Use High-Deductible Health Plans To Win More Worksite Sales

It was easy in the past to tell the difference between traditional employer-sponsored health benefits and voluntary health benefits. Traditional health benefits, whether through a preferred provider organization or a health maintenance organization, were offered and paid for primarily by the employer.

Where employers did not offer PPO or HMO coverage, they often would offer critical illness or hospital indemnity-type programs. These are typically voluntary, sponsored by the employer but paid for by the employee. Different insurance companies typically conduct enrollment meetings for these products at different times, and decisions about such voluntary coverage are made outside of the selection of traditional health coverage.

The differences between employer-paid and voluntary health care benefits are no longer that clear, especially with the advent of high-deductible health plans and health savings accounts. These consumer-driven health care options have characteristics of both traditional and voluntary products. This translates into a more complex health care decision for the employee. It also creates opportunities for producers to strengthen their relationships with business owner clients and provide additional solutions to each businesss employees.

Unlike most voluntary health care plans, the employer normally pays a significant percentage of the premium for the high-deductible health plan for employee coverage. This encourages employees to sign up, so they are protected against catastrophic medical claims. Enrollment is straightforward, using similar techniques and tools that are in place today for other health benefits. Although the details are different for HDHPs, the benefits are similar to other offerings.

Because the HDHP and the HSA are new, however, they require additional communication and new sales tools. They may look partly or entirely voluntary to the employee, depending on the funding strategy of the employer.

Many producers ask themselves why they should spend time helping individual employees determine how much money they should put into their HSAs since this takes time and produces little or no direct compensation. But it does something else that is very important to the producer. It provides a forum to discuss employee needs and present other voluntary products, such as dental, disability and life insurance.

David Van Ahn of Van Ahn Insurance Services LLC., an Ankeny, Iowa, brokerage, has developed a comprehensive 4-step approach to selling and enrolling HDHPs and HSAs. According to Van Ahn, the key is to “educate, educate and then educate.” His process reflects that focus.

First, he meets with the prospective employer to explain how HDHP-HSA programs work. This comprehensive discussion focuses on benefit and tax implications as well as likely reactions from employees. The agent also presents preliminary rates to give the employer an idea of the savings that can be expected.

Second, a preliminary meeting is held with the employees of the business. Van Ahn explains the program to them and allows ample time to address their questions and concerns. This early introduction allows them to become familiar with the program and determine how it will affect them, well before the effective date.

Producers who use similar meetings should seek 2 things. First, they need to ask employers to make enrollment meetings mandatory for all employees. This is a significant change in benefits for most employees, and they need to understand the impact fully. In addition, spouses should be encouraged to attend so that they can hear the information firsthand.

The third meeting is held with the employer to review final rates and determine what level of contributions the employer will make to the HDHP premiums and to each employees HSA. These are critical decisions that will affect employee perceptions of the new offering. Preparations also are made for the actual employee enrollment meetings.

Enrollment meetings are held next. These are consultative in nature, explaining the program again and helping guide employees as they determine how much to contribute to their HSA.

It is at this point that Van Ahn introduces additional voluntary products. Employees often find that the premium savings from the high-deductible health plan allow them to purchase disability, life and other benefits to provide them further protection.

About 6 months later, Van Ahn meets with the employer and employees again to answer any questions and lay the groundwork for renewal, which by then is only 4 months away.

Although this comprehensive approach takes more time than the traditional sales process, it creates satisfied customers that have paid dividends to Van Ahn, including higher customer retention rates, greater penetration of each clients employee base, and referrals to other customers outside the worksite.

These are the main benefits of the HDHP for producers. Offering these plans, along with health savings accounts, as voluntary solutions opens doors for you to increase your compensation and build customer loyalty.

Jerry L. Ripperger is director of consumer health, Principal Financial Group Inc., Des Moines, Iowa. You can contact him at Ripperger.Jerry@principal.com.


Reproduced from National Underwriter Edition, November 24, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.