Entering the supplemental medical services market should be a no-brainer for employee benefits producers looking to expand their revenue stream and diversify business in the wake of health care reform. With a growing number of baby boomers reaching age 65 every day, the Medicare supplement business is thriving. Not to mention the need for supplemental insurance felt by employees of all ages thanks to the widening coverage gap as employers increasingly switch to consumer-driven major medical plans.
In such an environment it's certainly no surprise that Denny Ebersole, founder of LouisianaBenefits.com, is able to draw a substantial portion of his annual revenue - around 25% - from the supplemental stream. So why aren't more brokers following suit? It's not a novel concept, but the daily grind can often prevent a broker from seeing the forest for the trees, says Ebersole, whose office is based just outside New Orleans, in Harahan, La. "We're caught up in every day rigors of our business and it's not necessarily easy to do things a little bit different," he says. "People tend to gravitate to the stuff that they do, that they do, that they do."
Complacency is a big factor, agrees Ray Guzman of Benefit Management & Brokerage Inc. in Slidell, La. A friend and colleague of Ebersole's for almost 30 years, Guzman says growing business in the supplemental market has been a natural development for both of them. "We both have clients that we've had on the books almost from the start of our career," he says, "and we've seen a lot of our customers age to the point where we've had to become very knowledgeable and experienced and resourceful in that marketplace."
Guzman also believes a lot of agents are just comfortable selling group medical and aren't willing to invest in the education and resources needed to branch out. But Ebersole has a simpler explanation for why he's succeeding in supplemental sales: "I asked."
EMPLOYEE ADVOCATE THE GROWING COVERAGE GAPS THAT ARE EVOLVING FROM THE DEFINED CONTRIBUTION MODEL ARE LEADING CARRIERS TO DEVELOP THEIR BUSINESS STRUCTURE AS WELL. SCOTT WESTBROOK IS A LARGE-GROUP SALES EXECUTIVE FOR HUMANA BASED OUT OF BATON ROUGE, LA. "HISTORICALLY, EMPLOYERS AND BROKERS AND CONSULTANTS HAD DISMISSED OR NOT PUT AS MUCH EMPHASIS ON THE ANCILLARY OR WHAT WE CALL THE SPECIALTY LINE OF SERVICES AND PRODUCTS," WESTBROOK SAYS.
According to Ebersole, Humana is a leader in the supplemental space with some "very innovative products" that close the gap for employees. "We're evolving. We're becoming more and more recognized in that pillar toward overall wellbeing to be able to secure peoples' financial wellbeing," says Westbrook. "That is: life, disability, being able to offer critical illness, cancer policies, accident policies. Those things that really help people live more stress-free."
In the insurance business for more than 25 years, Ebersole works primarily with small businesses. It is his goal to remove the majority of each company's already overburdened staff from the employee benefits process as much as possible. Creating an environment where Ebersole is the resource on all things employee benefits creates opportunities to make additional sales, he says.
"Once they start contacting my office rather than somebody in the administrative role within the company that they work for, then they know that I'm the insurance guy and they just tend to talk to me about the other issues they may have going on," he explains. "And of course I can also prompt them along the way."
One of Ebersole's goals is to maintain a high level of confidence and in doing so, help his clients. A favorite quote of his from author and motivational speaker Zig Ziglar: "You can have everything in life you want, if you will just help enough other people get what they want."
Ebersole works to motivate his employer clients to find a way to continue to provide employee benefits, despite rising costs in a struggling economy. "I build myself up as their advocate looking to defend their interests against the insurance companies," he says. "So it just becomes natural that they're going to reach out to me as they've got various issues that arise with regard to other insurance needs."
LOYALTY AND RELIABILITY AS HIS CAREER EVOLVED IN THE INDUSTRY, EBERSOLE HAD HIS OWN RESOURCE TO REACH OUT TO IN THE FORM OF HIS FATHER, AN AGENT WITH METLIFE FOR DECADES. BORN AND RAISED IN HOMESTEAD, FLA., EBERSOLE MOVED TO NEW ORLEANS AT AGE 19. HIS FATHER MENTORED HIM FROM AFAR WHEN HE STARTED HIS OWN CAREER WITH METLIFE, SUGGESTING THAT HE FOCUS ON EMPLOYEE BENEFITS.
