After several members of our Agency Growth Mastermind Network asked me about Patient Protection and Affordable Care Act compliance, I recognized a new agency revenue opportunity. As you continue to reinvent your agency to stay relevant and profitable post-reform, here's a strategy to add value for the client and revenue to your bottom line.
You probably already assist your clients with compliance around COBRA and Form 5500 reporting. But the compliance picture for employers is about to get very ugly. In Massachusetts, the compliance burden of the state's health care reform - the primary model for PPACA - has required agencies to provide compliance services to clients as a no-cost value-add to the client. In a typical example, Boston-based Longfellow Benefits has had to add two additional staff just to keep their clients compliant.
According to a senior carrier executive, a recent study on the paperwork requirements of PPACA concluded that companies with fewer than 100 employees would not have the manpower to remain compliant with the new requirements. Implication? PPACA's non-compliance penalty is $100 per employee, per day - uncapped. Simply put, the penalty would put many small businesses out of business. Further, with HR's reduced staffing and do-more-with-less mandate, even mid-market companies will struggle to meet PPACA's compliance requirements.
I'm seeing two possible scenarios for your agency. Some services you should offer without compensation simply because they solve a meaningful problem for the client; helping clients with PPACA compliance may become one of these. But why give it away when it can be a profit center?
Due to both the onerous compliance burden that PPACA is about to place on employers and clients' unfamiliarity with the new regulations, the agency that gets out ahead of the process should be able to offer this compliance service for a fee. The key is to roll out a turnkey PPACA compliance program to clients and prospects now. A turnkey service can be a major differentiator ... if you're fast - and first - to market.
The magic word is "turnkey"
You can see how a turnkey "PPACA Compliance Program" is different than just doing a bunch of tedious paperwork for the client. The former is viewed as a unique and high-value service, while the latter is perceived merely as hourly labor, your staff doing paperwork instead of the client's staff. This difference in perception is due, in large part, to your mastery of the law's arcane rules and regulations; if the client doesn't have to learn them in the first place, your value and client retention both increase.
Of course, someone on your staff must be capable of researching and staying current on regulatory decisions and revisions. You may want to hire a compliance specialist to run your program. There are also, of course, third parties that, for a fee, will keep you updated on PPACA's regulatory changes.
But, if you don't get ahead of the curve now and make PPACA compliance a fee-based service, you likely will end up having to hire staff and subscribe to the third-party information service anyway, while giving away your compliance services. Either way, though, you can use compliance services to leverage PPACA to provide greater value to your clients.
Griswold is an authority on both voluntary benefits and consultative selling. His firm, Bottom Line Solutions, consults with agencies across the country. Reach him at (615) 656-5974 or nelson@InsuranceBottomLine.com.
