By Andy Dastur
Many agents, politicians, insurers, providers and consumers view the individual health insurance market to be in chaos.
With consumers, the number of uninsured has gone back up. Health insurance premiums have never been higher. More consumers than ever are saddled with health care debt and are being forced into bankruptcy. Making it even more difficult is that consumers are getting confused from harassing phone calls from unscrupulous telemarketers or being tricked into buying products that are not insurance. For those with health insurance, policyholders are being asked to take on much more of the risk, including significant out-of-pocket expenses that are outside almost anyone’s budget.
Networks continue to narrow as providers refuse to accept patients on most individual health plans. The reimbursements are low and no plans contribute enough volume to make up for it. Taxpayers are spending tens of billions annually to insure very few and politicians are more in disagreement on solutions than ever.
Agents are doing all that they can to be on the lookout for the “perfect” solution for their clients, but it is simply not out there. Agents are confused trying to decide between varying options and must take the time to customize a solution for each customer to fit their varying needs, budgets and health issues. However, commissions are getting squeezed and with so many product options, agents must spend more time learning the details of how all these plans work.
When you look at all of these problems in the market, it makes you wonder why any agent would want to be in the individual health insurance market. However, as Sun Tzu wrote nearly 3,000 years ago: “In the midst of chaos, there is also opportunity.”
So first, let’s explore why agents should be in the individual health market. The market chaos has created a demand for agents to provide expertise on options and potential solutions to meet consumer needs. Further, consumers have demonstrated that they are willing to pay a lot to get the health insurance that they want. Insurance carriers are piling back into the market, developing better products and competing for business including increasing agent commissions and business opportunities.
If you are now convinced of the opportunity, then the question is “How do agents enter or stay competitive in this turbulent market?” The first thing to do is accept that health insurance is complicated and there is no one-size-fits-all solution. Agents will need to take the time to learn all that they can to become experts.
The individual health insurance market is now fragmented into three primary categories:
So where and when do these fit? While short-term medical used to be sold to bridge gaps between jobs, it is now being used as a long-term medical plan. In many states, terms can be as long as three years, which historically is the average time consumers have stayed on their health insurance anyway. However, these do not work well for those with pre-existing conditions. Fixed benefit indemnity plans cover pre-existing conditions, but usually after a 12-month waiting period and are underwritten. Prices are significantly lower and coverage continues to get stronger, but these plans expose consumers to catastrophic health claims. Affordable Care Act plans fit those with pre-existing conditions and the ACA’s unlimited coverage protects against catastrophic claims, but with high deductibles and narrow networks, out-of-pocket costs can be significant and options limited.
There is no one size fits all, however agents frequently find that the best solution for their clients may include a combination of all three types of plans. Agents are starting to see how to put together a plan that could include a fixed benefit indemnity benefits for some needs, short-term medical to accomplish other consumer requirements, and ACA-compliant plans to solve still other issues.
In the current environment, health insurance advisors will need to understand how to put all these puzzle pieces together.
Andy Dastur is executive vice president at North American Life Plans. Andy may be contacted at [email protected].
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