Insurance Brokers: An Employer's Guide Through Health Care Maze

by Kerry Smith

Now more than ever, insurance brokers’ expertise is essential for helping employers through the ever-changing, ever-complex nuances of the Affordable Care Act. Brokers say that since the Supreme Court ruled 5-4 in favor of upholding the law, sometimes called Obamacare, in late June 2012, small-business owners have been increasingly relying on their smarts to make the best possible health care decisions.

According to St. Louis-based Arch Brokerage Inc. co-owner and partner Joe Bottani IV, the high court’s ruling nearly 2½ years ago signaled a turning point for employers. “It was like Y2K,” says Bottani. “Obamacare became real to businesses. They knew everything was going to shift. The Supreme Court’s ruling became a launch point. Last year we were able to kick the can down the road and make renewals. But those of us in the industry look at Jan. 1, 2015, as the beginning of the second round of health care reform, or health care reform 2.0.”

Bottani’s firm is among 11 insurance/benefits companies that make up The Blue Chip Consortium LLC, a network of more than 25 brokers and 600 clients. As such, Arch is able to leverage its collective expertise and keep pace with the latest modifications in Obamacare to educate employers.

Building a base of knowledge among employer clients, according to Bottani, is one of Arch’s key objectives. “We spend a lot of our time these days educating employers – through seminars and one-on-one sessions – as to how the health care law is going to impact them,” he says. “Employers’ decisions on coverage are no longer made on a year-by-year basis. We assist them in planning forward three to five years because a short-term decision may impact multiple years.”

Under Obamacare, the fate of a company’s health care costs depends upon the very makeup of its employees, according to Bottani. “We have a client who owns a lawn care business with 20 employees, 19 of whom are young males,” he says. “This group now has multiple factors working against it in terms of coverage and pricing.”

When it comes to trends, Bottani sees business owners shying away from hiring a 51st full-time or full-time-equivalent employee for fear of increased requirements mandated by the new health care regulations.

“We’re going to see a lot of employers – particularly those in the restaurant and nursing home businesses – shift from a full-time to part-time work force,” Bottani says. “It could be counterproductive to getting good people.”

Ted Ruzicka, owner of St. Louis-based Ruzicka Group Services, also spends a good deal of time finding employers the answers they need. An insurance industry veteran, Ruzicka will serve as president of the St. Louis Association of Health Underwriters in 2015.

“Our role as insurance brokers is more vital than ever,” Ruzicka says. “What differentiates the engaged brokers from the rest is that we are constantly educating ourselves, investing in our industry and staying on top of it all. Health care reform has made us sharper, tougher and smarter. I think it’s a good thing. It has weeded out the guy who sells auto insurance and life insurance and who also dabbles in health insurance. That guy is now a dinosaur.”

Informing employers about new Affordable Care Act-related fees they may be paying without realizing it is another example of how brokers are helping business owners. “I have a client with more than 50 employees who is paying $712 per month in ACA renewal fees but didn’t know it,” says Ruzicka. “Employers who devote their hours to running their businesses don’t have time to keep current on all the complexities of the new law. That’s why we’re here for them.”

After 40 years of brokering health insurance, Stephen Klingel chose to opt out of that sector of the industry. Klingel is an employee benefits, wealth and income specialist at Cassens Insurance Agency in Edwardsville.

“We decided we didn’t need the exponential increase in liability,” Klingel says. “The role of the traditional insurance broker is disappearing, which is what the intent of the law is. The act continues to be a moving target.”

Klingel cites the case of a small-business owner who had to stop offering insurance benefits to his employees in 2011 to stay afloat. Three years later the company’s revenue has increased but the CEO is opting not to reinstate group health insurance for his workers because of the complexity of the regulations.

All three brokers predict that the health insurance landscape will continue to grow more complex with time.

“Going forward, there’s going to be more need for expertise, not less, and the type of expertise is going to change,” says Bottani. “In the past we provided mainly financial and plan expertise – insurance expertise – as to which deductible is better, which plan has the best network and more. Now our role is much more advisory and strategic. Now it’s not so much about which plan but rather the best benefits strategy through which companies can accomplish their overall objectives.”