A few weeks ago, I published an article entitled “Is this the beginning of the end for the ACA?” For someone who’s normally pretty positive, this article was fairly pessimistic. Here’s the short version:
- Premiums, deductibles, and out-of-pockets are going up.
- Copays are going away.
- Networks are shrinking
- And there’s no end in sight…
It seems that the ACA has failed to deliver on a few key promises: 1) Plans will get better; 2) Costs will go down; and 3) If you like your doctor, you can keep your doctor.
With that said, I think it’s fair to ask the question what can we expect in 2016? As we near the end of the open enrollment season and begin another calendar year, it is important to look ahead and try to predict what will happen. It’s the only way we can properly advise our clients and it’s also the best way to grow our business. So I thought I’d peer into my crystal ball and tell you what I see. Here goes.
First, our jobs are secure.
For brokers, this is always a concern, but I think it’s clear at this point that the government has not built a better mousetrap and most people will not be able to figure this out without our help. However, our jobs will continue to change, and so will the way we get paid.
Here’s our new job description.
Individual brokers used to shop the market, present the quotes in an apples-to-apples format, and recommend the best option for their clients. Now, though, getting quotes is the easy part. People can visit Healthcare.gov for that apples-to-apples comparison, so that’s not the way for brokers to add value. These days, provider networks and drug formularies are a bigger concern. In 2016, the challenge for brokers will be to help people compare premiums, providers, and prescriptions and find what plans provide the best protection based on their own unique situations. Healthcare.gov is meant as a one-size-fits-all solution; brokers must recognize the fact that everyone’s healthcare needs are different and deliver personalized recommendations. That’s something the government will never be able to do.
Group brokers will see their jobs change as well, but in different ways. Yes, we’ll still need to address premiums, penalties, and plan design, but the way for us to add value and differentiate ourselves from the competition is by focusing on benefits automation, communication, and compliance.
Technology is no longer a luxury.
Just a few short years ago, health insurance and employee benefits were very paper-based; we killed a lot of trees. But, like the rest of the world, the industry is quickly moving online. Traditionally reserved for very large companies, benefit admin systems are now being used for smaller and smaller group enrollments. This trend will accelerate in 2016. If you don’t yet have a technology solution for your clients, you need to be searching for one. Very soon, it will be expected, and brokers who can’t provide online enrollment capabilities will lose business to those who can.
Communication is critical.
As the cost of coverage goes up, our clients’ ROI goes down. It’s simple math. Since there’s only so much we can do to affect the “investment” side of the equation, brokers need to focus more on the “return” side. In order to help employers get their money’s worth, we need to make sure that employees truly appreciate the benefits they’re being offered, and that requires a bit of a sales job.
I’m continually amazed at brokers who work so hard to sell to employers but then don’t even show up for the enrollment meeting; instead, they rely on their office staff for that “administrative function.” News flash: speaking to the employees is not an administrative task; it’s step two in the sales process.
The quickest way for brokers to give themselves a pay raise is by increasing participation in both core and ancillary products. You don’t need to go sell another group; you can just get the employees of your existing groups to sign up for the benefits.
That’s not to say that your account managers can’t do a good enrollment meeting, but if you’re going to delegate this task, you need to make sure they’re properly trained and know what to say to get and keep the employees’ attention. There’s a reason most employees look miserable at the annual enrollment meeting: because enrollment meetings are a miserable experience. Focus on changing that and you’ll be rewarded with higher participation, bigger commission checks, and increased client loyalty. Benefits communication is critically important, and it’s one area where most brokers have room for improvement.
Compliance solutions are a must.
Employer reporting and compliance will, once again, be huge in 2016. While we all know that ACA reporting, ERISA, COBRA, and other compliance requirements are employer responsibilities, it’s not enough to say “my E&O doesn’t cover that.” Brokers are continually being asked for compliance advice by their clients, and the more successful agencies are providing it.
That doesn’t mean you need to be the one to fill out IRS forms, prepare plan documents, or distribute notices to employees. But it does mean that you need to understand the requirements and have a solution for your clients. If you have not yet found one or more administrators that your clients can outsource these responsibilities to, that should be a top priority in 2016.
Commissions are changing.
The way brokers are paid will continue to change in the new year. In 2015, some group carriers started calling commissions “fees” and said they were negotiable between the broker and the employer, presumably in an attempt to exclude them from the MLR calculations. This caught the attention of CMS, which sent out a notice describing the circumstances under which an insurance company can disregard commissions for MLR reporting purposes. The most alarming bullet point on their list of criteria was that employers, not carriers, would need to issue 1099s to the agents they work with. That’s something most brokers would prefer to avoid.
Unless the MLR bill that NAHU has worked so hard on finally ends up passing in 2016, we can expect more insurance companies to adjust the way they pay brokers. This may require some conversations with our clients about how (and how much) we’re compensated, so it’s a good idea to start those conversations early, before you’re forced to have them.
In the individual market, more and more carriers are reducing or eliminating commissions. The fact is that a lot of insurance companies don’t really want to be in the individual market, and the quickest way to discourage sales is by cutting off broker commissions. You’ll need to decide how you want to handle that. Does it make sense to continue selling individual products? If so, are you going to quote those companies that won’t pay you for your efforts? And if not, will you take a stand and refuse to sell their group products as well?
You need to sell other products.
One way for brokers to protect their income is to stop putting all their eggs in one basket. Our license allows us to sell a lot more than just health insurance, which is a good thing since our clients need many of the innovative solutions that are out there. It’s a lot less expensive to purchase an accident and critical illness policy, for instance, than it is to buy a lower-deductible health plan. Employers looking to increase employee satisfaction can get a lot of bang for their buck with employer-paid dental and life insurance. And as copays disappear and wait times to see a doctor increase, telehealth and doctors online services can restore much-needed access to health care providers.
You should have all of these and more in your product portfolio, and they should be a key part of your employer presentation, not just an afterthought. The good news is that they all pay commissions and are not affected by MLR.
Marketing is essential.
I believe Wendy Kneipp with Q4Intelligence is correct when she says in her recent LinkedIn post that Insurance Agency Marketing Will Be 2016’s Differentiator. More specifically, content-driven marketing, as Wendy points out, “will keep readers coming back for more” and “will ultimately drive them to buy from you.” In other words, add value by educating people before they’re your clients, and your efforts will be rewarded with increased sales.
Another benefit of teaching people as a way of marketing your business is that you’re forced to learn in the process, and what you learn will make you a better agent.