As the federally-run Small Business Health Option Program, or SHOP exchanges, go live across the board in November, brokers on the front lines of the exchanges aren't sure how interested employers are going to be in the option. A number of small-group employers are already planning to send their employees to the Affordable Care Act's individual exchanges, rather than utilize SHOP, which the ACA has set up for employer groups of 50 or fewer full-time employees.

Kelly Fristoe, owner of Financial Partners in Wichita Falls, Texas, is wary of the fact that his state's SHOP exchange only has one insurance company participating at this point. Rather than deal with potential consequences of that, he is steering his small-group clients interested in the exchange market toward the individual plans. "We've had some small-group customers - not a lot - telling us that they're going to dump their plan and send their employees to the individual market," says Fristoe, president of the Texas Association of Health Underwriters. "So we've made some arrangements with those employers to be able to be the agent that sits with those employees. They're going to let us have time with their employees to educate them on purchasing insurance through the marketplace and qualifying for a subsidy."

Because he wants to keep those individuals as clients no matter what, Fristoe was particularly "frustrated" Oct. 1 when technical glitches kept him from checking out the plans on, a problem he says continued well into the third week of exchanges opening. "I'm needing to salvage that business and I need to know what those individual rates are so that I can go back to those people and show them how to qualify for a subsidy, if they qualify, and get them enrolled," he says. "... We're going to be the agent that's going to try to salvage that business instead of it going to one of our competitors."

David C. Smith, vice president at Ebenconcepts in Morrisville, N.C., agrees that accessing the information on exchange rates is of the utmost importance right now. "You have to recognize that we're going to have some percentage of very small groups that have already decided they're not going to offer a group health insurance plan next year," he says. "So if you have four or five employees, a lot of them have made a business decision to not do it, and they just want to get a feel for what it's going to cost their employees when they make that decision."

As an administrator for the testing process for agents to be certified with Covered California, Neil Crosby, director of sales at Warner Pacific Insurance Services in Westlake Village, Calif., is surprised that the majority of people attending his classes so far have been serving the individual market. "I'm shocked at how many ... are coming to primarily do it individually. There's so many of them," he says. "Some of the ones that do individual they also do small group, of course, but a lot of them are representing the individual. I'd say maybe 65% of people in the room."

A lot of agency owners "want to get a feel for" the individual market exchanges, says Smith, because it is very appealing for micro groups, those with nine, 10 employees, to "go to the marketplace for subsidized coverage and maybe pay less for that than they would for their group insurance today." An employer that might save $3,500 to $5,000 in premiums by making the switch, "they're not walking that border, they're running to that border," he says.

While some brokers used the delay of the online launch of the federal SHOP exchanges to November as a reason to put off strategizing, Michael Wolff, chief operations and financial officer at Dickerson Employee Benefits in Los Angeles, is against the approach. "I think you want to have all the tools in your tool box. In California at least they have been successful in negotiating with the carriers to come to the table and give their best offers ... there's a chance they are giving a very good rate," he says.

Wolff references the SHOP exchange tax credit for small businesses with low-wage earners that is available for 2014.

"Of course we don't know how long that will be upheld, but it's a real tax advantage for next year, at least," he says. "... Why not have it in your portfolio to show? Everybody's talking about it. You don't want to say, 'Well, I don't know about it, but it's probably bad because [it's] the government [offering it].' ... but it's a better story if you say, 'Yeah, I have that, and this is what they offer.' Why would you not?

"Our model is ... to bring a representation of the market to the agent and to the client," adds Wolff, whose agency is one of only four in the state of California authorized to be a wholesaler for Covered California's SHOP exchange, which did open on time Oct. 1. "This is a market phenomenon right now that we want to offer and explain."


Unable to sell

Meanwhile, some agents had trouble logging on to even start planning. Covered California experienced a "bottleneck" in the first weeks that led to many agents not receiving their proper certification to be able to sell on the exchanges, according to Wolff. He is in the process of helping to train the more than 17,000 agents who have signed up to participate on the SHOP.

"What happened is that Covered California estimated that maybe four or five thousand agents would go through the trouble of an eight-hour class and four-hour online course and a test, so they were budgeting and planning for that kind of interest," says Wolff.

At press time in mid-October, 1,295 insurance agents were cleared to work on the exchange, with 3,382 approvals in progress. "It's quite daunting," Crosby says.

MD Sam Smith, president of Genesis Financial and Insurance Services in the Los Angeles area, serves on the broker advisory board for California's SHOP exchange. He says it is "frustrating for agents" that many still don't have their certification numbers that are required to be able to sell on Covered California.

Even so, "on the whole, we were happy with the roll out; happy with the way we were treated at press events," says Smith, president of the California Association of Health Underwriters. "Agents were included with all the press events."

And at press time, Smith says confusion in the agent-clearing process had been fixed and "hundreds" of applications are being certified on a daily basis now.

Wolff reiterates that agents who are not yet certified for Covered California cannot sell on the exchange, "but you can already give [potential enrollees] the information. You can of course be ready," he says. "We are all studying up."



Glitches 'paralyzing'

Like millions of Americans, Financial Partners' Fristoe was anxious to see what the ACA's hyped exchanges had to offer when the system went live Oct. 1. So much so, that he set his alarm for 12:30 a.m. that morning to take a look. Unfortunately, even at that early hour, he encountered what would become a common theme throughout the weeks that followed: technical difficulties.

"Nobody had much luck [Oct. 1]. Show me a person who had luck getting people enrolled and I'll eat a boot," says Fristoe.

Thom Mangan, CEO of United Benefit Advisors and EBA Advisory Board member, refers to the launch of the exchanges as "a loud thud of a rollout." Like Fristoe, he logged on to his state's site,, just to see what was available.

Although Mangan believes "the system is not even close to being ready for the amount of interest," he was at least glad to see that one of the first buttons visible on the Illinois site is one about how to contact a health insurance agent.

Fristoe likens the situation to the first week a new restaurant opens up in a small town. Everyone wants to eat there right away, but the place is likely to be overwhelmed, and therefore have poor service, maybe even sub-par food. "It's just chaos, and that's what we're dealing with, is the chaos," he says.

By the night of Oct. 1, Ebenconcepts' Smith was still experiencing run-time errors as he attempted to log in to North Carolina's site. But he acknowledges that he "doesn't have a lot of clients who buy Christmas presents in July," implying that they are equally as unlikely to buy health insurance in October that is not effective until January of the following year.

But, it is still "frustrating" that the difficulties accessing the exchange mean agents remain in the dark about exact product availability and pricing, says Smith.

"People are calling our phones left and right, clients, prospects, et cetera. But we don't really know anything because like a lot of people, none of us have seen what products are there," he says.

While acknowledging technical issues and some missing information, Dickerson's Wolff is nonetheless excited at the launch of Covered California. "We believe the initial reaction shows that there's a big need," he says.

"We have only two days now to report, but what I'm impressed by is how big of an interest there is," he says, adding the California has reported more than 5 million visits to the Covered California site and "hundreds of thousands of calls" since Oct. 1. "That's pretty impressive."

Wolff agrees with Smith's prediction that it is nearly "unheard of" to sign up for insurance three months ahead of an effective date. At this point site visits and phone inquiries are "just a lot of curiosity," he believes.

With this in mind, Wolff urges people not to panic that some rates have yet to be released, pointing out that even established carriers outside of the exchanges don't have their rates available for Jan. 1, 2014 yet. "Everybody should breathe a little bit," he says, "and then we'll take it from there. It is a big undertaking, that's for sure."

Additional reporting by Brian M. Kalish and Gillian Roberts.

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