Health care reform: what independent agents need to know
By Justin R. Brown
Like most legislation, the Affordable Care Act is highly complex and no quick glance at the thousands of pages it contains can give you an in-depth idea of exactly how it will change the world of health insurance. The reality is, though, that this law will be cause for altering the way independent insurance agents have worked in the past. So, what do you need to know to prosper in this upcoming new environment? Here are a few starting points.
First, while the PPACA is federal law, much of how it will affect insurance agents will vary from state to state. For instance, the details are still unclear as to whether and what type of commissions will be allowed on state health care exchanges.These exchanges, which are essentially marketplaces that allow uninsured individuals and some groups to shop for coverage on their own, could cause a drain on business for independent agents — although the end result remains to be seen.
Some agents, such as those who do business in Florida, will need to pay particularly close attention to the changing state laws in this regard, as Florida is one of the only states to have outright rejected federal grants for health insurance exchanges. This, however, could also present a great opportunity for agents in Florida to work directly with currently uninsured consumers on obtaining new coverage.
Assuming the role of navigator entity
Independent insurance agents' will also see changes in the way that health insurance applicants enroll in coverage. It has been estimated that approximately 24 million Americans will purchase coverage through health insurance exchanges. In order to accommodate for this massive number of applicants, Congress established navigators to assist them with an overall understanding of insurance and the new marketplace through which a policy may be obtained.
In order to be eligible to become a navigator, an entity must demonstrate that it already possesses existing relationships — or could readily establish relationships — with:
- Employers and employees
- Consumers (inclusive of those who are either uninsured or under-insured)
- Self-employed individuals
Licensed insurance agencies and brokers may qualify to become a navigator provided that they comply with the standards that have been established by the Secretary of Health and Human Services. This, too, could present an opportunity for those who currently work in the independent insurance agent arena.
Additional agent training requirements
As always, all states will continue to require that insurance agents and brokers be properly trained and pass an examination prior to becoming licensed to offer coverage. It is expected that states will also need to enhance the training requirements for those producers who sell exchange plans in the future.
In fact, the federal rule requires that a broker participating in the exchange "receives training in the range of QHP [qualified health plan] options and insurance affordability programs." Therefore, it is expected that states will also require training on issues such as premium tax credits, cost sharing assistance, online exchange enrollment tools and other related topics. Jumping on potential new opportunities
This year is actually the ideal time for independent insurance agents to start preparing their clients for the new PPACA requirements that will start taking effect in 2014, as waiting until the changes are already in place may cause rushed decisions and ultimately lead to incomplete preparation.
For example, HR departments will need to start deciding exactly how to measure the work hours of those who aren't considered full-time employees in order to determine who is and isn't eligible for coverage under the new health insurance-related rules. The earlier clients are prepared, the less frustrated they are likely to be.
Providing education can also lead to reinforced customer loyalty for independent agents. Here again, frustration and confusion could easily brew for those current or potential policy holders who are unfamiliar with the new choices that are available to them, as well as with the Web-based capabilities for choosing such coverage.
Overall, there are plenty of people who are already confused by the new law, so by providing proactive guidance to clients and prospects now, you are much more likely to be seen as a knowledgeable resource in the future. Keep your clients informed by being procative and contacting them first.
Certainly, when push comes to shove, other ways that independent insurance agents may adapt to the new health care law should include expanding their product offerings. This goes along with the old adage about not putting all your eggs in one basket. Therefore, in terms of keeping your business flourishing, it may become essential to diversify the products that you offer.
For those who already sell multiple lines of coverage, it might be a good idea to invest more in developing those channels of business. As the next few years will bring a lot of changes to the ways you can benefit from selling health insurance, it's important to get to work now on creating additional avenues for income. Bringing on additional lines can be particularly beneficial if you start to see a downsizing in your health insurance related revenue.
In any case, it is imperative to get — and stay — informed about the many ways that your insurance business may be affected as these new rules roll out. After all, a well educated and adaptable agent is also more likely to be a much more successful agent.
Get more information on the new laws from HealthCare.gov or if you really like to read, check out the full law document here.