Worsite Marketing

Employers are Drowning in a Sea of Rising Healthcare Costs – Worksite Marketing to the Rescue!
by Matt DeWolf

Employers are drowning in rising health plan costs in this still-struggling economy. They are waving their arms for someone to provide a solution that will at least help keep their head above water.

It’s critical for brokers to throw these employers a life raft. More employers are offering high deductible health plans that shift the responsibility for incurred claims under the deductible to another entity. How the employer transfers that risk is what needs to change.
There have been numerous articles about how worksite marketing is growing. As the industry evolves, it is vital to reshape the role of voluntary/supplemental products and their distribution. Before we look at how to use workplace marketing as a solution, we must understand why the alternatives are losing their foothold in the marketplace.

HSA Plans Aren’t In Favor When The Employer Doesn’t Fund Them

The HSA plan is one of the most popular alternatives to a traditional co-pay plan. This option has grown because it allows the employer to fund a portion of the deductible, reducing their upfront exposure on the high deductible plan. These funds usually help pay for office visits and prescriptions, which are the most commonly used benefits in a health plan. However, employers are decreasing or eliminating the funding of the HSA because of double digit rate increases mixed with the struggling economy.

You could argue that the responsibility rightfully lands on the employee. But, employees are in no better financial condition and they certainly aren’t funding the HSAs themselves. Show me an employee on a high deductible plan with nothing to offset the costs of their prescriptions and I’ll show you an employee who feels like they don’t have any benefits. Without the employer funding a portion of the HSA, the plan breaks down, which is unfortunate since the employer is still paying a premium to make such plan available.

Carrier Restrictions Limit Self-Funded Plans

Partially self-funded plans, usually administered through a third party administrator (TPA), are suffocating amidst carrier restrictions. Whether or not carriers should restrict the employer from wrapping their high deductible plans, the fact is that they do. Some agents will not distribute the concepts to their employers as long as carriers threaten to cut commissions to those who don’t play by their rules.

Reshaping The Role of Voluntary/Supplemental

To drive home these points, let’s examine one of the most competitive high deductible plans in the small group market. It is not HSA compatible and it does not allow for wrapping or self-funding. What makes it so attractive is that it covers office visits at a co-pay (deductible waived) as well as three-tier prescription coverage at a co-pay (deductible waived).

I’ve talked to numerous agents in the South Bay Area who are still a little apprehensive implementing this plan with their employer groups. The main reason is the potential cost to be incurred if a covered individual is hospitalized. Enter the hospital indemnity plan, which allow for limited/defined benefits in the case of hospitalization.

Even the basic plans can help protect an employee’s hard-earned savings. For employees with little or no savings, the plan may help protect them and their families from a major financial burden. When implemented properly, policies like accident, critical illness, or disease specific plans can help with the possible costs incurred under high deductible plans. When implementing these plans, it’s important to find a carrier that can offer multiple benefits as part of the standard policy.

So why aren’t California employers jumping to save money while maintaining a respectable amount of coverage? It seems that there’s a breakdown in the distribution of such products.

How Are Voluntary Products Being Distributed To Your Groups?

Many brokers are uncomfortable with the marketing strategies of some of the major supplemental carriers. The carriers often market directly to the employers and their representatives may or may not tie in with the current broker. This gives the broker little control over what’s being marketed to their clients.

Beyond that, brokers are often frustrated with the number of reps that come and go in the industry. It hardly engenders the kind of confidence brokers need to build solid relationships. Throwing bodies at the masses may work for companies that -market directly to the groups, but there has to be a true partnership with the broker community for these concepts to take hold in the marketplace. Look for a company with a business model that aligns with what you’re used to.
Last but certainly not least; it will be important for a broker to partner with an enrollment company to market these products properly to their clients’ employees. Most agents aren’t writing this business because it seems too labor intensive and not cost effective enough. Partnering with an enrollment firm can help a broker to leverage time and resources.

If You’re Not Saving Employers, Someone Else Will

The tides have changed, but so far, the strategies have not. Don’t be the last one in your county to adopt the worksite marketing strategy. Chances are that decreased group size and the general movement to high deductible plans have affected your bottom line. Adding supplemental/voluntary products will allow you to create another source of revenue while serving a need among employers and employees.

My suggestion is for the employer to pay for a portion of the additional benefits given the low costs. At the very least, make these products available at the employee level. Since their financial standing is at risk, they should have the option to manage that risk. Your clients are looking desperately for someone to save them. The good news is that they will look to you first if you’ve done your job. When they do come to you, will you have what they’re looking for or will they continue looking until they find someone who does?
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Matt DeWolf is a regional sales manager for Allstate Workplace Division (AWD) and is based in Monterey. DeWolf is responsible for developing relationships with the insurance broker community. He can be reached at matt.dewolf@allstate.com

Allstate Workplace Division is the marketing name for American Heritage Life Insurance Company, a wholly owned subsidiary of The Allstate Corporation, and the underwriting company. Coverage is provided by limited benefit policies and riders. Limitations and Exclusions apply. For more information, visit www.allstateatwork.com.