The people you most need to keep are covered by the same plan as everyone else.
Group coverage is built for the middle of a workforce. Life and disability schedules cap out well below what a senior leader actually needs, and the gap is invisible until the year it matters. Executive benefits close it without restructuring the plan underneath.
Income replacement is a percentage until it hits a maximum.
Disability and life schedules are usually stated as a multiple or a percentage of pay with a hard dollar cap. For most of the workforce the percentage governs. For the highest earners the cap governs, and their effective replacement rate is far lower than the plan appears to promise.
Disability, at the Top of the Scale
A plan replacing a share of pay to a monthly maximum can leave a senior leader with a fraction of their actual income. Bonus and commission income is often excluded from covered earnings entirely, which widens the gap further for the people whose pay is most variable.
Life, Above Guaranteed Issue
Amounts above the guaranteed issue limit require evidence of insurability. An election that was never medically underwritten is a promise nobody has checked — and a death claim is where it gets checked. The failure is administrative: an executive elects a higher amount, the carrier sends a health questionnaire, and nobody follows up, so premium is deducted for coverage that was never approved. We reconcile pending evidence requests against payroll deductions so each elected amount is either approved or corrected.
Supplemental Layers
Individual or executive coverage layered on top of the base plan, portable where that matters, structured so the combined replacement rate is a number you chose rather than one the schedule produced. Individual disability policies can be written on the executive’s own occupation, can cover bonus income a group plan leaves out, and stay with the person if they leave. We model the combined replacement rate at each pay level, so the gap being filled is measured rather than estimated.
Retention arrangements are tax arrangements. They get built with your advisors in the room.
Nonqualified plans are a legal and tax structure first and a benefit second, so we coordinate rather than improvise — clients have CPAs and attorneys available through us for exactly these questions.
Nonqualified Deferred Compensation
Arrangements that let key employees defer income beyond qualified plan limits. The deferral election timing and payment terms are governed by rules with real consequences for getting them wrong, so documents come before funding. Tax rules fix when deferral elections are made and when payments can occur, and a failure can make deferred amounts taxable at once, with penalties. The plan document is legal work, so we coordinate with your attorney and CPA on the insurance funding rather than drafting it.
Key Person Coverage
Insurance owned by the business against the loss of someone the business depends on — sized against what the disruption would actually cost, not a round number. Sizing starts with the revenue tied to the person, the cost and time to recruit a replacement, and any loans or guarantees they personally back. Disability key person coverage is worth pricing as well, since a long absence can cost the business as much as a death.
Buy-Sell Funding
A buy-sell agreement that is not funded is a conversation. Funded, it is a mechanism. We work with the existing agreement rather than around it. We read the agreement for its valuation method and trigger events, then check whether the policies in force still match the current value of the business, since an agreement funded years ago can leave the surviving owners short. The choice between cross-purchase and entity-owned policies has tax consequences your CPA should confirm.
Carving out the executives can create a testing problem.
Self-Funded Plans and 105(H)
Where a plan is self funded or level funded, offering richer medical benefits to a highly compensated group can fail nondiscrimination testing and make benefits taxable for exactly the people it was meant to reward. The test looks at who is eligible and what they receive, so an executive-only reimbursement of deductibles is the classic failure. Insured plans have a parallel ACA rule whose enforcement has been delayed, which is a reason to design carefully, not to ignore it.
The Safer Structures
Insured arrangements, reimbursement designs and carefully defined classes usually achieve the goal without the testing exposure. The structure matters more than the generosity. An insured supplemental medical policy for executives, or individual disability and life bought outside the group plan, sits outside the self-funded testing rules. Defining classes by bona fide job categories rather than by name keeps the eligibility rule defensible if it is ever questioned.
Tested Before It Is Offered
We test the design first. A benefit withdrawn after an executive has relied on it is worse than never offering it. Testing uses data you already have: eligibility, pay and who actually enrolled, run before the plan year starts and again when the workforce changes. If a design fails, it is fixed before anyone is told about the benefit, not after a return is filed.
What employers ask about executive coverage.
Why do group limits fall short for senior people?
