The Affordable Care Act (ACA) has forever altered the health insurance industry, requiring brokers to take on new roles and offer innovative solutions to their clients. Companies large and small are relying more on the expertise of their brokers, and top-level executives are increasingly concerned with compliance, cost control and employee education. Likewise, employees are still adjusting to their roles as consumers in the retail healthcare market, and they need their brokers’ help to understand their costs and risks.
While these changes have generated a great deal of confusion and uncertainty, they have also created some opportunities for brokers willing to adapt. Fast sales based on limited information are quickly becoming a thing of the past, and client education, teamwork and long-term partner relationships are the best paths to stable growth among brokerages. In the post-ACA environment, brokers can thrive by taking on consultative roles within their client companies; by choosing and relying upon trusted partners; and by augmenting product sales with fee-based services.
From Salesperson to Strategic Partner
Perhaps the greatest post-ACA transformation has been the shift from sales “hunting” to sales “farming.” Before the recent reform, successful brokers “hunted” by focusing on short-term leads and product sales. Their growth varied according to their commissions, and they reacted as quickly as possible to clients’ changing needs. Clients also chose from laundry lists of voluntary products, many of which they did not fully understand. This method was viable largely because those products did not necessarily supplement core sets of benefits, and because there was little need for consultation and collaboration between clients and brokers.
The current environment, however, demands greater proactivity and longer-term thinking. Clients’ ACA obligations and employees’ rising out-of-pocket costs necessitate a more careful, measured approach – one which requires brokers to “farm” for sales and renewals over months and years. They must foster long-term relationships with the client teams that implement new policies, and they need to recommend products that fit the current and future needs of unique groups of employees.
This collaborative approach has driven brokers to become strategic partners, rather than just salespeople. From costly compliance to employee education to retention and turnover, today’s clients face a variety of challenges that brokers can best address through consultative services. These services include benefits administration; employee education and benefits engagement; ACA compliance; benefits positioning and marketing; cost-sharing and plan incentives; and consumer-directed health plan (CDHP) design. Ultimately, these services make it possible for clients to purchase the plans that will best suit their budgets, goals and employee needs.
Employees themselves also want more assistance from brokers, and given their rising costs and responsibilities, they need to better understand their financial risks. In fact, 87 percent of employees now expect more decision-making tools and support when they enroll for insurance and benefits. Fortunately, 64 percent also see a growing need for voluntary insurance compared to years past, and 57 percent are likely to purchase additional products to ensure adequate coverage.[i] From supplemental health to life insurance to dental and vision, consumers understand the importance of voluntary products. Brokers just need to help them understand how to fit those products into plans that meet their needs and protect their finances.
More than ever, brokers need to rely upon trusted partners. Older sales strategies allowed for short-term partnerships with a wide variety of carriers, many of whom only offered products suitable to clients’ immediate needs. Now that brokers are investing more time and resources into lasting client relationships, they need partners who can grow along with them.
For many brokers, collaboration with these partners begins with technology. The market has seen a rapid influx of benefits administration solutions over the last three years, many of which are provided by carriers themselves. Whether they’re provided online, in call centers or in person, these solutions make it easier for brokers to manage clients’ enrollment, compliance, CDHP account management, benefits communications and related tasks.
Aside from technological concerns, there are several questions brokers should address as they assess a potential partner. First, are clients going to eventually need products the carrier doesn’t have? Employee needs will change over the course of a client relationship, and ideal partners will already have accommodating options in place. Second, how are commissions going to be handled? Splitting payouts with a helpful worksite partner may be more profitable than keeping all of the money and doing all of the legwork. Third, will enrollment personnel still be available at renewal? A consistent enrollment staff can make it far easier to renew a policy with minimal hassle on the client end.
Most importantly, can the carrier be trusted to keep brokers’ long-term interests in mind? As brokers invest more time into consultative roles, they necessarily become more concerned that the worksite products sold will focus solely on that new sale, rather than on a long-term relationship with the client. In this higher-risk, higher-reward environment, it is more important than ever to find dependable partners.
New Revenue Streams
Finally, brokers can thrive in the post-ACA environment by creating new revenue streams with fee-based services. A full three quarters of brokers at least somewhat agree they’ve either expanded their consulting services or created new consulting practices in the past year.[ii] While product sales may not happen as quickly or as readily as before, these services can grow revenue and add value to the overall packages brokers present.
In addition to new service offerings, many brokers are also expanding into new clientele. 46 percent have changed their target clients due to healthcare legislation, and among that cohort, 17 percent are pursuing new industries, 32 percent are focusing more on small companies and 30 percent are focusing more on medium-sized companies.[iii]
Aside from expansions into new services, industries and company sizes, there are plenty of reasons for brokers to remain optimistic as the ACA continues to change the industry. New worksite players and innovative products are making it easier to offer packages that truly suit clients’ needs. Younger workers also understand the value of voluntary products and are more willing to spend than their parents and grandparents. Most importantly, the majority of brokers’ success now comes from relationship building. By positioning themselves as partners and offering valuable consultative services up front, they can set themselves up for stable growth in the future.
This article summarizes a webinar hosted with Patricia Griffey, regional vice president at National Association of Health Underwriters. The webinar entitled “3 essential ways the ACA transformed brokers” was the first in a series presented by Aflac. The “Thrive from 2015 to 2025” broker webinar series aims to address the ongoing changes in the health insurance industry resulting from the Affordable Care Act (ACA) and how brokers can take advantage of their new role as health benefits advisors. To learn more, visit aflac.com/thrive2025.
[i] 2015 Aflac Workforces Report, a study conducted by Research Now on behalf of Aflac, January 2015
[ii] 2015 Aflac Workforces Report, a study conducted by Research Now on behalf of Aflac, January 2015
[iii] 2015 Aflac Workforces Report, a study conducted by Research Now on behalf of Aflac, January 205