The Benefits Industry Matures

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Designing a comprehensive benefits plan today can be like putting together a jigsaw puzzle. While traditional health insurance products provide the main elements, discounted benefit plans can be a cost effective way to round out the picture.

The last few years have seen a steady growth of these regimes, which historically have been more defined by what they are not than by what they are.

“I think most people who participate in healthcare discount plans know they’re not insurance, but the challenge is communicating what they really are,” says Allen Erenbaum, president of Consumer Health Alliance, a national trade association in Dallas. “It’s not because they’re complicated, but because a lot of people don’t know the concept. The plans are extremely simple.

Benefit plans have been around for a little over two decades. For a few dollars per month per person, plan members get better prices – typically 30-70% higher – from network providers. Dental, vision, chiropractic, hearing, alternative care, veterinary care, legal, gym, identity theft assistance, roadside assistance, entertainment, travel and retail rebate programs all exist, in various standalone or bundled combinations.

Discount plans are the right product at the right time, said Chuck Misasi, senior vice president, sales and marketing, for Careington, a supplier in Frisco, Texas.

“When Medicare Part B started with a drugstore discount card, the Aetnas and Cignas jumped into the water after seeing the writing on the wall. Discount plans offer great value and utility, and members can use them as often as they like.

Three major trends have emerged in recent years:

  • Stricter industry regulation

  • More employers offering discount plans as a benefit; and

  • A greater role for brokers in marketing plans.

The bar is rising

Although the industry is relatively new, the early days felt a bit like a border rush, with a few companies looking to get started and make a quick profit. That has changed, says Erenbaum, who has worked for the CHA since its inception in 2001.

“The main change is that the industry has moved from a largely unregulated industry to a heavily regulated industry,” he says. “This means that large national companies now have compliance services that they did not have 15 years ago. But the advantage is that the industry is more mature and established, and its programs are more widely accepted. “

The biggest change, of course, has been the implementation of the Patient Protection and Affordable Care Act.

“The PPACA requires plans to provide essential health services, but they are not comprehensive,” Erenbaum said. “There are a lot of unmet needs for ancillary services. Our plans fit fairly well with PPACA. It has brought new people into the health insurance coverage market, and while we are not insurance, it has brought people into exchanges and other places that are considering health care for the first time. .

Reid Rasmussen anticipated the openings PPACA would offer, which is why he co-founded Freshbenies in Frisco, Texas.

“We started our business six months before the end of PPACA,” says Rasmussen, now president of the company. “We thought it would increase the cost of medical insurance, so consumers would need other ways to save money. The costs have increased drastically. Since the adoption of PPACA five years ago, the average increase in personal expenses for a family of four has been $ 2,900.

“But even if the PPACA had not passed, there would be inflation. This is what drove us.

Careington is also targeting services that fall through the cracks of compulsory insurance coverage.

“PPACA has definitely helped our business,” says Misasi. “With many employers opting for high deductible plans and spend more on bonuses, there may not be much money left from the employer to fund other benefits. They seek value and price transparency.

Discount plans can offer both.

“Consumers get a price list of what the plan will pay per procedure,” he says. “Because they’re only a fraction of what an insured plan would cost, employers can get a head start on our plans. There is tremendous value and transparency.

His colleague from Careington, Greg Rudisill, senior vice president of strategic partnerships, echoed his point.

“PPACA has helped increase the volume of discounted products that we sell,” says Rudisill, who has been with the company since 1992. “Additionally, it has opened up more opportunities to the world of brokers and consultants. With many of them working longer hours now, selling discount plans is a great way to add income and deliver more value to customers.

Employers are mobilizing

The cheap and high-value computation of discount plans makes them attractive to employers, who can offer them as paid or voluntary benefits.

“As health insurance premiums or deductibles go up or benefits go down, it takes more money out of the employee’s pocket,” says Erenbaum. “Discount plans save money. For example, some companies may switch from dental insurance to a discount plan.

However, getting employees to join requires a bit of education.

“A misconception is that employees say, ‘I already have insurance, so why would I need it? ”, Says Rudisill. “They may not realize that they may purchase a gap in their insurance coverage, such as vision Where dental, and they can use this benefit for all of their family members.

“Another misconception is that they can already get discounts by paying cash. The depths of discounts with a plan will far exceed what anyone can achieve on their own. “

Employers who seek an informed broker and encourage employee engagement will get the best return on investment. Many brokers are either new to selling discount plans or not seeing them as complementary to insurance sales.

“The main problem is that the HR person asks their broker for discounted products because they don’t always present them,” says Misasi. “Many of them are still in the learning phase. Ask if they have ever placed a discounted product with customers. If a broker has never done this before, you might want to consider looking for another source.

Erenbaum suggests a few more questions to ask.

“Check to see if the supplier is a member of our association and accepts our consumer-focused code of conduct,” he says. “In two dozen states, you can see if the provider is licensed by the insurance department. When reviewing a plan, check with the provider before signing up. Make sure you can cancel within 30 days and get your membership fee back. And make sure the plan says it’s not insurance.

Perhaps the best way to engage employees is to show them the potential savings.

“The way to get the most participation is to treat it like any other voluntary service“, says Misasi.” One of the paths is the one paid by the employer, which is available for a fraction of the cost of traditional insurance. If that is not an option, it can be a voluntary employee benefit Host a registration meeting where employees can learn more about the benefits.

Brokers buy

While rebate plans are an increasingly important part of the benefits package, brokers are still focusing on more lucrative insurance products, right?

“I would say that was correct until the last few years,” says Rudisill, who has worked in the discount plans business since 1978. “Brokers didn’t have time to focus on products and offers at reduced prices. But since the implementation of PPACA, they are working harder and longer for less money, so they are looking for ways to regain lost income.

This is exactly the idea that led Rasmussen to launch Freshbenies.

“Positions are being cut, competition has intensified and as a result, brokers need to expand the ranges of coverage and the number of services they sell,” he says. “Non-insurance services are going under the ACA’s radar. These services allow them to serve groups of people and populations that insurance plans do not – and increase their incomes.

This need to increase income coincides with an increased demand for affordable benefits.

“The difference today is that their customers’ direct spending is increasing dramatically,” says Rasmussen. “The broker’s job is to find the problems and fix them. At one point the brokers said, “The commission is higher on Medicare, so the discount plans are not worth my time. This time is over. Their clients need the means to help hundreds or thousands of people save on health care costs through a variety of benefits. Many employers have insurance plans that don’t cover what they used to do.

Simply put, successful brokers today are selling solutions, not products.

“The use of brokers is increasingly common as they seek to diversify the products they sell, even though they already sell health insurance,” Erenbaum said. “Reduction plans are a natural complement to insurance.

“A misconception is that medicare plans try to compete with medicare. They are not.”

As long as consumers and businesses need to keep a close watch on costs, industry insiders are optimistic about the future of rebate benefits.

“A lot of things are happening now because of technological advancements,” Misasi said. “We believe that the use of technology will add mobility, such as wearable devices, in the future. The product structure will include more hybrid products combining discounts and insurance. “

Rasmussen has a succinct message for brokers: Get on board, because the train is leaving the station.

“The reduction plans will continue to adapt,” he says. “What I am seeing is that bundles will become the best selling ancillary products in the market.”

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