Using Medigap insurance to save money and pick up new business clients

By Roccy Defrancesco

The Wealth Preservation Institute


There is not a timelier topic today than the cost of health insurance. Even so, when I told someone I was writing an article on Medigap insurance, they thought I was crazy. I said, "crazy like a fox."

You need to learn about Medigap insurance if you:
    1. want to provide the best advice to business clients
    2. want to pick up new business clients
    3. want to make more money
This newsletter is not about Medicaid gap insurance. It is about Medigap insurance for businesses that have group health insurance.

What is Medigap insurance?

Medigap insurance is a type of health insurance that covers the expenses not covered by typical health insurance coverage. Like what? Deductibles, coinsurance costs, and out-of-pocket maximums.

Healthcare costs are going through the roof

As we all know, health care costs have been rising at astounding rates. Many employers are deciding whether they can continue to afford to offer health insurance to employees. Many who are keeping it are being forced to significantly raise their deductibles and/or co-pays.

Medigap insurance can really help take the bite out of raising a deductible, and is definitely something your business clients or potential clients will want to learn about.

Let's look at a real example of the benefit of how Medigap insurance works.

A 36-employee business with a fully insured health insurance plan that has a $250 individual deductible, $2,000 maximum out-of-pocket co-pay, $15 office visit cost, $25 urgent care visit cost, $150 E.R. visit cost, and $10 cost per prescription drug purchase. The total annual premium is$338,592.

The business could no longer afford the current coverage and decided to change the coverage to a $1,000 individual deductible, $3,000 max. out-of-pocket co-pay, $25 office visit cost, $50 urgent care visit cost, $150 E.R. visit cost, and $35 cost per prescription drug purchase. The total new annual premium is $277,538.

Of course, the employees are not going to be happy. However, to soften the blow, the employer layered in a Medigap policy to pay for most of the expenses not covered by the traditional coverage, such as deductibles and co-pays).

For the year, the total cost to the employer in order for the employees to have Medigap coverage is $11,736. When you add the Medigap premium to the new lower premium for the fully insured health care coverage, the total is $289,274. Therefore, the business saved $49,318 for the year.

Also, the employees had a Medigap policy in place where, if they have surgery, a hospital stay, or some other large health care expense, they have no out-of-pocket expense, because the Medigap policy picks up that expense from dollar one.

Do you think current and/or new business clients would be interested in Medigap insurance? Absolutely.

Making money selling Medigap insurance

I did not write this article to tell you how to make a bunch of money selling Medigap insurance. I did it because it will help you provide better advice and so you can use it as a tool to pick up new clients. However, you can make money selling Medigap insurance, if you want to go down that road.

How much? In my example, 25 percent of 70 percent of the premium ($11,736 x 25 percent = $2,934 x 70 percent = $2,053.80).

There are also bonuses that can kick up commissions in year one by over 35 percent. If you currently work with 100+ employee companies, or decide to go after them, the commissions can add up; and it may be something you want to give some thought to.

Summary

The time is right to bring to provide your business clients with something of value they are not getting from anyone else. The timing is right for you to grow your business using a unique cost-saving tool that will bring a huge smile to potential. Even if the insurance is not purchased by clients or potential clients, I guarantee you they will all appreciate your effort, which will do nothing but elevate you in the eyes of the client or potential client; and there is nothing wrong with that.

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