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Agencies are Better Positioned to offer Health Insurance than Expected Post ACA

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It’s now four years since the Affordable Care Act was passed, and reports of the death of the health insurance agents’ profession have been greatly exaggerated.

First, some agencies got a shot in the arm from guaranteed underwriting during the open enrollment period.  If someone applied for an ACA-compliant exchange plan between October 1 and March 31, there was no medical underwriting to worry about. You had a 100 percent approval rate, and you could get paid quickly. Better yet, there was no need for going back and forth with underwriters looking for additional information from the applicant, notes from attending physicians, medical records requests, etc. If the check cleared, you were in business and you had a client.

Now that the open-enrollment period is over, though, agents have to go back to blocking and tackling the old-fashioned way. New enrollees must go through medical underwriting.

How can you tackle it?

  1. Sidestep the medical underwriting issue by prospecting for people who have undergone a qualifying life event. For example, if an individual has lost group coverage, gotten married, divorced or widowed, and wants or needs coverage, they can still get on through the exchanges without medical underwriting.
  2. Focus on more affluent individuals and families who don’t like what’s available on the exchanges. For example, many times the plans on the exchanges actually exclude most desirable or prestigious health centers in the area, or the best specialists. This can be a powerful differentiator for certain clients who are able to pay more for better coverage.
  3. Pursue “excepted” markets that are not directly covered under the ACA. In the health insurance world, that includes products like critical care insurance plans or short-term ‘bridge insurance’ plans. These can be a great way to get temporary coverage in place until the next ACA open enrollment period next year.
  4. Go after related lines such as disability income insurance and long term care insurance.
  5. Solicit small-to-medium sized business owners. These people may not have a full time HR staff and cannot devote significant time to learning the ins and outs of the health care law. But they still need to be able to make major decisions that will affect their hiring, health care and benefits decisions and growth potential, and they need an expert in their court. There are many opportunities for agents in these markets, working both with the business owners and directly with the employees themselves, in the voluntary benefits space, for example, or in catching employees as they are kicked off their employer plans.

Yes, there was some displacement in the market. Some agents working the low end of the markets lost customers as consumers in lower-income segments went to the exchanges to take advantage of subsidies that they couldn’t get through broker-sold policies off of the exchange system. But markets have a way of adjusting – and as the federal exchange-based insurance programs ran into difficulties, or as Americans found that the exchanges weren’t as “affordable” as first advertised, they are increasingly turning once again to the neighborhood insurance agent for advice and insurance solutions better designed to fit their needs.

Case in point: Arkansas, which recently approached the federal government with a request: Rather than throw millions of dollars at expanding Medicare, Arkansas wanted to take part of their apportionment of federal funds and start a ‘private option’ program. This program would facilitate Arkansas residents buying a private health plan of their own, outside of the exchange program. Thus far, the Arkansas program has about 105,000 takers. Under the program, customers go through agents, rather than “navigators.”

Additionally, some states have also turned to brokers to help bring people to the exchanges, allowing carriers to provide a very basic compensation to encourage them to do so. It isn’t much. In Tennessee brokers are getting about $15 per month per enrollee, or about $180 per year to play with. Some agents were doing brisk business bringing middle market and lower-income people to the exchanges. Sign up a couple in Tennessee and that’s $360 to divide between the agent and the agency. Not a lot to support more than an add-on approach with traditional appointment based selling, but it was sufficient for technology-savvy agencies to make a go of it going for three yards and a cloud of dust via phone and Web sales. So brokers working this system have had to invent systems to bring their message to more people, faster.

Insurance Still Needs Agents

One of the lessons of the ACA is that insurance still needs agents to be sold. Even high-demand, high-visibility lines like medical insurance do not sell well unless there is a concerted and expensive effort to persuade people to buy.

There have been many attempts over the years to eliminate agents as the middleman from the process. The Affordable Care Act and the exchanges, supplemented by “navigators” (of widely varying levels of experience and competence, to say the least) was merely the latest effort. And when enrollments were running far, far behind targeted levels, it became clear, even to government, that they still needed agents out there in the field, speaking to people directly about their options and recommending solutions.

Going forward, look for more expansion of the role of the agent, as more programs similar to Arkansas’s private option plan – signed into law by a Democratic governor – get rolled out.

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