July 14, 2013

New health law brings opportunities, challenges for insurance agents

Charles Oliver
charlesoliver@daltoncitizen.com

— In less than three months, Americans will be able to buy health insurance on new state and federal exchanges.

The exchanges promise to provide health insurance to those who no longer have it, and they’ll also have a big impact on those who make their living selling insurance. Across the nation the businessmen and businesswomen who run those insurance agencies are keeping a close eye on the exchanges and trying to figure out how they’ll affect their firms.

Local insurance agents and brokers say the exchanges open up a new market for them, while at the same time creating a new source of competition.

They say the ultimate impact on their businesses will be determined by the details of how the exchanges work and the role the agents and brokers will play in steering consumers through those exchanges, details that are still being worked out.

“The federal exchange, which we will have in Georgia, has indicated it wants to work with brokers to help folks enroll, and I think they see brokers playing a valuable roll in increasing enrollment in the exchanges,” said Brian Peters, managing director at Advance Insurance Strategies, an insurance agency based in Dalton.

The Patient Protection and Affordable Care Act, also known as Obamacare, set up exchanges where American citizens and legal residents can purchase health insurance. Those who meet certain income requirements and who are not covered under Medicare or Medicaid or whose employers do not provide health insurance that meets certain standards for coverage and affordability may receive federal subsidies to help them pay for insurance in those exchanges. Enrollment in those exchanges starts Oct. 1.

Georgia and 26 other states refused to set up exchanges, citing potential costs. In those states, the federal government will run the exchange.

“Every state is different, but here in Georgia we are supposed to be able to market on the exchange,” said Blake Adcock, president of Dalton’s Adcock Financial Group, an independent insurance agency focused on life and health insurance. “There will be some licensing requirements and some training that will be required.”

But Adcock says the government hasn’t yet made it clear what all of those requirements will be.

“We really haven’t gotten any of the details,” he said.

He said there will probably be an overall certification for the exchange and each insurance company selling on the exchange will likely have its own training and certification.

“There will be a good deal to do, especially since the information isn’t there yet,” he said.

Adcock said he expects the law will actually expand business for insurance agents and brokers. The law requires everyone to have health insurance, and it says that insurance companies can no longer reject customers because of pre-existing health conditions.

“If we write half the people we’ve declined in the past it would be a pretty big increase in business for us. In general, right now, about 40 or 45 percent of the applications we file get declined,” he said.

The law also provides subsidies for those earning up to 400 percent of the federal poverty level, allowing some people who couldn’t afford health insurance to buy it.

“The devil is going to be in the details. You have to buy the subsidized insurance on the exchange, and we expect there will be a lower commission on the exchange products. But even if they decrease the commission, with the increased number that will be covered it could be a potential increase in revenue,” Adcock said.

But with an increase in the potential market comes increased competition.

“The exchanges themselves aren’t competition for agents, but some of the people who will work around the exchanges may be viewed as competition,” said Russell Childers, an Americus-based insurance broker and past president of the National Association of Health Underwriters.

The law provides funding for organizations that will assist people enrolling in the new exchanges. Those grants are expected to be awarded in August.

“They are calling them several different things. The most common is navigators,” Childers said. “Georgia, in this past legislative session, passed a bill that requires navigators to be licensed. The (federal) law and the Georgia law both specify that navigators and other personnel who work with the exchanges can’t actually recommend a health insurance plan because they aren’t licensed insurance agents.”

Navigators are supposed to help consumers fill out forms, answer questions about coverage and help consumers determine if they qualify for federal subsidies. They aren’t supposed to direct people to particular plans or be paid by insurance companies.

In addition, consumers will be able to sign up directly for coverage on these health care exchanges by going to www.healthcare.gov, and avoid dealing with an insurance agent or broker.

But Childers noted that insurance agents have been competing with online options for many years now and while many consumers do choose to purchase online, many others see value in maintaining a relationship with an agent.

“We help them select a plan. But we also help them with claims issues. We sometimes help them with treatment questions. For example, sometimes a doctor will suggest they need to see some sort of specialist who is in their network,” he said. “We are going to make sure that people know we can work with the exchanges and we can help them determine what subsidies they qualify for. And on top of that, we can also help them later with any claims they may incur.”