Selling benefits to small businesses is very different than it was even one year ago. Health care reform, combined with escalating costs, has dramatically changed the conversation. Any consultative discussion with a small employer needs to focus on these two core issues.
Interestingly, during formulation of the Patient Protection and Affordable Care Act (PPACA), little value was placed on the role of the agent. Yet, thanks to the complexity of the legislation and resulting new regulations, an informed insurance advisor can play an increasingly important role for customers and prospects.
Small businesses need expert advice about the immediate effects of health care reform, as well as a roadmap of evolving changes expected during the next several years. In essence, this calls for a multi-year strategy to address many new challenges.
It is very possible that this new era will reshape the agent and broker benefits space. It will be critical to align yourself with outside resources in order to enhance the services you deliver to small companies, their employees, and families. One key is expanding your capabilities with solutions that can create more leverage for small employers.
If you can “own” the intellectual capital and speak about this evolving construct, you will have a distinct advantage. Agents must be able to articulate what this means and, perhaps more importantly, what it does not mean. Areas where strategy, analysis, and communication can have an effect include:
- Presenting the client with a timeline of events clearly outlining guidelines for 2010 and beyond. The National Association of Health Underwriters offers one to the public, and the Council of Insurance Agents and Brokers has a timeline that members may access.
- Use a tax calculator to understand whether an employer is eligible for a tax subsidy in 2010.
- Create an ongoing communication strategy marketing your consultative services around health care reform.
- Help small businesses understand the resources available through your agency that will guide them through this process.
The bottom line is that you should view health care reform as a catalyst for discussions with any prospect. The topic is current, and confusion abounds.
At the same time, small employers are challenged by spiraling costs and a fluid carrier marketplace. Fertile territory includes creative approaches to consumer-directed health insurance products versus more traditional health benefits, as well as emerging products likely to be developed. In addition, contribution strategies will play an increasingly important role downstream.
Agents also should not overlook opportunities related to establishing employer compliance. Numerous mandates and revisions help employers understand what they can do and how they can do it. Significant changes that will affect most small employers focus on eligibility and non-discrimination; these provisions make a significant portion of small-business benefit offerings obsolete.
To become compliant, many of these employers will have to redesign their entire program, addressing who is eligible for benefits, what products they deliver, and their chosen contribution strategy. In addition, they will be affected by required payroll and reporting changes. Finally, it will be crucial for the employer to communicate more effectively with employees.
Agents must think about how to position themselves in this evolving marketplace. Rules will continue to be defined as elements of the legislation take effect this year and going forward. What will most help you are communication platforms and the ability to efficiently synthesize information and simplify messages to small employers, as well as to their employees and families. Agents with the right technology, processes, and systems will have distinct advantages over those who conduct traditional face-to-face presentations.
The challenge is that this opportunity to engage employers and deliver real consultative value comes at a time when commissions are under pressure because of mandatory loss ratio guidelines placed on carriers. It is too soon to know all the answers – but because PPACA did not come with directions for employers, agents and brokers who provide knowledge and guidance will be best positioned for whatever changes occur in the marketplace.
Mike Sullivan is executive vice president and chief marketing officer of Digital Insurance, which manages small-group benefits business. He can be reached at [email protected].