A short time ago, in a capital not so far away ...
The complications surrounding the Affordable Care Act rollout have reinforced the need for clients to do business with a trained expert.
The Affordable Care Act changed Kelly Fristoe’s health insurance business dramatically, just as everyone predicted.
But it didn’t change in the way many prognosticators expected: After a rocky start, he’s making more money than ever.
When the health exchanges opened on Oct. 1, the pundits were paying attention to the many stumbles of the national website, but Fristoe was busy in Wichita Falls, Texas. Although the website was down for the better part of two months, Fristoe and his staff persisted in signing up scores of people, just as he had been training to do in the three years since ACA became law. While other people were fretting, he was preparing.
“I’ve been taking the necessary time to focus on the intricacies of learning about health insurance,” Fristoe said. “I’ve done everything possible to educate myself about ACA, and now that it’s here I’ve used it to my advantage. This open enrollment season is our harvest season.”
Fristoe said he enrolled 150 individuals in health care between Oct. 1 and Dec. 31, which is the same amount of individual business he typically would write in an entire year as the health insurance specialist at Financial Partners.
This was despite problems with the federal website. “Most of our early applicants were people who were signing up for coverage off the exchange,” he said. “We went to the Kaiser Family Foundation website to try to figure out their subsidy because we had problems getting that information off the federal exchange. Many of my clients told me, ‘We don’t care about the subsidy. We just need to sign up for coverage in time for Jan. 1 and we’ll figure out the subsidy later.’” Fristoe and his staff also processed applications on paper while waiting for the federal website to become functional.
This is in addition to his group health insurance business. And he is making good money on them, something else that might surprise many skeptics.
“These new plans under ACA have premiums that are $2,500 a year higher than before, but we were able to get subsidies for many of our clients,” he explained regarding his increase in business. “We get paid commissions on the subsidies as well as on the premiums.”
He is expecting an even larger volume as the March 31 enrollment deadline arrives.
Of course, Fristoe’s story is not every agent’s experience, but Thomas Harte, the president of the National Association of Health Underwriters (NAHU), said Fristoe is more the norm than the general public might imagine.
Even Harte was anxious about the future of his industry and his agency, Landmark Benefits in Hampstead, N.H.
“Prior to the launch of ACA, a number of us were concerned about the health insurance agent’s demise. But what we have experienced since ACA went live proves that having a trusted consultant and advocate for the client is a system that actually works.”
As in Fristoe’s case, preparation and a shift in perspective made all the difference for agents in general and Harte’s business in particular. Harte’s company has 14 employees and has clients throughout New England. He has been in the business since 1989 and noted a shift in the agent’s role during the past five years.
“In the past, we presented our clients with plans and they selected them. Over the past five years, we have become more involved with compliance. Our role as an advocate has been bolstered.”
That initial concern spread to NAHU itself as it grappled with the implications of ACA. In fact, the association’s legislative priority had been to overhaul ACA. But as it became clear the law was being upheld and would be implemented, the association began offering programs for its members to make the most of the new reality.
Instead of its demise, the opposite is happening for NAHU. Membership grew 8 percent last year, with more people turning to the association for direction.
“I think that ACA has definitely improved the dedication of our members,” said Kathryn Gaglione, NAHU’s senior manager of public relations. “We have seen the importance of educating our members and preparing them to deal with ACA. We have had more members taking our classes, more of our members are talking with the media and interacting with legislators. We have taken a proactive approach to ACA, and we have started addressing issues surrounding it with our members before those issues hit the news.”
Another agent association that is focusing on helping its members succeed in the wake of ACA is the National Association of Insurance and Financial Advisors (NAIFA), which counts a number of health insurance practitioners among its members. NAIFA had spent much effort lobbying in favor of preserving the role of the agent in the ACA environment. The association now sees the ACA rollout as an opportunity to better serve a membership segment that previously had not received much attention.
“Because of ACA, we are strategically doing more to serve that segment of our membership because they had been asking for it,” said Sheila Owens, NAIFA vice president, communications and marketing. Over the summer, NAIFA launched a website filled with educational and advocacy resources related to ACA, including links to training that is required by the Center for Medicare and Medicaid Services (CMS) for agents seeking to do business with the exchanges. A series of webinars educating members on ACA and its implications was a sellout.
