In our last couple posts, we explained that CMS has extended the transitional relief for small employers until the end of 2019, giving healthier small group clients an opportunity to save on premiums for another year and avoid some of the rules applicable to ACA metallic plans. We also explained that taking advantage of this option may require these small groups to continue renewing their same plan year after year without the option of tweaking their benefits at renewal/re-issue time. For employers looking for greater flexibility in plan design, self-funding provides a great alternative; small-business employers with self-funded plans often save money by avoiding the modified adjusted community rating rules, and they have multiple plan options to choose from.
In this post, our message is that self-funding is not only a good option for your transitional small group clients but also for a lot of small-business employers who aren’t your clients—yet. Below is a three-step process that will help you recruit new small-business employers and grow your business in this lucrative market.
This sounds obvious—most agents would not recommend a strategy that they don’t believe in. But our suggestion is not that you simply take a look at the self-funding strategy so you’ll be able to recommend it when you do see a fit; rather, you should learn and understand the level-funding strategy inside and out so that you can explain, with conviction, why your clients should consider this option.
By becoming a self-funding expert, you’ll be able to determine more quickly and more accurately which clients would and would not benefit from a level-funded approach, as was detailed in our previous post.
Because self-funding was a strategy previously reserved for larger groups, some smaller companies might be nervous about adopting the strategy themselves. Your confidence and expertise will help calm their nerves and enable them to make a more informed decision.
Just as importantly, if you are not as informed as you should be with this solution, you might waste time running proposals or even recommending it to groups that really should stay on fully-insured plans.
Once you’re comfortable with level-funded plans, you can take a look at your book of business to determine which clients you want to target with this approach.
ASAP? Why would we recommend that if these transitional groups have until the end of 2019 to make a plan change? Is this really an emergency?
No, of course not. It is true that transitional plans will continue for another year, and nobody really knows what will happen after that.
However, it’s also true that many small group clients who are currently covered by a transitional plan could see comparable cost savings under a level-funded plan, so there’s really no harm in moving those groups (for which level-funding seems suitable) early. There are a number of benefits— very little downside and plenty of upside.
One of the benefits of moving early, before their scheduled renewal/re-issue date, is that small-business employers can escape the year-end madness. The fourth quarter is the busy time of the year in every market segment, and as you know all too well, you’re spread pretty thin during that three-month period. By changing their renewal/re-issue date, your clients will get more of your attention and may have more time to educate their employees about all of the benefits they offer.
Another reason to move early is for the potential cost savings the group can realize sooner than waiting until next year. On top of that, the National General Benefits Solutions Self-Funded Program offers deductible credit when a company moves in the middle of their plan year. For example, if an employee already paid out $1,000 toward their deductible on the original plan, that same amount will be considered met on the new level-funded plan.
A third and very compelling reason to move from a transitional plan to a self-funded plan early, before the end of 2019, is that transitional plans offer no opportunity for a refund. With self-funding, if the employer’s claims experience is good, there’s a potential of getting a refund after the end of the plan year, so why not start that opportunity sooner rather than later?
Although these small-business employers have the option of renewing their existing plan for yet another year, the benefits of having a transitional plan (e.g., lower premiums) may no longer be as prevalent. Having a transitional plan does not mean the premiums don’t go up from year to year; they certainly can. And if these small employers weren’t trying to keep their premiums lower, they may not choose to renew the same plan every single year; instead, they may want to consider some benefit adjustments that the ACA requirements impose, if not for the potentially vast premium differential. A self-funded plan can give the employer the opportunity to potentially offer additional benefits without necessarily the same price tag as ACA fully-insured plans.
For brokers, there’s a huge benefit to moving your clients early: it frees up your time to help new clients. Most agents are so busy trying to hang on to their existing business during the fourth quarter that they do not have much time to recruit new clients. If you can create some time for yourself by moving some of your groups early, you’ll be able to round up new business at the end of the year when your competitors’ groups are looking for alternatives.
This sounds simple, and that’s because it is. Brokers across the nation are already moving groups to self-funded plans when there is a fit, and you should be doing that too. AHCP can help by connecting you with marketing partners that deal exclusively in the small-business lead market.
If you’d prefer, you can certainly swap steps two and three. In other words, you can wait to move your small group clients to self-funded plans at their scheduled renewal dates, and instead you can begin approaching prospective small-business clients between now and the fourth quarter. If it would make sense for your current clients to move early, it would make just as much sense for prospective clients to move early.
The advantage of recruiting groups now, during the less hectic time of year, is that these employers may not be in active discussions with their incumbent agents about what they’ll do on their next renewal date. If you approach them with a potential concern their agent has not brought to their attention (“keeping your transitional plan requires you to renew as is once again, even if that’s not best for your employees”) and you’re prepared with a solution that their agent has not recommended (“I can offer you a plan that could help you keep your premiums similar to what you’re paying now while giving you flexibility in plan design”), these employers would be foolish not to listen to you.
Whichever strategy you prefer, the important thing is that you don’t wait. Based on everything we know right now, 2018 should be a very busy year. If you are not currently busy, perhaps you should be spending your time a little differently.
You can access more information on the self-funded insurance on our website at http://www.ahcpsales.com/carriers/national-general-benefits-solutions/