Survival of the Fittest - For Benefit Brokers and Employer Based Benefits!
Posted on Nov 9 2012 at 08:55:46 PM in B2B
The Election Is Finally Over! It's time for Brokers and Employers to grasp and plan for the "Disruptive Change" with Innovative Plan Strategies and Designs!
The wasteful and negative election period is now over! PPACA/Obamacare is here to stay! Those Brokers and Employers who took a "Wait and See" position on making Insurance and Benefits decisions will now be forced into becoming Decision-Makers. Many factors will have an impact on these decisions! These include:
- Changes in the existing PPACA/Obamacare Reform will be Ongoing.
- Regulations and Guidelines on Federal and State Levels will Abound.
- State Regulations and Exchanges will Differ Substantially.
- How Essential Health Benefits (EHBs) are defined.
- A Tremendous Volume of Information must be Reviewed and Acted Upon.
- Awareness of Timelines and Penalties will Demand Tracking.
- Brokers and Employers will Suffer from Confusion Based on Conflicting Information.
- A Plethora of Self-Proclaimed "Experts" will come forward to guide Brokers and Employers Down Unfamiliar Paths - Listeners Beware!.
- A New Set of Economic Measures must be Utilized by Brokers and Employers.
- Brokers' Commissions may be further Diminished.
- Brokers' Administrative demands by Carriers and Employers will Increase.
The remainder of this Blog will be dedicated to four specific areas of focus to provide Direction for Brokers and Employers:
1. What Brokers and Employers should be watching for in the coming months - 2013 and Beyond!
- Self-proclaimed "Experts" with Advice, White Papers, Webinars, etc. - Free and at a Cost - with schemes for circumventing PPACA or with promises of outcomes to good to be true.
- New Guidelines and Regulations as they are rolled out by the Administration, the Treasury, Congress, and Agencies in regard to PPACA.
- Timelines for Employers, Employees, and Individuals to be in compliance with various sections of PPACA.
- Federally mandated "Base" Health Plan Coverages" - Bronze, Silver, Gold, and Platinum - under PPACA.
- State Regulations and the Structure of their Exchanges.
- Guidelines for Private Exchanges.
- Employer Group and Individual qualifications under PPACA.
- Penalties imposed on Employers, Employees, and Individuals who are not in compliance with PPACA?
- The Role of "Navigators" in Educating and Enrolling qualified Employees and Individuals.
- How "Navigators" will be compensated?
- Medical Loss Ratios (MLR) and their impact on Commissions?
- Changes in existing regulations, ie. Self-Funding, Section 125, Reimbursement Plans, Reporting, etc.
- Changes in the Plans and Premiums offered by Carriers.
2. Insurance and Benefit Plan Strategies that Brokers and Employers should consider before Years End, in 2013, and in the Future.
- The Focus should be on Containing Costs while remaining in Compliance.
- The Goal should be Meeting the Needs of Employers and Employees.
- The Designs will need to be adjusted as Federal and State Regulations Roll-Out.
- Plan Strategies should act as the foundation for building a Sound Strategic Benefit Plan and consider including:
A) Create - or Participate in - a Private Exchange as permitted under PPACA. The Private Exchanges will become available by numerous entities in various forms. We suggest that the Private Exchange options include - but not require participation of the Brokers, Employers, and Employees:
- Accommodations for Federally and State mandated plans.
- Core Health Plan Choices - offering levels of Premiums, Co-Pays and Deductibles.
- HRA and HSA Options - to assist Employees and their Families in becoming better Consumers and potentially set aside Funds for the Future.
- High Deductible Health Plan Options - compatible with HRAs and HSAs.
- Self-Funded Health Plan Options - to provide Employers and Employees Greater Flexibility of Choices and Potential Savings.
- Implementation of Section 125 of the IRSC - to reduce Taxation for Employees and Employers while making Qualified Plans more Affordable.
- Availability of Reimbursement Plans - including: Medical, Dependent Care, and Transportation/Parking.
- Voluntary Benefit Choices - to Meet the Needs and Price Points of Employees and their Families.
- Ancillary Benefit Plans - to Offset the Costs of Employees and their Families for Day-to-Day Lifestyle Events and Needs.
- Wellness Plans - to Encourage Healthier Lifestyles and Reduce the Costs of Health Care.
