In my opinion, this year's Super Bowl was one of the best in the championship's history. I am always amazed that you can watch an event that flaunts the excess and capitalism of America so profoundly and also come away with some of life's most important lessons played out before your very eyes. Even the commercials are contests in creativity and ingenuity where the little guy can (and did this year) win.
The easy lessons to see include "never give up," "play to the end," "sportsmanship is important even on the grandest stage" and "timing can be everything." These are important lessons that are extremely applicable in our daily lives. But the lesson that strikes me most is this one: You can give everything you have, perform at your highest level, do your absolute very best and still not get the result for which you had aimed. That lesson is a little tougher to swallow, but is very important to learn for all who wish to be successful.
It is this last lesson that makes me think of business owners providing group major medical insurance coverage for employees. Or maybe even small business owners who formerly provided group major medical coverage for employees. In renewal season after renewal season an employer can do everything right, such as educate employees, run wellness campaigns, create an environment to maintain health resulting in fewer claims for a plan year, and still receive a double-digit price increase every year from his insurance provider.
This also applies to you: the health insurance broker. You can provide excellent service throughout the year, keep your client up to date on current events and compliance-related topics, explain the benefits of renewing with a single carrier for a period of years to build a track record and credibility, shop the market for competing proposals to demonstrate comparisons, work the relationship of the decision maker and still lose a case.
This is the insurance world we live in today. Price is paramount, employers are cash-strapped and brokers are scrambling. Health care plan increases are threatening to drive more employers away from coverage every year. Brokers look to HDHPs, individual plans, voluntary instead of employer-provided products and replacement of the major medical group plan with a limited medical plan. Boom! goes the dynamite.
You read that correctly; across the United States today, brokers are replacing major medical plans with limited medical plans. I did not think we would arrive here so quickly and I have counseled agents for years against this, but the marketplace has forced employers to make that hard decision So let's examine this new phenomenon more closely.
Limited medical is no longer considered experimental or immature. As companies across the nation are forced to drop major medical plans, or ask their employees to absorb huge increases, employers are looking for ways to ease the financial burden of health care. In certain situations, limited medical plans can and should be considered as a primary form of insurance. More and more brokers are being asked to replace major medical with limited medical programs. Fringe Benefit Group has been in the limited medical business for more than 20 years and we have always run away from these conversations, but we now believe that there is a time and a way to have them.
According to a study from the state of Wisconsin's Office of the Commissioner of Insurance, a 25-life group in January 2008 has an average premium of $480.56 for single coverage and $1,286.39 for family coverage. It is safe to say that the average premium for an individual on a health insurance plan is approaching or exceeding $400 per month with family coverage exceeding $1,100 per month across the country. The NFIB released a statement that premiums have risen 113 percent for members since 1999. We have arrived at these high premium levels through a very complex process that involves regulators (national to local), providers, lawyers, pharmaceutical companies, technology, insurance companies and even employers' desire to provide excellent coverage. Brokers are not exempt. Have you ever sold a renewal without taking the extra step to examine different options for an employer?
Fixed indemnity limited medical benefit plans provide intriguing answers to many of these "what if" questions. Many carriers have made benefit enhancements that allow for plans to increase to rate levels above $200 per month. The corresponding benefits will cover a large amount of an employee's day-to-day and minor hospital medical expenses. There is still enormous opportunity for limited medical's traditional users - seasonal, hourly and part-time workers, for example. There are great limited medical programs where individuals can pay $8-$20 per week and receive valuable benefits that enable them to access America's health care system.
But today, limited medical programs are also available that uniquely mitigate medical trends by doing away with the expense incurred model that has dominated health insurance plans. The structure of the benefits provides for specific limits for specific occurrences. This old insurance philosophy still works and actually promotes consumerism. Employees are empowered to have conversations with providers for what they are being charged versus simply walking away from an appointment wondering what the bill balance will look like. This is a return to old-fashioned shopping. Providers and participants join together to create a specific plan of service for a specific number of dollars. What a concept! It is time for brokers to give limited medical programs a fresh look and put them in front of certain employers for whom they might be a viable solution.
Employers that are fully educated on what limited medical plans will and will not cover are deciding to offer employees something affordable and more sustainable than major medical plans. I reluctantly arrived at this realization and accept that limited medical plans can now be considered a primary form of insurance. For a long time we fought these conversations, but we are now realizing that the limited medical plans have migrated and evolved - and should be in the product portfolio you consider recommending to your clients. Keep in mind, however, as you are discussing limited medical plans with your clients that all the same issues about limited medical plans still exist. Communication to employees is critical. Consumerism among participants must evolve. A proper examination of the level of care provided versus the level of care actually necessary is paramount.
Replacing major medical plans with a limited medical plan is a bold move, but after all, it is with hard life lessons that many of us make major growth changes in our lives.
Brian Robertson is executive vice president of the Fringe Benefit Group, which markets and administers the Framework Health Plan. Robertson can be reached at (800) 551-3424 or by e-mail at brobertson@frameworkhealthplan.com.
