Insurance Brokers Face Challenges and Opportunities!

Posted on Jan 6 2013 at 07:04:47 PM in B2B

Insurance Brokers Face Challenges and Opportunities!

2013 delivered more than a New Year to the Insurance and Benefits Industries. PPACA/Obamacare started to kick in and HHS began rolling-out guidelines and regulations almost on a daily basis.  

Disruptive Changes Creating Issues - Brokers, as well as Carriers and Service Providers, face a slew of disruptive changes and new issues, these include:

  • Timelines for Implementation 
  • A New Vocabulary of Terms
  • The Need for Strategies and Solutions for Assisting Clients and Potential Clients with their Concerns, Questions, and Demands
  • Reduced or Disappearing Commissions from Health Plans due to MLRs and Market Forces Creates the Need for New Revenue Streams
  • If the above was not enough, economic uncertainties have placed budgetary constraints on all parties - Brokers, Carriers, Service Providers, Employers, Employees, and Individuals. In addition, Brokers face increased demands for their time and expertise with reduced support from Carriers/Providers.

    Let's take a look at these changes and the issues:

    1) Timelines for Implementation - While a number of groups have created timelines for the implementation of PPACA/Obamacare, we recommend starting with the Federal Government's timeline - 

    2)  A New Vocabulary of Terms - We have isolated the following terms that are either reasonably new or that Brokers should review - There are probably many more! (Searching Google will provide multiple definitions and descriptions). 

    Adjusted Community Ratings – PPACA

    Administrative Simplification Regulations

    Cadillac Plans


    CHIP Plans

    Co-Ops – PPACA Related

    Deductible Limits – PPACA Related

    Dental Insurance Maximums under PPACA

    Early Retiree Reinsurance Program

    EHBs – Essential Health Benefits

    Enrollment Waiting Period - Under PPACA

    Excise Taxes – For Cadillac Plans

    Federal Exchanges – Health Insurance

    FFE – Federally Facilitated Exchanges

    Free Choice Vouchers - Under PPACA

    FSA Limits – Under PPACA

    Grandfathered Plans - uunder PPACA

    Guaranteed Issue – Under PPACA

    HDHPs – High Deductible Health Plans

    HHS – Health and Human Services

    HRAs – Health Reimbursement Accounts

    HSAs – Health Savings Accounts

    Individual Mandates – Under PPACA

    Interstate Insurance Compacts

    Life Time Limits – PPACA Related

    MLR – Medical Loss Ratios

    Multi-State Plans – PPACA Related

    NAIC - National Association of Insurance Commissioners

    Navigators - Exchange Related

    OPM - Office of Personnel Management

    Out-of-Pocket Expenses - Rescissions

    Penalties - Under PPACA


    Pre-Existing Conditions – Under PPACA

    Preventive Care (A&B) – Under PPACA

    Private Exchanges – Health Insurance

    QHPs – Qualified Health Plans

    QHIPs – Qualified Individual Health Plans

    Risk Corridors – Related to PPACA

    SBC – Summary of Benefits and Coverage

    Section 125 of the IRSC

    Section 105 of the IRSC

    Shared Responsibility – PPACA Related

    Section 105(b) of the IRSC

    SHOP Plans

    SPDs – Summary Plan Descriptions

    State Exchanges – Health Insurance Subsidies

    Tax Credits – For Providing Health Insurance

    Tax Subsidies – For Health Insurance

    Uniform Glossary of Coverage

    Variable Hour and Seasonal Employees

    Waiver Process - Under PPACA

    3) The Need for Strategies and Solutions for Assisting Clients and Potential Clients with their Concerns, Questions and Demands - We suggest there are 5 Profitable Strategies and Solutions that Brokers can implement with existing Clients and utilize to attract New Clients. It is important to emphasize that this is the time for Brokers to reach out to Employers, Employees, and Individuals as a Trusted Advisor. It is essential to meet with decision-makers who are confused and need help. Schedule meetings - to inform not to sell -using a combination of traditional Outbound and New Inbound Strategies. This is the time to be pro-active! 

    4) Brokers face Reduced or Disappearing Commissions from Health Plans due to MLRs and Market Forces - While Carriers of the Health Plans have slashed the commissions, this is only one revenue stream for Brokers offering Benefits and Insurance. Brokers should continue to be, or become, the Trusted Advisor for the Employer's, Employee's and Individual's health insurance coverage. At the same time, the Broker should begin introducing the concept of Fee Based compensation for their advising services. Most Employers are not aware that Brokers are no longer being adequately compensated by the Carriers for their services. Employers are accustomed to paying for advice, ie. accounting, legal, risk management, etc. Brokers should also be the Menu Builder for the Voluntary/Worksite and Ancillary Benefit Plans. As Employees and Individuals participate in these plans and services (penetration), the commissions can be extremely profitable and an important piece to the Broker's Strategies for Success. The renewals generated from Employees and Individuals remaining on the Voluntary/Worksite Plans - year-after-year (persistency) - provides the Broker income required for maintaining ongoing Service.

    Conclusion - In many ways 2013 and Beyond will be a great time to be a Broker - as well as to be a Carrier or Service Provider! Brokers should embrace the disruptive changes and capitalize on the opportunities. PPACA/Obamacare is not going away! There is a great deal to learn and adjust to as guidelines and regulations roll-out. The massive changes to the traditional marketplaces have leveled the playing fields. There are no experts at dealing with PPACA/Obamacare. No one has years of experience. There are Individuals and Organizations who are keeping up with the guidelines and regulations as they roll-out and that are creating profitable strategies and solutions. This is a great time to Partner and Affiliate with other Organizations to both gain expertise and to diversification.   

     For more information about the above - Email / Visit or Call 216.577.5579  



      Article Information
    Author: Phil
    Created: Jan 6 2013 at 07:04:47 PM
    Updated: Jan 6 2013 at 07:04:47 PM
    Category: B2B
    Language: English