by Leila Morris
For this article, executives in the small-group market give their take on important trends, and they offer tips for success in today’s benefit market.
What Are The Most Important Trends
In The Small Group Market?
Bill Figenshu, chief sales officer, Western Health Advantage: Three trends stand out as businesses try to control costs. First, we’ve seen more small groups moving from a PPO model to an HMO platform due to competitive pricing. Second, small groups are purchasing more HSA-qualified plans or high-deductible plans coupled with reimbursement arrangements or other wrap products to mitigate the out-of-pocket exposure of plan participants. Third, a lot of small groups are moving into exchanges, such as Covered California or private exchanges, such as CalChoice.
Stephen H. Nolte, CEO, Sutter Health Plus: The biggest change in California is that the small group definition recently expanded to include any employer with up to 100 full-time equivalent employees. Employers who are now defined as small group purchasers are trying to learn what this means to their businesses. In response, private and public exchanges are gaining momentum as everyone struggles to define the exact product, price, and network that will meet their needs.
Gil Youmans, director, Growth Markets for Colonial Life: We still find that many small businesses are confused by heath care regulations and are continuously besieged by rising health care costs. As a result, employers are transitioning to higher deductible plans and are shifting a greater share of the costs to employees. And many of the smallest groups, primarily those with under 50 employees, are not able to offer health benefits at all.
Bill Shepard, regional vice president, Individual and Small Business Group Sales for Health Net: The trends that affect our small-business clients the most are costs. First, the premium cost, and second, how much it costs to utilize the plans themselves. Together, they give you the true cost of a group’s plan. And when one or both go up, it deeply affects small businesses and their employees.
Tim Rhatigan, senior vice president Small Business And Individual for UnitedHealthcare: One continuing trend involves the changes brought about by the Affordable Care Act. This year, the expansion of the small-group market – from one to 50, to one to 100 – has meant community rating and essential health benefits, such as laboratory services and rehabilitative services and devices, now apply to a wider range of employers. Another big trend is innovation, which is empowering consumers and lowering costs for employers. Online start ups and human resource management services have placed an emphasis on ease-of-use when enrolling in health insurance.
Are Certain Ancillary Benefits More Suited To Small Groups?
Tim Rhatigan of UnitedHealthcare: The most frequently purchased ancillary benefit for small groups is dental insurance. Many studies have shown a strong connection between dental care and overall health. For instance, a 2013 UnitedHealthcare study found that people with certain chronic conditions had $1,000 less annually in medical and dental claims when receiving appropriate dental care as opposed to those who did not. Vision benefits generally rank second with small groups. Life insurance and disability benefits are important to consider as well. Some small groups show interest in critical illness plans. Critical illness coverage is reportedly up 11% over the past six years.
Stephen H. Nolte of Sutter Health Plus: Today, we are seeing more homogenization in small group benefits, which is mostly due to the Affordable Care Act. In the not-too-distant past, many carriers sold ancillary benefit packages to cover things like vision services or acupuncture. Today, the ACA categorizes some of these services as essential health benefits, meaning that health plans must build these into core benefit packages for small group coverage. Despite this, health plans are exploring non-traditional ancillary options that may be prudent for small groups to consider.
Bill Shepard of Health Net: Some ancillary lines, such as long-term disability, are less expensive and can be -extremely important by providing employees with peace of mind. Knowing that their family will have some support, even if they are unable to work, is significant. It demonstrates that the employer cares about employees and their families. Other lines, like dental, are more expensive, but can be good in recruiting and retention. In addition, regular dental and vision checkups are great for early detection of health problems, and can reduce the cost of care when certain illnesses are caught at an early stage.
Gil Youmans of Colonial Life: Many employees at small businesses, just like large businesses, are the sole breadwinners for their family. With growing numbers of America’s workers living paycheck-to-paycheck, they need the base coverage of disability and accident policies to protect their income if they are unable to work.
What Are The Keys To Being A Successful Broker To Small Groups?
