How can an adviser go from struggling to bring in $50,000 a year to earning more than $75,000 a month? Through the retiree health care market, Sam Fleet, president and CEO, AmWINS Group Benefits, told attendees at the benefitsCONNECT Benefits Technology Summit.

The retiree health care business is “a very interesting space and there’s a lot going on” Fleet said April 23 at the San Diego conference. It was one of his broker clients in the northeast who turned his business around by engaging prospects through their retiree health concerns.

See also: Employee ignorance is not bliss on retiree health costs

It’s no surprise that the Medicare system, established at a time when life expectancy was 70 years, is in trouble. With life expectancy expected to reach nearly 80 years old by 2020 and 10,000 baby boomers hitting age 65 every day, “the future state is clearly uncertain,” Fleet said.

At the same time, the percent of employers offering employer-sponsored retiree health benefit coverage has declined dramatically. In 1988 it was 66%, by 2013 it was only 28%, Fleet said.

The types of employers that are still offering such coverage include long-standing union deals (“those benefits are going nowhere,” Fleet said) and grandfathered plans with vocal retirees.

Companies fear a backlash if they reduce or eliminate the benefit, Fleet said, but meanwhile, some public entities are going bankrupt in the process. “Really take a look at where these companies still are and you can help them … lower their liability” and reduce costs, he said.

According to Fleet, employer strategies include:

  • capping the employers’ contribution
  • limiting employer share of contribution
  • tightening eligibility requirements
  • raising retirees’ premiums and cost sharing
  • eliminating coverage for future retirees
  • optimizing savings from Medicare Part D
  • outsourcing administration
  • making eligibility based on years of service, age

There are three ways to cap or limit contributions, he said:
1)      Group- insure/carve out from the employer’s active plan. “It’s pretty easy to do that,” Fleet said, adding that it provides the least interruption, as it usually matches current benefits.

2)      Individual/exchange coverage. This is a “recent trend” that provides no ERISA liability and allows retirees to decide what’s best for them, Fleet said.

3)      Hybrid plan. A combination of the first two, this is “gaining a lot of traction recently,” he said, creating the best of both worlds and a soft transition.

“It’s really cool, there’s not a lot of people doing this,” Fleet said.

Exchanges alone make sense on the surface, but in reality, “retirees really don’t like change. They hate it,” Fleet says. “So you get a lot of pushback.”

See also: A DB plan that's on the rise

For example, only 60% of retirees have a computer, so they can’t research plans at home. They then call into their former employer’s HR department and can be on the phone for a very long time, using up HR’s resources, Fleet said.

Hybrid benefits

The hybrid option, on the other hand, provides “customized plans that make a lot of sense,” he said. For example, while a Medicare exchange will offer some of the below benefits (as denoted by an asterisk) , and a group retiree plan will offer others (as denoted by two asterisks), hybrid plans will offer them all, Fleet added.

  • Generous plan choices*
  • HRA administration*
  • State-pooled rates*
  • Mitigate ERISA responsibilities*
  • Retiree advocacy*
  • Phone service without an appointment*
  • Customized plans**
  • Multi-year rate guarantees*
  • Single national rate**
  • Branded enrollment forms**
  • Pre- and post-65 premium billing, including split bills**
  • Non-calendar year special enrollment**
  • Offer retiree drug plan with no donut-hole**

Employers get a dozen calls a day from brokers offering innovations to their health and voluntary plans.
“Retiree is unique,” Fleet said. “That call gets an appointment. That’s a very different call from the other one and you’re separating yourself from the pack.”

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