Sooner or later, we’ll all have them: final expenses. When we pass away, there are a number of bills yet to be paid. The funeral, of course, is the big one for most people; burials, caskets, services, this all costs money. There are other expenses that happen as well; like medical bills, helping family and friends fly in for the service, and more. That’s where final expense insurance can help.
It seems everyone would be a good prospect for a final expense policy, but that’s not necessarily the case. Most people don’t even start thinking about it until age 50 or later and more affluent individuals may not need it, they have enough savings to cover those costs. We think the best prospects for final expense insurance are people over the age of 50 and who have low-to-moderate incomes. And the good news is you probably already have several existing clients who fit this demographic.
HHS changes transition rules AGAIN. Ok, it’s starting to get a bit ridiculous. Every time brokers think they have the ACA figured out, the government changes the rules. It happened again just recently. Before we tell you about the rule change, though, here’s a quick summary of how we got here.
The Affordable Care Act, signed into law six years ago, makes a number of changes to the small group market. Some of these changes occurred in 2010 and 2011, but the biggest changes were scheduled to begin on the employer’s renewal date in 2014. These “market reforms” require all ACA-qualified plans to cover the law’s “essential health benefits” and prohibit small group fully insured carriers from rating based on gender or medical conditions.
Everyone needs insurance to help protect them, and their family members, from financial loss when something unexpected happens:
If you’ve heard Bernie Sanders speak, you know that he would like to expand the Medicare program to all Americans. “Medicare for All” is the proposal, and the idea is that the government’s Medicare program works well for seniors and would be a good replacement for the Affordable Care Act. For brokers who have been selling individual plans through Healthcare.gov or one of the state-based exchanges, it may come as a surprise that any health care program in which the government is involved could run smoothly, but this one has been around for 50 years now and doesn’t appear to be going anywhere. For that reason, and because agents are looking for an alternative to the ACA plans they’ve focused their attention on for the past couple years, we’ve received a lot of requests recently for information about Medicare-related products, so we thought a short tutorial might be in order.
To begin with, Medicare is a government-run health insurance program that was signed into law in 1965 by President Lyndon B. Johnson. Currently, people age 65 or older, people with certain disabilities, and people with End Stage Renal Disease (ESRD) are eligible to participate in Medicare. The program, which is administered by the Centers for Medicare and Medicaid Services (CMS), covers nearly 54 million Americans, and as the baby boomers continue to age, another eight thousand people become eligible for Medicare every single day.
Originally, there were two parts to Medicare: Part A and Part B. Today, this is referred to as “Original Medicare,” and most people find that the protection offered by Medicare A and B is not enough.
One of the insurance industry developments this year that have us scrambling for solutions is the number of insurance companies that are reducing health care provider availability within their networks. This is happening by reducing the size of their networks or eliminating out-of-network benefits. These aren’t mutually exclusive: some insurers are doing both.
So why would a carrier that is trying to attract new members make a decision to restrict provider access? Well, like with most things, it comes down to expenses.
Brokers across the country are understandably worried about some of the recent developments in the individual market, including carrier decisions to stop paying commissions on products sold during special enrollment periods and to eliminate agent commissions altogether. If these changes have impacted your business, you’re probably nervous about having all your eggs in one basket and are considering looking for new income opportunities.
Here’s an idea: Why not sell Medicare products?
By Medicare products, we’re referring to Medicare supplements, Medicare Advantage plans, Medicare Part D prescription drug plans, or other products that may be of interest to the senior market, such as final expense policies.
If you haven’t ventured into this market segment in the past, there are a lot of great reasons to consider looking into it.
A recent Wall Street Journal article by Drew Altman, President and CEO of the Kaiser Family Foundation, reports on the connection between health insurance and financial security. The article is based on Kaiser Family Foundation polling of California residents who obtained health insurance after the Affordable Care Act took effect.
As Altman explains, “85% of those who remain without coverage in California say it is ‘very’ or ‘somewhat’ difficult to afford health care.” This is significantly higher than the 66 percent of respondents who have “trouble paying the rent or mortgage…as well as paying for gas (57%), utilities (51%), or food (44%).”
We hear it every day – agents are struggling to find individual major medical plans that meet the needs of their small-business clients. Some of the more recent developments in the individual market, designed to keep premiums down, end up making plans less desirable. Deductibles are growing, networks are shrinking, and more prescription drugs are being moved to non-formulary – meaning they aren’t covered under the plan – and yet, premiums continue to rise. Some health care providers are even deciding to stop accepting plans purchased through the Marketplace. How do you fix falling individual medical sales? Go self-funded.
We’re currently in-between open enrollment periods in the individual market, so brokers are receiving a lot of advice—from AHCP and elsewhere—to sell other products that their clients need. It’s not a bad idea considering the number of products our license allows us to sell; indeed, there are insurance products to protect almost anything that’s important to our clients and prospects. Plus, it’s a good time to diversify, to place our eggs in a few other baskets, especially with the current uncertainty surrounding individual health insurance commissions.
But there’s a problem. Actually, there are three problems:
1) our clients’ time is valuable, and they can only devote so much to learning about their insurance options;
2) they have short attention spans
3) they have limited insurance budgets.
As brokers, we have to be both diligent and creative to continue writing business in spite of these constraints.
The third annual open enrollment period under the Affordable Care Act is now over and in the record books, so it’s time to start looking ahead to the next OEP, scheduled to begin on November 1, 2016. This is important because there are likely to be some significant changes for the 2017 open enrollment period, changes which could impact your conversations with existing clients and the way you market individual health plans between now and November.