The Next Line of Trusted Advisors
Learn How Health Insurance Brokers Went From Being Thought Of As Out Of Demand To A Partnership Must for All Business Owners
by Julia Paulus Ogilvie
Five years ago Theresa Ruzicka and the other partners of RubinBrown LLP sat down for a meeting with a health insurance company executive. After the meeting, Ruzicka, whose husband is longtime insurance broker Ted Ruzicka, approached the executive and asked how the Affordable Care Act, having just been signed into law, would affect her husband’s livelihood.
“He told my wife it wasn’t good and that brokers would be replaced by government employees,” explains Ted Ruzicka, owner of Ruzicka Group Services and president of the St. Louis Association of Health Underwriters. “She called me in a panic and said: ‘You have to get out of the business. Your role is going to be obsolete.’”
As health insurance carriers reacted to the Affordable Care Act, broker commissions were cut and it got complicated, Ruzicka says.
David Watson, managing partner at The Blue Chip Consortium LLC and president of D.A. Watson & Co., agrees that as the complexities of the law were realized, concern grew. “We were very concerned, as an industry, that the legislation would have a detrimental impact on the insurance marketplace, insurance companies, and insurance brokers,” he says. “The scope of the legislation was so broad, the law was so complex and multifaceted that it was very alarming to know how to advise clients in that environment, much less operate our businesses. I was convinced that the role of the broker would continue to be needed, but I was very concerned that the business model would undergo dramatic changes.”
While brokers like Ruzicka and Watson stuck with their industry, many others were overcome by the fear of being in a dying role and sought other employment. On the surface, the assumption that the insurance broker would no longer be needed was a reasonable one, according to Watson. “The digital age has transformed many businesses,” he says. “Technology has allowed consumers, both individuals and businesses, to access data and to do transactions that before were unavailable. Examples such as the travel industry or automobiles are perfect instances of allowing people to make transactions more efficiently.
However, in the case of the insurance broker, the Affordable Care Act has created more business for brokers today. “The reason that health insurance does not as readily lend itself to a similar transformation is that the purchasing process is much more than just the actual transaction,” says Watson. “It involves understanding a rather complex contract; understanding the terminology; understanding how it all applies to you, your family or your employees, often without fully knowing future health needs.”
Not only did the need for insurance brokers not dissipate, but after some brokers fled the industry, those who stuck with it are also busier than ever. “So the concern has become ‘Where are we going to get brokers to do the work?’” says Ruzicka. “Now more than ever, we are busy.”
With an ever-evolving and ever-complicated industry, the experienced health insurance broker, once a commodity, can now be added to the list of trusted advisers whom savvy business owners call on. “The ACA has dramatically increased the regulatory and compliance burdens on employers,” says Watson. “A major value-added service that brokers provide is helping employers navigate the minefields that ACA has created – regarding plan design, disclosure and reporting."
By asking the right questions, brokers can also make sure business owners are matched with a plan that meets their goals, according to Ruzicka. “I ask, ‘Are you looking to save money, or are you looking to use your benefits are a recruitment tool?’” he says.
Secondarily, brokers are often valuable to business owners in communicating plan structure to their employees and how to best use their benefits. “The complexities of ACA are confusing to employees as well,” says Watson. “Having an expert frame and explain the health benefits and why things are changing is really important.”
Brokers often educate employees on how to get the most out of their benefits for the least cost and on the basics, like what a premium is, what their deductible is, etc. “We encourage owners to let us meet with employees,” says Ruzicka.
More specifically, business owners, and often their employees, can benefit from working with an insurance broker in the following ways, according to Watson.
Guidance on choosing a plan
Understanding the needs of the client, knowing the budget, understanding the economics of the particular industry and examining the demographics of the group all lead to making a well-informed recommendation (broker) and decision (business owner).
The plan-shopping process
Because brokers are very familiar with the industry and the terminology, they can expedite the solicitation of bids and the plan evaluation for business owners.
