Your Obamacare Confusion Is an Insurance Broker's Opportunity
Health insurance industry veteran Rudy Garcia became an independent broker early last year, opening his own Los Angeles firm so he could focus on small-business clients.
Garcia, owner of Qandun Insurance Advisors, now serves some 40 small businesses, most with fewer than 50 employees, and sees himself in a good position as employers prepare for landmark changes coming under the new U.S. health reform law. Garcia, 42, offers help to clients navigating the Affordable Care Act’s complex rules. “Agents that embrace reform and learn how [it works] will be participating in an unprecedented opportunity in this industry,” he says.
Employers are starting to prepare now for Jan. 1, 2014, when companies with the equivalent of 50 or more full-time employees face potential penalties if they don’t offer their full-timers affordable health plans that meet federal standards. Enrollment on state-based exchanges for individuals and small businesses gets underway later this year, although businesses may opt to go the traditional route of working directly with an agent.
The complex, evolving nature of the health reform regulations has left many business owners confused, leading some insurance brokers, Garcia among them, to market their expertise in helping businesses to comply with the law and make it work for their companies.
Many business owners who are worried about the ACA don’t fully grasp the law, according to Garcia, who says companies of various sizes can do well even as they comply with Obamacare changes.
Queries about health reform have more than doubled since Garcia started his firm, and he only expects the questions to grow as 2014 draws closer. Says Garcia, preparing for health reform is “at the top of everyone’s mind right after income-producing activities,” he says.
As a licensed broker, Garcia can sell insurance outside the exchanges, and he also plans to obtain the necessary designation that will allow him to earn a commission while working within the exchanges.
While businesses with 50 or more full-time equivalent employees now face significant new regulations under the ACA, there are ways to help them comply and “to be just fine under the rules,” according to Garcia. Businesses that are panicking over Obamacare may not have done the homework to see how it really will affect them, he says.
Garcia tells his clients with fewer than 50 workers, who don’t have to offer health coverage, that providing insurance can provide tax savings. Certain small employers offering coverage will be eligible for tax credits under the ACA. Also, employee contributions to group health premiums are pretax dollars, which means they will lower the total payroll amount, and therefore employers’ payroll taxes and workers compensation premiums, he says.
He encourages small businesses to keep offering coverage if they already do so, as it also can help with productivity and recruiting and keeping good employees.
A number of other employee benefits firms also are gearing their Obamacare expertise to small businesses, or even repositioning themselves to better seize on the opportunity.
S.S. Nesbitt & Co. of Birmingham, Ala., and Northwestern Benefits of Alabama recently merged with the healthcare law in mind. One of the firm’s services provides clients a way to navigate the “daunting regulations” of health reform by utilizing impact analysis, financial modeling, contribution analysis and other tools to guide them to compliance plans. The merged firm estimates such moves could lower clients’ benefits costs by 12 to 27 percent.
In Traverse City, Mich., the Ford Insurance Agency recently planned a country club breakfast meeting for employers with group health plans who may be “concerned or confused” about the Affordable Care Act. The firm offered to detail steps employers can take to mitigate potential risk, go over the basics of the law and provide an update on implementation.
“I can assure you that employee benefit brokers across the country are in the process of transforming their practices both to assist their clients with the challenges of healthcare reform and to allow their business to survive after reform,” says Thomas Harte, president-elect of the National Association of Health Underwriters and president of employee benefits broker Landmark Benefits Inc. of Hampstead, N.H.
Harte says his firm has invested in calculators so clients can learn what penalties they might face, holds seminars to inform them of potential challenges under the ACA, and provides updates every couple of weeks on what’s happening in Washington with reform regulations.
Health insurance brokers’ efforts to position themselves as Affordable Care Act sherpas come amidst industry turmoil prompted by the law. Because health insurance carriers must contain administrative costs to comply with the ACA, brokers have been hit by sharp cuts in commissions from insurers and some have left the industry or cut staff.
Nearly 11 percent of insurance agents planned to leave the industry between 2010 and 2011 as a result of the health reform law and its economic impact, according to a National Association of Health Underwriters survey. NAHU also found a large majority of agents were losing income due to the new “medical loss ratio” rules that set floors on carriers’ medical spending as a percentage of revenue from premiums, prompting cuts in administrative costs such as broker commissions.
To assist their members, the NAHU has been lobbying policy makers, reminding them of the importance of agents and brokers as the country prepares for individual and small-business health exchanges, or marketplaces, in 2014. NAHU also is offering brokers an “ACA Decision Support Tool” to provide their clients with customized reform impact analyses.
NAHU is offering a new 10-course certification program and test to become certified in the reform law, and there are other certification programs across the country as well, Harte says. The association has “seen an overwhelming response from brokers across the country who want to be certified,” he says.
To know if your agent is qualified to advise you on the health reform law, the NAHU suggests you contact your state insurance department to make sure the agent has a current license. And while it may not include all brokers with ACA expertise, NAHU’s “Find an Agent” feature shows the types of business that member agents practice and whether they’ve received NAHU’s “PPACA” health reform certification.