Case Study – Arrive Palm Springs

Hotel, Restaurant, Bar, Coffee House & Ice Cream Spot
120 employees
Palm Springs Market

SITUATION
Arrive was a new hotel in the Palm Springs, CA market in early 2016. As is the case with most hotels and
restaurants, most employees are at minimum wage. About 15 employees have salaries significantly
higher than minimum wage. They wanted benefits to attract and retain great employees in order to
compete in the very competitive resort community and to be in compliance with local, state and
federal rules related to employee benefits. To get assistance with employee benefits and compliance,
they had chosen a “brand name” brokerage/payroll company.

Arrive Hotel, Palm Springs

CHALLENGE
As you would expect, the challenges included cash flow, low wage earners, and expensive medical
insurance options. Their plans were not in compliance with the “affordability” rule of the ACA, and only
17 employees were willing to enroll. Employees did not appreciate the options available, which meant
they were far from realizing their goal of having benefits that attract and retain the best employees. In
addition, the CFO was responsible for HR and Benefits and could not devote the time to do it well. Lastly,
Arrive was concerned that if they kicked in more dollars toward the premium as a solution, they would
have too many employees enroll and would blow out their budget. By late 2016, Arrive was completely
dissatisfied with their “brand name” brokerage and approached Qandun for solutions.

STRATEGY
After evaluating Arrive’s business model, mission, goals, and challenges, we encouraged them to
implement a strategy that included more medical options, dental, vision, life insurance, and a robust
employee engagement strategy. This included 5 major carriers and two metal tier levels of benefits so
that employees that needed less expensive options would have great options with various doctor
networks, ensuring that most employees found their preferred providers. At the same time, richer options
were available to employees that could afford to buy more coverage, again with high percentage
match on provider networks. The program wrapped in a voluntary low cost dental plan and two low cost
voluntary vision plans. The employer kicked in a fully paid life insurance policy on every employee. Then,
we showed Arrive how to maximize reduction in payroll taxes, worker’s compensation premiums,
corporate taxes, and the costs associated with hiring and retraining new staff which helped to pay for
these added benefits.

We held informative meetings to engage and educate all employees on the value and affordability of
the coverages being offered by Arrive. These meetings included education on Medicare, Medi-Cal
(Medicaid), Veterans Benefits, TriCare Military Benefits, and spousal/parental dependent benefits to
ensure those not needing this employer’s plan would be well informed in terms of deciding on their
current coverage vs. that offered by Arrive. These in-person meetings were not offered by their previous
broker.
Finally, to ease the workload for the CFO, we implemented integrated systems that took the employer
into a paperless process with some checks and balances.

OUTCOME
After rolling out the improved benefit options, lower cost share, and full employee engagement strategy,
the employer saw the employee enrollment on medical grow from 17 to 49. All 76 full time employees
enrolled on life insurance, and many voluntarily purchased dental and vision coverage, ensuring all
employees had benefits they valued even if they did not need the medical benefits. Arrive now has an
online paperless system that keeps track of who has and has not completed enrollments or has not yet
confirmed receiving and reading required disclosures, saving the CFO/HR several hours a day.
Employees know and appreciate their benefits and know how to use them. Arrive is in complete
compliance with ACA and other regulations with no fear of an audit by the Department of Labor nor the
IRS in relation to employee benefits. All of this was achieved for a net price tag to the employer after
taking into account payroll tax, workers comp premium, and corporate tax savings. All of this was less
than 50 cents per employee per hour averaged across the entire employee population which is less
than 4% of payroll. Arrive learned that benefits are much less expensive than adding additional pay into
the employees paycheck. For each dollar of payroll, the cost is more like $1.15 to $1.30, depending on
the salary and benefit mix. For each dollar invested in benefits, the cost is really only 70 to 80 cents on
the dollar.

OUTLOOK
As Arrive becomes more established with predictable, profitable cash flow, the next step is to bring in
other valuable, low cost benefits like:
• accident offsite to protect workers comp from fraudulent claims,
• long term disability insurance,
• telemedicine,
• total compensation statements,
• wellness initiatives,
• payroll integration with HR/Benefits platform,
• and mobile employee engagement.
The goal is to make Arrive the premier hotel/restaurant employer in the Palm Springs market and to help
them open up additional hotels as they grow.