Health insurance premium rates have risen significantly because of the Affordable Care Act, especially in states that ceded all enforcement of ACA exchanges to the federal government ­- a trend that could alter brokers’ selling strategies.

Across all states, average per-person premiums increased over 24% from before the fourth quarter of 2013 to the first half of 2014 beyond what they would have had they simply followed state-level seasonally-adjusted trends, according to a study by Amanda Kowalski, a Brookings nonresident fellow and Yale University faculty member. A recent Kaiser Family Foundation survey also found the average annual premiums for employer-sponsored family health coverage reached $16,834 this year, up 3% from last year, continuing a recent trend of modest increases.

See related story: ‘Striking change’ in employer-sponsored health care premiums

Rising premiums and the health care reform law will require brokers to become more focused on suitability than before, benefit industry experts say.

"In the financial world, suitability is a huge part of the process and you need to be able to gauge someone’s level of risk. Now, in the health insurance world, we as agents will have to enter into a long discussion around the suitability of plan design,” says Kelly Don Fristoe, owner of the Wichita Falls, Texas-based firm Financial Partners.

Specifically, brokers need to inquire how that client seeks out health care, which doctors they use, their current health status and whether they are a high utilizer of health care services. If they are not a high utilizer, then they may be a good candidate for an HSA. These discussions also include information such as their income, their family and household income, how their kids make for salary, or if they can claim them as dependent, because if they can, families can use their kid’s income as part of the household income.

Basically, brokers will need to determine what type of plan design—on exchange or off exchange, subsidy level, grandfathered or grand mothered—is suitable to that family.

Whereas in the past brokers spent 30 minutes with a customer and sold four plans in two hours, now that discussion has expanded. Agents are spending two hours with a single customer. Advisers need to use their client’s time more effectively to discuss plan suitability, says Fristoe, who also serves as the NAHU Region 6 vice president.

Commission changes

Fristoe believes this change will affect brokers’ commissions significantly. Many agents, he says, are contemplating new business models in which they receive commissions in addition to charging consulting fees to consumers. He doesn’t know anyone personally who is doing this right now, but agents are actively discussing new payment models.

After all, agents may spend two hours educating a consumer and in the end that client may decide not to buy a plan at that point in time or to pay the penalty, but the broker has no compensation for providing that knowledge to the consumer, he adds.

Fristoe, and other benefit advisers, believe it is appropriate and fair for brokers to be compensated for helping someone learn the lay of the insurance landscape even if they don’t sell a plan.

“In my experience, buyers look for value. As prices rise and value becomes less clear, the role of an expert benefit adviser becomes even more valuable,” says Brandon Moore, an account executive with First Person Inc. brokerage based in Indianapolis, Ind. 

“Rising premiums, whether group or individual, increase the value proposition offered by brokers,” he adds. “As prices rise, so do the stakes. Just recently, the marketplace issued an incorrect subsidy determination for one of our individual clients. We appealed the determination and won, and the client is now receiving the appropriate APTC. Had this client not had a broker, she might not have caught the mistake and would have overpaid by about 400%. This is just one example of how the expertise of brokers is more valuable now than ever before, and can have a huge impact on the client’s bottom line.”

Fristoe agrees that “the rise in premiums will require us as agents to be more strategic in creating health insurance solutions for both individuals and employers that are as affordable as possible. Our job now is to help people to make the most educated financial decision as possible when picking a health insurance plan."

While a broker may get paid more if they sell a gold plan, they may do their clients a better service by finding them a plan that’s suitable to their needs.

“If I can sell [a plan for] $200-$300 less and not compromise on plan [design],” says Fristoe, “then I can [attract that client’s friends and get their business as well.] It’s about volume: gaining and keeping more customers.” 

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