This is the third and final post in a three-part series about the changes we can expect next year. In part one, we pointed out that we’ll have a new President, Congress, and Supreme Court Justice in 2017, and that combination could mean big changes for the Affordable Care Act. In part two, we talked about the more immediate and mostly negative changes to the health insurance products we’re selling, particularly those in the individual market: higher premiums, higher cost sharing, smaller provider networks, and fewer competitors. In this post, we’ll discuss a few practice management considerations for agents—things you need to consider when determining what market segments you’ll focus on, what products you’ll recommend to clients who can’t afford major medical coverage, and how you’ll get paid for your efforts.
PRACTICE MANAGEMENT CONSIDERATIONS
#8: Uncertain commissions
In the first two posts, we focused on the fact that there will be a lot of uncertainty this fall and early next year—uncertainty about the presidential and congressional elections and the makeup of the Supreme Court, uncertainty about the plans we sell and the new administration’s proposals to change those plans, and uncertainty about the carriers in the individual market. Well here’s one more uncertainty: commissions.
During last year’s open enrollment period, we saw some carriers cut or eliminate commissions on some of their plans, and most carriers stopped paying commissions altogether on plans sold after the open enrollment period ended. That makes it difficult to say exactly what will happen in the coming months.
That said, our clients do need help, and that means there will be a role for brokers going forward, even if we have to charge a fee for our services. We continue to believe, and certainly hope, that health insurance companies will pay brokers for the work they perform. Even if there were no commissions on ACA plans, there’s plenty of money to be made selling products that help fill the gaps of today’s health plans. Your clients need these solutions. The key is to make it part of your coverage recommendation, not an afterthought.
#9: Limited Benefit plans – They’re back!
As we all know, not every prospect we talk to will purchase health insurance. Some believe the available options are too watered down to provide any real protection while others simply can’t fit the monthly premium into their budgets. Nevertheless, people do need something to offset the risk of high medical bills.
While not a replacement for health insurance, limited benefit plans do offer some protection when an individual has an unexpected illness or injury. The 2014 ruling by the Department of Health and Human Services made it illegal to sell limited benefit plans without an underlying health insurance policy; consumers needed to attest that they had Minimum Essential Coverage in order to purchase a limited benefit plan.
Well, a court just reversed that decision. As the New York Times reports, a federal appeals court struck down a rule issued by the Obama administration that barred the sale of such insurance as a separate stand-alone product. Under the 2014 rule, “fixed indemnity policies could be sold only to people who already have the more comprehensive coverage that meets detailed federal standards,” but the court concluded that this rule amounted to “administrative overreach” by HHS. This ruling, we believe, is good news for brokers and for their clients, and unless HHS files an appeal we should once again start seeing limited benefit plans as a stand-alone option in the near future.
#10: Group Market changes
For those of you who sell small-group plans, there are plenty of changes in that market segment as well. Here are a few:
- The transition relief for non-grandfathered small-businesses expires at the end of 2017, which means that you’ll need to prepare your clients this year for what’s to come. Let them know that many of the same groups that benefit from the transition relief would do well with a self-funded small-business option.
- Employers of all sizes have begun receiving notices from the federal and state Marketplaces and will certainly be confused about what they’re supposed to do with them. Brokers who can provide guidance will be in high-demand. The notices let employers know that one or more of their employees received a premium tax credit in the individual market and that they may owe a penalty to the IRS if they’re an applicable large employer and they either 1) didn’t offer group health coverage or 2) offered coverage that was unaffordable or failed to provide minimum value.
- Finally, the Defined Contribution bill that recently passed the House of Representatives is making its way to the Senate. While it’s still a bit of a longshot, it does have a lot of support on both sides of the aisle, and its passage would create huge turmoil in the small-group market. We’ll keep an eye on it for you.
Long story short, small-group coverage isn’t going away, and because this is a transition time for many small-business employers—a time when they’re looking for solutions to keep their premiums under control and keep their plans in compliance with federal laws—brokers who have answers could make a lot of money. Now is not the time to abandon this market segment.
You’ve heard the saying “the only constant is change.” That is certainly the case as we head into 2017. With a national election right in the middle of the fourth quarter and the continuing evolution of the health reform law, brokers need to keep up with the candidates’ proposals; the legislation that’s making its way through the various congressional committees; the regulations that are still being issued by HHS and the IRS; carrier decisions to modify their plans, reduce their commissions, or exit the market; and more. Not an easy task.
At AHCP, we’ll do our best to tell you what you need to know as you advise your clients this year. And, of course, we’ll continue to offer the products and solutions you need to provide your clients with the best possible coverage for their health insurance dollar. Let us know how we can help.