In 1985, Ebersole left MetLife to launch his own employee benefit business. "As I grew into adulthood I knew that I didn't want to work for 'the man' and insurance was a way that I could work for myself," he says. "I was frustrated working as an employee and I said, 'Well, insurance is a great opportunity for me.'
"I knew I could be successful and I've always felt confident in my ability to sell. So I said, 'I can do this,' and so I did."
Ebersole spent the next five years getting his business, originally titled Partners Insurance and Financial Planning, before he incorporated as Ebersole and Associates (DBA LouisianaBenefits.com), off the ground. To maintain a steady stream of income in the interim he worked as a paperboy for The Times-Picayune - seven days a week, 365 days a year. "I figured that was something I could do that would get me some cash flow while I was building my business without interfering with my ability to go out and meet with clients and do my work," he says.
It was on the paper route in the mid-'80s that Ebersole met one of his first clients, Linda Poché, owner of fabrication shop Poché Welding Incorporated. When Ebersole came by Poché's office one day she immediately recognized the name on his business card as the same one she'd been signing checks to for her home newspaper delivery for several years. Poché was impressed that Ebersole could keep up the newspaper route and run an insurance business. She felt a connection to his efforts. "He did what he had to do to support his family," she says. "He got up early in the morning and did it like us. My husband and I worked a lot of hours too, getting our business going."
He also happened to have a product that she needed. As a new company with only herself, her husband and one employee at the time, Poché had difficulty finding insurance coverage. Ebersole made it happen. Currently, Poché Welding offers its 11 employees group medical, life, dental, and short- and long-term disability benefits. Poché recently had her first encounter with an employee switching over to Medicare when her husband turned 65. "Denny really helped me with that because that was hard," she says. "He didn't have to do that. He doesn't have anything to do with Medicare. But he sits down and he helps to tell me how to do it, what's available. He sits there and gives me all the options that I have and he doesn't have to do that, he really doesn't. But he lets me know what I can do. It's really good."
DIVERSIFIED ASSETS EBERSOLE TAKES A GREAT DEAL OF PRIDE IN CLIENTS WHOM HE HAS RETAINED AS LONG AS HE'S BEEN IN BUSINESS. THE STRENGTH AND LONGEVITY OF HIS RELATIONSHIP WITH POCHé IS EVIDENT WHEN, ASKED FOR HER PHONE NUMBER, HE IMMEDIATELY RECITES IT FROM MEMORY - A RARITY IN THE CELL PHONE AGE.
Helping clients like Poché Welding make the transition to Medicare is one thing that developed naturally for Ebersole. "The bottom line is it's a way to move people off of the group, which usually makes the employer happy," he says. "It usually works out to save money, which makes everybody happy. It also gets some of the people who are more problematic in the group out of that population."
The one-quarter of his business that comes from supplemental sales is not just from the Medigap crowd. Younger employees are "absolutely" embracing the products. "A lot of the strategies we're using nowadays are moving toward supplemental products to augment benefit plans that are getting squeezed because of cost," says Ebersole. "A lot of employers are looking to close the gap.
"It seems to be a market that everybody is clamoring for."
Although business is doing well, Ebersole says he rarely counts his commissions and makes an effort to distance himself from them. "I really don't want to know from one day to the next how much I'm going to make on a sale," he says. "I'm much more interested in making sure that I'm helping my client get to where they need to be rather than focusing on how much I'm going to make."
It's a healthy outlook considering health care reform has already slashed commission revenues. Ebersole says he's just as concerned about health care reform as the rest of the industry, "but I also believe that as long as I'm delivering value there will be a place for me at the table. And if my focus is delivering value for my clients then I'm more likely to survive."
