheck's not good enough. And my dad kept saying, but the benefits like but and they couldn't see that. So if you're in that planning stage of life, look at the long term benefits.

[00:21:48] Look at these things, because at one day you're going to look up and you're going to be 65 and you're going to be going, wow, I could have done a few little things. You don't have to do everything perfectly, but I could have done a few things differently or better. And the other piece I love about this, I was at an event recently and one of the major topics was AI and leveraging AI and what it can do for you.

[00:22:16] And fast forward a week, I met a woman online who had been at the same event. And she literally said, after the first day of talking about AI, I went back to my hotel room and cried. And I thought, holy crap, holy, I went back to my hotel room and whipped out my laptop. But I was like, what can I create? So this fear around AI, what it can do for you is somewhat unfounded as far as the amount of information you could get.

[00:22:45] And I love that your recommendation of look up what the benefits are, drop it into AI and have it, you know, break it out for you. And you can actually have it talk to you. You can have a conversation. I'm like, hey, I'm Jennifer. I've got this, blah, blah, blah. The more you talk to yours, the more it knows you. Now I just drop stuff in and it was like, hey, Jennifer, what do you want to do today?

[00:23:10] I do have a paid, you know, disclaimer, I have a paid OpenAI ChatGPT account. I have other ones that are free and I bounce between them depending on what I'm doing. But it's been very eye-opening the amount of information you can get very quickly on what's available to you. And so like my friend looked up some prescription stuff and it was like, yeah, this one's just as good. You know, you don't have to pay blah, blah, blah. You can get it here.

[00:23:40] So like those are two really big key takeaways for me personally is don't be scared of AI. And it's never too early to start planning. Yeah. Yeah. No, I mean, it's truly there's so much available to you. I think, you know, the more you interact with it, you can start to.

[00:24:05] There is still a I think there will always be a layer of like responsibility you should bring to the conversation. Absolutely. You know, there's there's so much available to you. And it's the best way I can put it if no one has ever like used it at this point. You know, when you want to like look up something on Google, but then you look at it and then you get like 15 different pages. You're like, I don't care about this. These are blog posts or things.

[00:24:33] And then I have to sift through the things to find the thing or it's a YouTube video and you have to sit to find the thing. The AI is just a straight shot to basically your your request. So it is it is a very powerful tool that you should start leveraging most definitely. Well, I love the fact that it tells you where all it went and it starts with Google. Like it went to Google. It went to Wikipedia. It went to here. It went to there. I mean, like it hits the newspaper.

[00:25:01] So it's kind of fun because if you ask a very complicated question, you'll see all these little circles pop up. And those are all the different places it's going to grab the information. And as you say, sift it down into a somewhat comprehensible answer. But I love that we can use it for something so important as our health care. Like or well, any kind of insurance, actually, in financial planning. Like, is this the best plan? What works for me? What works for my family?

[00:25:29] Years ago, many years ago, you could choose. As a woman or as a man, I guess, for a family plan, if you wanted maternity insurance, health insurance and you could choose do I want maternity or not. And my sister had a friend who opted not to get the maternity. She was like, no, she had two kids remarried. And she was like, no, we're not going to have any more kids.

[00:25:59] And lo and behold, she ended up pregnant. And so, yeah, it was a cash out of pocket hospital. But like you could pick and choose what you need. What's your family dynamic? And what are you going to need? What are you going to use? So super important to know to know your dynamics. For your audience, I do have a bonus. I know I talked about I talked about the basic, you know, OK, if you wanted to start turning into financial leverage and then on the conversation.

[00:26:28] I'm like, wow, you know, all I talk about, I guess, is financial leverage because it's insurance. But for real, besides that, like layer one setup, there's a second layer setup that you can provide. That second layer setup is going to create additional tax savings without what feels to be that burden on the employee. Like you said, with your dad and his friends, you know, same position. They just couldn't see the value of the benefits.

[00:26:55] What people dislike about benefits or insurance in general is that it feels like an out of pocket expense. You as an employer or as an employee, your employer has the option to provide you with a setup where you can get additional money back into your paycheck that can either pay for your benefits or be a pay bump, a monthly pay bump by utilizing a specific strategy. And that's what we what we help all of our clients with.

[00:27:24] So if you'd like to learn more about that, you can go to. Never ending fundraiser dot com, you'll be able to drop in your email, take a quick quiz. And then if you'd like to hop on a on a call with us, we can walk you through how you can set that up for your organization. But in general, it's creating about two hundred fifty dollars per month per person in net tax savings.

[00:27:49] So, you know, for a 10 employee for a 10 employee group, you could be looking at, you know, close to thirty thousand dollars in tax savings in a year alone. Wow. And that was never ending fundraiser dot com. Yeah. And that will be in the show notes. So those of you who are listening on your phone, just look at the show notes and click the link. It'll be it'll be clickable. So we'll have that that in there for you.

[00:28:13] So this has been really a great conversation as we wrap up our talk. Do you have any final words for the audience? Don't be afraid to live your life how you want it. Don't be afraid to take the risk. Even if you feel like it's late in life or, you know, there are no more risks left to take.

[00:28:38] Just take one, even if it's a tiny one, maybe take another one and just enjoy. Enjoy what you have while you can. Perfect last words. Thank you so much, Jacob. It was a pleasure getting to know you and I look forward to connecting with you soon. You too. Thank you so much, Jennifer. All right. Thank you.

[00:29:00] Thank you for taking your time to spend with me on this latest podcast of Destined for Success. Please take a moment to leave a review, share it with a friend and subscribe and get the newest episodes every Monday morning. I'm Jennifer Takagi and I look forward to connecting with you soon. Thank you. Thank you.