It happens every year. Many compete and one is chosen. Many more never even get the opportunity to show what they can do because they simply cannot qualify for the contest.
BENEFITS BUSINESS
Solving special employee benefit problems
can help agents get a foot in the door
By Len Strazewski
Agents and brokers may not participate in professional sports playoffs, but the producers who specialize in marketing employee benefits programs have their own annual competition.
It happens every year. Many compete and one is chosen. Many more never even get the opportunity to show what they can do because they simply cannot qualify for the contest.
Agents and brokers may not participate in professional sports playoffs, but the producers who specialize in marketing employee benefits programs have their own annual competition. When group health and welfare benefits come up for annual renewals, agents virtually climb over each other to bid on the lucrative programs.
Employers, however, rarely let more than three or four agents, brokers and employee benefits consultants submit proposals; so many agents never even get a shot at the gold medal--unless they have an edge that pre-qualifies them in the eyes of human resource executives or employee benefits buyers.
How can they get that inside edge? Solve some other problems for employers and they'll be much more open to your proposals, say agents and other insurance marketing experts. And employers have plenty of other health benefits-related concerns that can provide marketing opportunities for smart and aggressive agents.
They include:
* COBRA or substitute benefits for outgoing employees
* Temporary health insurance for seasonal, temporary or probationary employees
* Short-term health insurance for early retirees prior to Medicare qualification
* Replacement health coverage for employee dependents who no longer qualify for inclusion in group plans, such as students over age 23
Michael T. Kern, president of the Kern Insurance Group in Cedarburg, Wisconsin, says he has had good luck getting the attention of large employers by marketing a package of individual short-term medical insurance products designed to fill those problematic health coverage gaps for workers and dependents.
The specialty products are sold directly to employees who are referred by human resources managers who may also provide the applications and often help the employees fill out and submit the forms. "The products practically sell themselves," Kern says. "And once an agent has demonstrated how they respond to some of the problems that employers encounter on a regular basis, those solutions are what can give an agent access for the future."
For example, employers are required by COBRA regulation to offer terminated or other outgoing employees a continuation of group medical benefits. However, COBRA benefits can be prohibitively expensive for some employees who have to pay the full cost of participation in the existing major medical plan--whether or not they need the full value of the benefit plan.
Kern says an individual short-term medical plan can provide a much less expensive option for some employees--particularly young, employable workers without dependents or pre-existing medical conditions that would create a demand for the full COBRA coverage. COBRA benefits can cost $600 to $800 per month, but short-term medical insurance with limits as high as
$2 million can be much less expensive.
"Laid-off workers can save as much as 60% over COBRA charges with a short-term plan that can provide catastrophic coverage for up to six months. The terminated employees are satisfied, and the employer is happy because workers are not left uncovered," he says.
"Many employers are not even aware of this option and don't make it available to workers--unless an agent is aggressive in making them aware of the coverage," he says.
Margaret M. Crawford, senior vice president of human resources at Fortis Health in Milwaukee, one of the nation's largest providers of short-term medical insurance, agrees. Though her main responsibility involves management of the Fortis Health corporate human resources, she also helps with employee benefit product design.
"Many employers are experiencing a reduction in workforce due to the present state of the economy," she explains. "But despite the economic pressure to reduce headcount, employers are concerned about these workers and want them to have some affordable health care. But many of them have no experience in providing options other than COBRA.
"This can be a great opportunity for agents who can step in with an affordable option that doesn't require any additional administration from the employer," she says.
Employers who are hiring may also have a need for short-term medical products. Employers in seasonal industries may not want to include temporary employees in the permanent group medical plan at the full cost of coverage, but still desire to provide health care for a limited period, Crawford notes.
And employers who require a probationary period or waiting period before an employee qualifies for group medical may still want to provide some coverage.
"Despite the trend toward workforce reductions, employers still need to recruit employees for some special positions. Access to health insurance should not be a bar to getting the right employee for the job. In some cases, an employer may be willing to pay for short-term medical insurance for 60 to 90 days until group medical activates or make that coverage available for employee purchase," she says.
Kern says agents also can follow up on this gap plan with solicitations for personal lines. New employees needing short-term medical insurance may also need homeowners insurance, new auto insurance and other personal coverages.
The key difference in short-term medical coverage is the restriction on pre-existing conditions. Most short-term medical plans will not cover conditions diagnosed before the plans begin. As a result, they are not good deals for workers with diabetes, cardiac disease or other chronic conditions.
Otherwise, Fortis Health and other short-term medical plans can provide the same major medical benefits as group major medical plans and can have similar limits. The plans can have similar or less generous coinsurance terms chosen by the policyholder and deductibles beginning at $250. Cash-strapped workers can choose the less generous benefits to reduce their premium.
Kern Insurance, which represents Fortis Health, has three employees and brokerage relationships with more than 140 producers in Wisconsin. Short-term medical insurance products are also available in Wisconsin from Golden Rule Insurance Co. in Lawrenceville, Illinois, and Wisconsin Physician Insurance Services Corporation in Madison, Wisconsin.
Kern also notes another short-term medical marketing opportunity--students continuing past the age of inclusion in their parents' group benefits plan, usually age 23.
"More and more students are taking longer and longer to complete college training as they continue straight through to graduate degrees or spend extra time on professional internships. Employers don't want to leave one of their employee's children uncovered but have little choice under the terms of the group plan. Short-term medical gives them some options in continuing coverage," he says.
Kern markets a specialized Fortis Health product called Student Select that offers major medical coverage with limits up to $2 million for full-time students for up to 24 months. "Every human resource manager should have a stack of these applications in his or her desk drawer--and once they are aware of the product, they usually want them," he says.
John Radovich, national sales director at Fortis Health, agrees that short-term medical and other niche products can be the key to large employer access. "Large group health benefits programs are extremely competitive and everybody wants to get access to the program. But employers are very reluctant to let too many agents and brokers make their pitch. The incumbent agent has the edge--and maybe a couple of others will get to submit proposals."
A former marketing director at MetLife in New York, Radovich worked with agents in developing large group proposals and saw many agents fail to get the attention of buyers--even if they might have had superior terms or coverage available.
"Many simply could not get employers to return their telephone calls because they couldn't cut through the clutter. They never got the chance to submit their proposals," he says. "Do a good job with some of the special problems employers face, and you get your shot at the bigger plans." *
The author
Len Strazewski has been covering employee benefits issues for more than 20 years and is employee benefits editor of Human Resource Executive magazine. He has an M.A. in Industrial Relations from Loyola University.