Focusing on supplemental benefits to keep the revenue stream flowing is a must-do for Ebersole. "We have to grow horizontally. We definitely have to grow sideways," he says. "We can't just look for new clients, we have to look for ways to expand our presence with the clients that we have, and doing so will ensure that we have an opportunity to exist in the future, I believe."
Consequently, he's working more on life insurance, annuities and "all manner of additional product portfolios."
The effort is not unrecognized by Poché. "He's always trying to make it better for us, find different products for us," she says. "He's always offering us the new, latest things."
Poché has personal as well as professional life insurance through Ebersole, and her children also have individual life insurance accounts with him. Originally, she had mortgage insurance on her house and another life insurance plan. After explaining her coverage to Ebersole, he told her of a less costly alternative where coverage wouldn't decrease with the mortgage insurance. "That's what I did and it was so much better. It was unbelievable. Without him I wouldn't have known," she says. "The thing is he doesn't push you. He gives you options."
BE PREPARED ONE OF EBERSOLE'S BIGGEST STRENGTHS, SAYS GUZMAN, IS HIS LEVEL OF EDUCATION. "WHEN HEALTH CARE REFORM BECAME AN ISSUE HE MADE IT A POINT OF MASTERING EVERYTHING ABOUT IT. ANYTHING THAT HE DOES HE KNOWS THE INS AND OUTS AND LEAVES NO STONE UNTURNED - WHICH GIVES HIM A VERY BIG EDGE WHEN HE'S COMMUNICATING WITH CUSTOMERS," HE SAYS.
Whenever Poché hears something new about health reform she'll call Ebersole with a question. Not only does he have the answer, but he also offers to meet with her employees in person to discuss it. "You get scared when you don't know what's going to happen," says Poché.
Poché is also scared at the thought of losing Ebersole as a result of health reform. "It would be like losing a best friend - somebody that really has your interests at stake," she says. "It would be like shutting somebody out. I just don't want to lose him."
But no matter how health reform affects Ebersole's business, Poché believes he's not going anywhere. "I know his future's in jeopardy, but he'll do something," she says. "Denny's a go-getter. He's not going to sit down and wait - I can tell you that. He's going to take care of us until the end."
As soon as it became clear in 2008 that health care reform was a top issue on then-candidate Barack Obama's presidential platform, Guzman and Ebersole made a decision to follow the principle of the insurance they sell and be prepared for the worst, says Guzman. "We realized the market's changing. Hopefully it doesn't go extreme, but if it does we need to have other markets ready and available to do so," he says. "And I think a lot of agents just think that everything's going to be fine at the end. We'll cut staff; we'll go back to working in a house instead of at an office. It amazes me some of the philosophies that I've seen some of these agents take. They just keep on going not thinking that they've got to do other things."
Humana's Westbrook agrees that now is the time for brokers to show their value. "The broker industry needs to diversify its revenue stream and income stream and needs to not be so dependent on the medical arena," he says.
"Employers, through their brokers, are asking for more information on the ancillary products - and not just as part of a package they offer with group medical. There are those brokers that really concentrate on the medical side and there are those now that realize they need to balance and make sure that they complete the account and not dismiss these other services and capabilities."
Medigap FAQsWho may be looking for a Medicare supplement?
Those who have reached age 65 or older are generally eligible for Medicare coverage if:
* They or their spouse have worked for at least 10 years in Medicare-covered employment
* They are a citizen or permanent resident of the United States
* They are under age 65 with certain disabilities or end-stage renal disease (kidney failure)
When is the best time for them to buy a Medigap policy?
According to the Centers for Medicare and Medicaid Services, the best time to buy a policy is during the eligible person's Medigap open enrollment period when carriers cannot use medical underwriting - a six-month time frame lasting from the first day of the month he or she is both 65 or older and enrolled in Medicare Part B. Some states offer additional open enrollment periods.
Which insurance companies sell Medigap policies?
Visit medicare.gov and select "Health & Drug Plans" for a listing of which companies are available in your area.
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