NAIFA’s president, John Nichols, predicted that instead of heading for extinction, advisors will have a place in the post-ACA world. “There will continue to be a role for advisors in all of this due to the sheer complexity of the product and the fact that not everyone will go to the exchange for coverage,” said Nichols, who is also president of Disability Resource Group in Chicago. “People will always have questions or concerns about health insurance, and they will need a place where they can get answers.”
NAIFA worked with CMS in helping to train its members for the ACA rollout, and that relationship has helped to boost the role of the agent, according to Diane Boyle, NAIFA’s vice president of governmental relations. “I think CMS has a greater appreciation for what agents do and the role that the agent plays in ACA,” she said. Training is a key to success. Another one is recalibrating the practice. Some agencies are adding other products and services. Diana Johnson, a health insurance agent in Easton, Md., said she is seeing fellow agents diversifying their practice into related areas such as voluntary benefits and wellness programs.
“I also see real growth opportunities in partnering with payroll companies that can get data that can be used to help your group clients with reporting their required information to the government” in order to comply with ACA mandates, she said.
But Johnson herself is doing the same thing as Fristoe, getting into the nitty-gritty of the ACA and guiding clients. In fact, she wishes there were more hours in the day to answer all her group health insurance clients’ questions since ACA took effect.
“Everything has changed, all the plans, all the rates. It’s like learning a whole new business,” she said, also referring the widely reported confusion over canceled plans. “There were more than 100 new plans issued in January alone, and the old ones were taken away.”
NAHU President Harte and Fristoe, the busy agent in Texas, both said focus and thorough education were keys to their success.
“I believe that brokers who get credentialed in health care reform, are active in a trade association, invest in technology and devise compliance resources for their clients are the ones who will be successful,” Harte said.
Fristoe said he believes “the days of an agent doing all the disciplines of insurance – life, disability and the like – and doing all of them very well are over.”
“The agent who focuses on health insurance, and devotes their practice to that, will be recognized as the expert in their community,” he added.
That point is not lost on Russ Childers, who has taken a hit in his business in Americus, Ga. Childers is looking at making adjustments to his practice to make up for losses in the health insurance part of his practice.
“We haven’t stopped doing health insurance, but we’re looking at how we can generate more revenue over the next six months in other areas of our practice,” such as life insurance, disability income insurance and long-term care insurance, he said. In particular, he said he is seeking out more life insurance clients than previously in order to keep his income level up.
Childers said a major problem for him was that Georgia has only one individual plan approved in the state exchange, and it is paying a commission of only $17 per month. “That makes it pretty tough to break even on that with all the service involved in getting someone enrolled,” Childers said, adding that he has had a reduction of up to 30 percent of his income because of reduced health insurance commissions.
As with Childers, in addition to the website woes, advisors’ experiences vary by state. Some states have a number of carriers offering plans on the exchanges, while others may have only one or two plans available. This also has an effect on an advisor’s commission.
Childers said the exchange has hurt his business, but others say the complexity and confusion have driven business their way.
Kathy Marrazzo of Health Advisors Group in Harrisburg, Pa., said ACA has been “employment insurance” for many agents.
“I think we will always be needed and we’ll still be around, unless something in the law changes and the whole thing gets washed out,” Marrazzo said. “We advisors know all the plans and changes, and we are the ones who are keeping up with everything on a daily basis. People need us to answer their questions.”
Not all agents will stick with it through ACA’s disruption. Agents nearing their golden years might think retirement looks a whole lot better than reinvention.
Another segment having a harder time is comprised of agents who specialize in the small group market – agents who work employers with fewer than 10 full-time workers. Many of those employers may eventually opt to shed their health insurance and send their workers to the exchange for coverage.
That is an opportunity to help those clients make that transition, but, again, many agents might be reluctant to make their own transition.
For many that’s the beauty of the private marketplace, where people can step up and make their success by helping others. NAHU’s President Harte said that the key to his members’ success.
“Health insurance is not like buying milk or bread at the grocery store. It’s an overwhelmingly complicated purchase. The broker’s value in the marketplace is exceedingly greater than ever,” Harte said.
“The successful health advisors of the future will be those who educate themselves and are there when their clients need them.”
Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Susan may be reached at [email protected]