Stephen H. Nolte of Sutter Health Plus: A broker’s value is rising proportionately with how complicated it is to purchase health care coverage today. A small employer with five to 10 employees has the same issues to manage as does an employer with 100 employees. While they may not have as many employees to manage, they have to deal with all the technical components of the ACA. In addition, brokers are the spotters for what is coming; they offer a critical set of eyes on the overall value proposition. Finally, small employers always have an eye on the acquisition of talent; the broker can provide context and visibility around all employee benefits, not just health care. In short, it is extremely important for a small business to have a relationship and dialogue with a broker they trust.
Gil Youmans of Colonial Life: A broker should consider choosing a voluntary benefit company that offers its own enrollers to support major medical enrollment while educating employees on voluntary benefits. Some brokers are losing income opportunities with changes to major medical offerings. But they have a chance for significant supplemental income just by making the introduction to the employer.
At many small businesses, one or two people often fill the roles of business owner, day-to-day manager, HR director, and benefit specialist. There is often a need to overcome an objection for something that sounds time-consuming or complicated. For example, some decision-makers are concerned that it takes a lot of effort to add a payroll slot for voluntary benefit deductions. But the small effort that goes into creating the slot can more than pay for itself when the decision-maker realizes the pre-tax savings that can be experienced through voluntary benefits and the variety of value-added services a benefit company can offer.
Bill Shepard of Health Net: As with with any other line of business, the key to being successful with small groups is providing customer service and knowing what your clients need before they need it. Many small groups don’t have an HR department, or they don’t have an HR or management background. So they don’t always know what they need to do, or what they can or can’t do under the law. It is essential for a small-business owner to have a broker they can trust who is committed to holding their hand through the day-to-day operations that come with running a business and administering group plans.
Bill Figenshu of Western Health Advantage: Since health care is much more complicated than it used to be, the key is to be a knowledgeable consultant on ACA-related issues, employer mandates, and carrier rules. Small businesses don’t often have robust human resources departments, so they rely on broker consultants more than ever to convey the comparative values of the various health plans and compliance mandates. A successful broker must have good relationships with carriers; brokers and carriers should communicate well with each other so that all the details of plans are understood. Armed with this knowledge, brokers can suggest superior health plan solutions for their client’s needs.
Tim Rhatigan of UnitedHealthcare: Given the rate of change in policy and innovation, it is essential to be adaptable to change.
Are There Certain Sales Techniques That Are Most Effective With SmalL GROUPS?
Bill Shepard of Health Net: Many small businesses are run by entrepreneurs whose experience lies with the products or services that they developed. That does not usually include health insurance. So the key is being able to communicate the information that they need to make informed decisions, so they have a complete understanding of products that are offered to their employees.
Tim Rhatigan of UnitedHealthcare: The most effective technique involves adapting to an ever-changing market. It is essential to understand the needs of clients and prospects, and meet those needs in a way that is tailored to them and delivers exceptional value.
Gil Youmans of Colonial Life: We find that education is the biggest hurdle to overcome with small groups. Many small business owners don’t realize that voluntary benefits can be available at a workplace with just three employees. There is a misconception that employees don’t want, don’t need, or can’t afford voluntary benefits. But when our counselors are able to sit down with employees, who are feeling the added pressure of healthcare costs on their wallets, we find that many are willing to spend a few dollars to protect their incomes, their lifestyles, and their families with financial protection products.
Bill Figenshu of Western Health Advantage: A good sales technique is to be informed and think beyond current market constraints. For example, brokers need to understand and promote consumerism as the market shifts toward that direction. Employers and consumers have become more empowered and sophisticated. They are demanding more from their healthcare partner. ACO-type HMO models are well-suited to this task as everyone – health plan, hospitals, physicians, employers and consumers – has skin in the game. Also, today’s consumers and employers want more information on wellness programs from their healthcare partner. Improved wellness engagement heightens morale, keeps employees healthy, and keeps them on the job, which decreases absenteeism and improves production and profits. H
Leila Morris is senior editor of California Broker Magazine.