Negotiation
There is less negotiation in smaller-group markets than there used to be, but renewals, and certainly large-group clients, require the skills and knowledge that can only come from someone familiar with the industry.
Education
Group meetings and individual consultations are still the core of benefits communication. Brokers have always done these. However, more and more brokers are assisting with online communication tools as well.
HR
This is becoming a central function in the broker-business owner relationship. Integrating all the pieces of the benefit package into an efficient, user-friendly tool is the goal. If brokers can leverage the available technology (employee benefit portals, electronic communication, web-based enrollment), then there is real synergy in the HR space.
Compliance
Compliance is king. We live in a world where regulation is everywhere. Business owners have to be aware of the rules and how to navigate them to their optimum advantage if they are going to wring every efficiency out of their benefit investment.
When you are seeking a broker to help navigate the complicated world of health insurance, Ruzicka suggests taking the same steps you would when choosing other professional service advisers. “Make sure they are part of a professional association,” he says. “Ask how many years they have been in business. Anytime you look for a professional, look for a designation because it shows they are investing in their industry.”
Watson believes referrals are always the best source of professional help. “Talk to other business owners, accountants, attorneys, etc. to see who they have worked with and what they have experienced,” he says. “A reliable source is the St. Louis Association of Health Underwriters. This is the professional association for the health insurance brokerage industry in our community – a great resource for finding knowledgeable benefits professionals.”
Once you find a professional broker you can work with, building a relationship with them, just as you would with your banker, accountant or lawyer, is important. “If there is a foundation of trust, both parties can work collaboratively to design the best solutions for that particular business in what is a very challenging environment for business,” says Watson.
For the future, Ruzicka and Watson both believe transparency for the consumer is the next step. “The delivery and financing of health care is evolving in front of our eyes,” says Watson. “The ACA has forced consolidation of hospitals, physician practices and insurance companies. The players are all getting bigger and, often, less consumer-friendly. The next big frontier will be in the realm of transparency. If consumers can access better and more accurate data on the cost, outcomes, success rates, readmission rates, secondary infections, etc., it will spawn a real evolution in how care is purchased and delivered.”
Stay Educated on the Latest in Health Care
Beginning Thursday, Sept. 24, the Missouri, Springfield and St. Louis associations of health underwriters will be hosting a statewide health insurance industry event, the 2015 Missouri Employee Benefits Symposium. This year's event is focused on “Building Your Winning Team.”
Cost: The event cost is $70 to $100 per person, based on membership and registration date.
Where: The DoubleTree Hotel at Westport
What to expect: The events begin 1:30 p.m. on Thursday with a Self Funding Certification course followed at 4:30 p.m. with the Trade Show Grand Opening and VIP Reception with guest speakers Ron Jacober of KMOX Radio and Greg Marecek, President, St. Louis Sports Hall of Fame. Friday's programming includes an all-day trade show and expert presentations on topics ranging from updates on the compliance and the Affordable Care Act to how brokers can stay competitive.
For more information, contact the St. Louis Association of Health Underwriters executive director, Dave Drennan, at 636-519-9300 or slahuoffice@aol.com.
Who are the members of the St. Louis Association of Health Underwriters?
SLAHU is the St. Louis chapter of the National Association of Health Underwriters. Serving eastern and central Missouri, the St. Louis chapter represents licensed health insurance agents, brokers, consultants and benefit professionals who serve the health insurance needs of employers large and small and individuals seeking health insurance coverage. The goal of SLAHU members is to obtain insurance for clients, balancing their desire to purchase high-quality and comprehensive health coverage with the reality of rapidly escalating medical care costs. They help consumers by guiding them through the complexities of health insurance purchasing and enrollment while ensuring they get the best policy at the most affordable price. Members, who are licensed producers, also help clients with claim issues, service questions and compliance matters throughout the life of each policy they sell. For more information on SLAHU, visit moahu.org.
Submitted 8 years 266 days ago