Because group disability and life are built around a typical salary. Above a certain income a plan maximum replaces a much smaller share of pay, so the people with the most to lose end up the least covered. The practical check is to run the schedule against your top earners’ actual pay. Because the gap sits above the cap, it is concentrated in a small group, which keeps the fix affordable.
Is there a tax or compliance catch?
There can be. Self-funded arrangements favoring the highly compensated run into nondiscrimination rules, and nonqualified deferred compensation has its own timing requirements. Test the structure before it is offered, not after. Tax treatment also depends on who pays. Employer-paid disability produces a taxable benefit, and employer-paid group term life above $50,000 creates imputed income, so the structure decides what the executive actually receives.
Does this have to be offered to everyone?
Not necessarily, which is what makes it useful for retention. The rules governing who may be covered differ by benefit and by funding, and that is precisely why the design comes before the promise. Supplemental life and disability can generally go to a defined executive class. Self-funded medical enhancements face the strictest limits, and nonqualified deferred compensation must stay within a select management or highly compensated group to keep its exemption.
Executive benefits in Bloomfield Hills for the people your business depends on
Group plans are built for the whole team. They often fall short for owners and senior leaders. A group disability plan may cap the monthly benefit, so a high earner gets a small share of their pay. A group life plan may stop well below what their family would need. Executive benefits in Bloomfield Hills can close those gaps.
We are an independent employee benefits consulting firm, in business since 2007. No carrier owns us. We work with employers in Bloomfield Hills, Birmingham, West Bloomfield, Troy and across Michigan.
Executive Benefits
Executive benefits are extra coverage for a small group of people. They sit on top of your regular group plans.
Supplemental life adds coverage above the group life amount. Supplemental disability adds income protection above the group disability cap. Both help the benefits match what a senior person really earns.
Key person coverage is different. The business buys life or disability coverage on someone it depends on. If that person dies or cannot work, the business gets the benefit. It can help cover lost revenue or the cost of finding a replacement.
Some employers also ask about nonqualified deferred compensation. That is a plan where an executive agrees to receive some pay at a later date. It has tax and legal rules that need expert advice. Clients can bring those questions to CPAs and attorneys through our firm.
We look at your current group plans, find where they stop short and compare options from several carriers. For proper coverage of an account we work in teams of 5: an account executive, an account manager, a plan analyst, customer service and IT.
Why do high earners need more than the group plan?
Group plans set limits so they work for everyone. Group disability often replaces a share of pay up to a monthly maximum. For someone with a high salary, that maximum can cover much less than they expect. Group life also has limits. Employer-paid group term life above $50,000 is taxable to the employee, so many plans stay near that line. Supplemental coverage fills the rest.
What is key person insurance, and does my business need it?
Key person insurance protects the business, not the family. Ask a simple question. If one person left suddenly, could the business keep running? If the answer is no, key person coverage is worth a look. It is common for founders, top sales leaders and people who hold key client relationships.
Common questions
Can we offer executive benefits to only a few people?
Often, yes. Many of these products are designed for a select group. Executive disability and life coverage, for example, can go to a defined group of key people, as long as the eligibility class is written down and applied consistently. Tax treatment varies by product, so your CPA should confirm it before anything is promised.
Who owns a key person policy?
The business usually owns it and receives the benefit. The business pays the premium, is the beneficiary and generally receives the death benefit free of income tax, provided the employee gave written consent after notice before the policy was issued and fits one of the tax code’s exceptions, which a key person usually does. Premiums are generally not deductible, and any later transfer of the policy to the executive is a decision to make with your CPA.
Can we get tax advice?
Clients can talk with CPAs and attorneys through our firm. Plan design questions come to us, and tax and legal questions go to the CPAs and attorneys we bring in, so a deferred compensation plan, a buy-sell or a key person policy is reviewed by the right person. We keep your own advisors working from the same numbers we do.
Talk to us about executive benefits in Bloomfield Hills
Book a 30-minute call and we will review your executive benefits in Bloomfield Hills against your current group plans. Visit us at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304, or call 248.370.8853.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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