Do employers want to stop offering health insurance? Most employers provide health insurance for the same reasons today as they will in the future: it’s an employee benefit that hopefully sets them apart from their competition to obtain and retain qualified personnel.
Health care reform may change the buying process drastically. Employers will not be required by law to offer health insurance, but they face financial penalties if they decline to do so.
“There will be difficult decisions ahead,” says Albert Ertel, COO of Alliant Health Plans. “That decision-making process needs to be a team effort between the employer and their professional insurance agent or consultant. It’s an integral part of the value provided. Who else will have the employer’s back during this time of transition?”
Smart Business spoke with Ertel about why professional insurance agents are a vital part of the new health care landscape.
Why are insurance agents important?
Health care reform may force a dramatic change in how health insurance is to be purchased. One facet being discussed is the health insurance exchange: national or state exchanges. If the Supreme Court ultimately decides on the insurance mandate, every individual will be required to obtain his or her own coverage. Employer-sponsored plans qualify. But to collect any subsidies, individuals must purchase coverage through an exchange. Can this be done effectively over the Internet without assistance?
Consider some examples. You want to travel from A to B. Purchasing airline tickets is a single, simple transaction. You can purchase car insurance the same way. It is simple and a single transaction. You want to insure your car against damage. It’s easy until you have a claim. Even though most folks don’t have a claim but once every 10 years, an agent is the preferable source of purchase and service.
When shifting the discussion to health insurance, transactions multiply. It gets complicated: premium, plan design, provider network, etc.; claims from doctors, hospitals, labs, etc. So many transactions must be paid. What is the responsibility of the patient versus that of the insurance company? Getting answers can be rough. Much of a health insurance agent’s work starts after a policy has been implemented and the insured has received care.
What does the role of agent entail?
A typical approach to the human resources department used to be ‘I believe I can bring you a better benefit program at a lower cost than you have today.’ The agent would conduct a survey of the current program that is in place: benefits, rates, claims experience, known health issues, location of employees. Are employees all in Georgia, or scattered throughout the country? Are you fully insured and large enough to consider self-insuring?
Today it is different. A longer-term approach must be considered. Employers are looking for wellness, disease management and additional ways to hold down costs. Employers need to review their contribution strategies. How much is appropriate for employees to share in the costs? Should they increase the deductibles and/or co-pays? What about health-saving accounts (HSA) or health reimbursement accounts (HRA)? An agent can offer a cost/benefit analysis for numerous options being considered. The value proposition gets started once he has the information. Once a game plan has been set in place, it’s time to ‘shop,’ which means requesting programs from different insurance companies and producing an analysis to determine the best product.
Service cannot be taken for granted. A trusted agent could also assist with educating employees and dependents.
Why is that education necessary?
HR departments take on many roles and health insurance can be a drain on employees. Working with a professional agent may provide additional resources without increasing staff. Agents offer dedicated expertise and assistance without increasing payroll. They have a role and responsibility to assist employees’ understanding of the health coverages offered at the company.
Employees receive an ID card and a certificate of coverage or summary of benefits. Most people do not read the certificate until after they have sought and received care or treatment. So many employees/patients work the system backwards. A physician order does not guarantee the service is covered under the plan. Insurance is a contract for specific benefits at specified levels of coverage. It’s meant to provide financial support after illness or injury. Today, plans must include preventive care and wellness. It adds new costs intent on getting people to their physician sooner rather than later, because prevention tends to be less expensive over the long haul. Creating a complete message is important; prevention, wellness, diet and exercise can be offered through the employer with the right help.
How are these agents compensated?
Health care reform is creating static. A great misnomer among congressional delegates is that health insurance agents are paid 15 to 20 percent of premiums collected. That is such a fallacy. Agents can be, and many are, a tremendous resource and compensation needs to be fair and reasonable. Health care reform may make it very tough for carriers to compensate agents. New rules will require insurance carriers to pay out 80 or 85 cents of every premium dollar for medical costs. After administrative costs, taxes and a small margin it leaves a very small amount to compensate or pay for agent services. As noted previously, exchanges will be an option for the purchase of health insurance. Every employer should have the option of professional expertise without added costs. Health insurance isn’t just a financial decision. Its impact goes home to the family.
Albert Ertel is COO of Alliant Health Plans. Reach him at (706) 629-8848 or firstname.lastname@example.org.