B) Utilize a Defined Contribution (DC) Employee Benefit Design Strategy. The DC strategy is essentially a Cafeteria Plan and Full Flex Plan on Steroids. DC Plans provide better Control to the Employer and more Choices for Employees and their Families. DC Plan designs should include the following:
- All of the above under (A.)
- The CFO and/or Financial Advisor(s) - for the Employer determine a fixed budget to be allocated to Employee Benefits - year-by-year. In addition, they allocate Benefit Dollar/Credits to Employees by Classifications - Without Discrimination.
- The Managers and/or HR Department - working with the Broker(s) - select a Menu of Benefit Choices to offer Employees and their Families.
- The Managers and/or HR Department - working with the Broker(s) - determine the methods, for and the providers of, Employee Benefit Education, Communication, Enrollment, and Data Management.
- The CFO, Managers, and/or HR Department - working with the Broker(s) - determine the Technology required for Implementation and Tracking of the above. In recent years the capacities of Technology have become more Efficient and Cost-Effective.
C) Begin a systemic shift to a Fee Based Compensation Model for Insurance and Benefit Broker/Advisors. This would replace the traditional Commission Based Models. Brokers/Advisors would clearly represent the Employers, Employees, and Individuals:
- Brokers would have no perceived or real Conflict of Interest.
- Carriers would be enabled to more easily comply with MLR.
- Consumers - Employer, Employees, and Individuals - would gain greater representation in negotiating with Carriers and other Suppliers of Plans, Programs and Services.
3) Broker Affiliations and Partnerships will become more important in Delivering Programs and Services to Employers, Employees, and Individuals. These Affiliations and Partnerships will include (some may be integrated):
- TPAs - for Self-Funded Plans.
- TPAs - for Reimbursement Plans.
- TPAs - for Retirement Plans.
- CPAs - to assist with Tax Planning.
- Law Firms - to assist with Compliance Issues.
- Traditional Core Benefit Brokers working with Voluntary Benefit Brokers - to grasp the full spectrum of Benefits Choices.
- Defined Contribution Plan Design Specialists - to assist in Strategically Designing and Implementing the Strategy.
- Retirement Plan Specialists - for helping to integrate all Voluntary Employee Benefit Plans.
- Enrollment Company Specialists - for providing the Education, Communication and Enrollment to meet the Employer, Employee, and Brokers' Needs and Financial Capacities. Types of Enrollment may include: Group Meetings, One-On-One, Call Centers, Kiosks, Internet Based, Paper Based, or an Integration of these Methods.
- Technology Companies providing Software or Cloud Based Services - to simplify and integrate all of the above Regulations; Strategies; Affiliations and Partnerships; Plans, Programs and, Services; and more.
4) Things to remember for 2013 and Beyond -- For Evaluating Insurance and Benefit Plan Designs and Strategies! For Implementing Plans Programs, and Services! For Remaining in Compliance!
- There are no Experts on PPACA. There are people who have and are closely Monitoring the Changes, New Regulations, and New Guidelines.
- There are no Silver Bullets for avoiding the reach of PPACA.. There are Strategies for expanding Employers' and Employees' Options and for Retaining some Control.
- It will take several years for the PPACA Regulations and Guidelines to Roll-Out - Keep Up-to-Date!
- Tax Laws, as the Federal and State Governments concern themselves with Revenues and Deficits - will become more burdensome - Keep Up-to-Date!
- Tax Reform will be proposed and possibly implemented - Keep Up-to-Date!
- All levels of the Insurance and Benefit Decision-Making Process -- Brokers,/Agents; Service Providers; Employers; Employees and their Families; and Individuals -- will have a high degree of confusion, skepticism, doubt, fear, etc.
- Because of the above, the Education, Communication, and Enrollment Process will become More Important and may Take More Time.
As the above outlines, the time has come for Brokers and Employers to begin the process of Disruptive and Innovative Change brought on by the skyrocketing Costs of Health Care and Health Insurance. These factors have been combined with Health Care Reform and Changes in the traditional Employer based Benefits Delivery Systems. There will be no return to the Good Old Days!
Survival for Brokers in 2013 and Beyond will be based on their willingness to abandon Old Strategies and Models while accepting Change. It will be essential for Brokers to embrace and even spearhead New Strategies and Business Models to Survive. Brokers must become creatively involved in building new Plans, Programs and Services - as well as Delivery Systems to accommodate the above changes. 2013 will deliver Brokers and Employers many Challenges and Opportunities!
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