For all of you erstwhile, growth-oriented group health agents looking for ways to grow your agency, I have outlined a few tactical options that we have found work very well when prospecting for new clients.
Benefits administration and misinformation regarding The Affordable Care Act have created significant opportunities to churn new clients in your direction. For the most part, brokers have done a very poor job of explaining compliance to their employer clients, particularly low-wage hourly employers. Use these tactics and I know that you will find a willing audience of potential new clients at your disposal.
Once you have your answers, our job (General Agent) is to join forces with you to replace these poorly thought out solutions (and incumbent brokers) with more permanent and satisfactory ones. Try these out the next time you are prospecting new employers:
Probing Questions for Prospective Employer Clients
1. Do you employ more than 100 hourly or part-time employees working between, 30 – 40 hours per week? Do you currently offer these hourly workers a limited medical plan, MEC (Minimum Essential Coverage) or MVP (Minimum Value Plan)? Note: Self-funded MEC satisfies the A (highest tax consequence for individual and employer) while self-funded Minimum Value addresses the so-called B penalty (less tax consequence)
2. Do your MEC plans include a supplementary indemnity benefit? Or are they MEC only? (Note: Try to determine if they pay more than $50 per member per month for a MEC only option)
3. Does your MVP plan have any enrolled employees? If yes, this is a red flag for follow-up
4. Does your MEC plan return unused claims surplus to you? Another red flag
5. Have you experienced unusually poor administrative service from the carrier or TPA sponsoring your MEC or MVP programs? Likely you will find that most service has been anywhere from poor to horrible
Comments/Analysis on the Above Questions
Q – 1. You want to identify employers who employ hourly workers and are using *“skinny options” to comply with the employer mandate requirement under ACA. If they say no, this begs the question, “what exactly are you doing to comply with ACA employer mandate requirements?“
*Any solution using limited medical or MEC only coverage
We also want to determine whether this employer is using a MEC, MEC plus indemnity, or MVP plans. We know, for example, that MVP plans are likely **not necessary and carry with them and unacceptable amount of risk to the employer. This should be an opening for you to discuss eliminating the MVP and retaining a MEC plus replacement.
**The reasoning for this is that fewer than 1% of typical hourly employees exercise their rights to subsidized health plans on the exchange. Simply put, the penalty for not meeting Minimum Value is less than the cost (and potential risk to the employer for high claims) of implementing a Minimum Value solution.
Q – 2. If your prospect is offering a MEC ONLY option, chances are it is grossly overpriced. Example: Claims typically run no more than $12 to $15 per covered employee per month. Most MEC Only plans charge an exorbitant administrative fee, compared to the actual claims being paid. This is another opportunity to make the incumbent broker look bad and you look good. The strategy here is to replace the MEC only, with a MEC plus insured indemnity for only a few dollars more.
Q – 3. This is another opportunity to show the MVP in a bad light and continue to question the wisdom of offering it in the first place. The dirty little secret of MVP offerings are that they do not want anyone to enroll in them, this is likely due to reinsurance underwriting restrictions. Either way (whether there someone enrolled are not), you can make the incumbent broker look incompetent, or at least ill-informed, by pointing out how unnecessary it is to worry about the Minimum Value component of ACA, for all the reasons stated above.
Q – 4. Many, if not most of the MEC plans that we encounter, do not return unused claims dollars to the employer. Due to the predictability and relatively minimal risk, these plans are almost always overfunded. In some cases, no pre-funding is required, so the employer is required to fund claims on “on-call” basis, this can affect cash flow and is disruptive to budgeting and cash flow.
Q – 5. Many of the TPAs sponsoring MEC/MVP plans have done an exceedingly poor job of handling billing administration. In some cases, we have found that they do not even answer the phone. Many employers assume that poor service comes with the territory in this market segment, this is absolutely not true and is unacceptable. Often, this simple question, “how has your service been” creates an opening to discuss improvement in the plan as well as provider services.
We hope that some of these ideas will prove useful to you in your marketing process. I estimate that over 50% of the service sector marketplace (food, hospitality, nursing home, agricultural and light manufacturing) are being poorly advised by their current consultant. There is no telling how many more years the Affordable Care Act will survive, but we do know that it is currently the law of the land and as such continues to create opportunities for agencies such as yours.
Once you have gotten your answers, give me a call and we can formulate a killer response that is guaranteed to make you look like the smartest agent on the planet.
William Hammett – 619 301 7460 firstname.lastname@example.org