The Patient Protection and Affordable Care Act was touted byPresident Barack Obama and his allies on Capitol Hill as a remedyto treat the nation's ailing health care system and ever-risinghealth insurance costs. But as employers, employees and theirbenefits brokers and agents work through the implementation ofPPACA, more and more side effects appear each day.

There have been reports of rate increases from Ohio and Oregon.There's concern over the levying of excise taxes on so-called“Cadillac” health care plans. And it seems like a person can't gotoo long without hearing about the progress of his or her state'sinsurance exchange. Health care providers, insurance companies andhuman resources departments across the nation have worked more thana little overtime as the nation hurtles toward the 2014 deadlinefor implementation of the controversial law.

But one area of the benefits industry is getting a bit of goodmedicine from PPACA. Supplemental health insurance—policies peoplepurchase in addition to traditional health insurance—managed toescape much of Obamacare's sweeping changes and labyrinthineregulations. A recent study by CSG Actuarial in Omaha, Neb., foundthat Obamacare leaves supplemental health insurance largelyunaffected and will have very little, if any, impact on a certaintype of supplemental plan known as Medigap.

There are a variety of supplemental health insurance optionsavailable to employees. The most popular plans include hospitalindemnity, major illness and Medigap. A hospital indemnity plancovers copays, deductibles, prescriptions and other out-of-pocketexpenses a policyholder accrues during a hospital stay while majorillness policies cover expenses related to an employee's expensesassociated with cancer or other chronic diseases.

Another kind of supplemental plan popular among blue-collaremployees is accidental death or dismemberment policies. Dental andvision policies are considered supplemental aswell.  

Over the past couple of years, brokers and agents have notedsome growth in the supplemental health insurance game. In fact,industry sources say, large providers such as Aflac and ColonialLife have started educating brokers and agents on their products inhopes of expanding their sales force.

Meanwhile, employers are seeing new strategies for providingsupplemental health insurance coverage—as well as ways to reducecosts—while employees can realize more stable pricing, more choicesand other advantages. Benefits brokers and agents are finding thatsupplemental is steadily working its way into their conversationswith clients and can provide another product to add to their lineupof offerings.

“Employers offer health insurance to make their employees feelsafe and secure,” says Trish Freeman of Trish Freeman InsuranceService in Gonzalez, La. “PPACA is a great unknown, so voluntaryplans can help replace some of that security. And in the end,they'll provide a sense of security where PPACA is filling everyonewith fear.”

For the workers

For starters, supplemental health insurance plans give employeesmore options in their benefits packages. And, industry veteranssay, employees always like to see more choices. Employees withfamily histories of illness, for example, could opt to purchase acritical illness plan to help offset expenses should they contractthat illness. Beyond choice, though, supplemental plans have theability to reduce overall costs and liability for employees, whichbecomes critical as Obamacare takes full effect.

Since many warn that PPACA will lead to premium increases, anemployee can save on his or her monthly health insuranceexpenditures by coupling a high-deductible traditional healthinsurance plan with a less costly hospital indemnity or majorillness policy. Just remember, supplemental plans aren't “real”health insurance; they're something one purchases in addition to atraditional health insurance plan.

Brokers and agents who sell supplementary insurance point toanother advantage for employees who purchase the policies—theirprices are relatively stable. That's not something most modern-dayworkers are too familiar with. Most workers only see regularincreases in their health insurance premiums. Supplemental plansare also affordable—a hospital indemnity plan, for example, canrange from around $40 per month for an individual to around $100per month for a family.

“The employees I've dealt with are very satisfied, especially ifthey've had to use those supplemental benefits,” says John Gaglioneof GBSA Insurance in Aurora, Ill. “Nobody is anxious to spend moremoney on insurance, but we recognize as heads of households orfamilies that we need a risk management plan for our families.”

Freeman adds that the demand for supplemental health insurancesometimes comes from within an organization as employees sharetheir experience with the benefit.

“I went out and did an open enrollment renewal with one of mylarger groups where we have three supplemental plans in place.There was a 30 percent increase in the participation becauseeveryone talks about how great this hospital plan is within thegroup,” Freeman says.

For the bosses

Employers can realize a cost savings with supplemental plans aswell, because in many cases the employee pays 100 percent of thecost. The plans aren't nearly as expensive as regular healthinsurance, so some employers are looking at making them availableto part-time and seasonal employees or even low-wage earners. Thecost to the employer also opens up the benefit to employees whowork at employers of all sizes.

“With voluntary products, I see it growing, especially forsmaller business,” says Sue Emery of Emery Benefits Solutions inAuburn Hills, Mich. “Larger employers are moving along, but withsmaller businesses, it gives them access to a lot of other productsand it integrates them to an access level they didn't havebefore.”

Because supplemental plans are so cost effective, employers ofall sizes also are able to offer an expanded roster of voluntarybenefits, which sends a positive message to theiremployees. 

“I think every group in America that has a deductible on theirplan needs to look at gap coverage,” Freeman says. “Every companyin America needs to look at voluntary plans, because when they getsqueezed with these expenses and reforms, the burden will fall tothe employee. So when the employer offers a solution, they looklike a hero.”

Industry sources do report reluctance on the part of someemployers to investigate their options when it comes tosupplemental health insurance plans. In many cases, employers aregoing to look to their benefits broker or agent for advice orguidance on supplemental offerings.

Brokers and agents, therefore, should get enough education aboutthe products to discuss the topic with members of their existingclient roster and new business prospects.

“At first, there's a reluctance [from] employers to take onadditional transaction responsibilities but once you sit down withthe employer and talk to them about how it could work for them andhow it could be a tax advantage, they're more open to hearing aboutit,” Gaglione says.

“Many [employers] have a lot to absorb,” Emery says. “A lot ofthe information I'm giving them is much more information thanthey've ever been given, and they've never been given the attentionI'm giving them. What I am doing is revamping their employeebenefits program. They like what I have to say, but they have tofigure out how to do it.”

For the brokers

For some brokers and agents, there wasn't much thought put intoselling supplemental health insurance—they either left it toanother agent or the “Aflac guy.” But because of Obamacare, moreand more brokers and agents are including supplemental plans intheir consultations with clients as part of a larger plandesign.

“I do try to present supplemental with the normal medicalpackage,” Freeman says. “I believe voluntary benefits are animportant part of the overall package. I want to show them a plandesign that shows them these plans from the beginning.”

For their part, the big supplemental health insurance providersare reaching out as well.  Industry sources have noticedover the past few years an increased outreach effort on the part ofsupplemental health insurance companies in hopes of getting moreindependent brokers and agents to start selling theirproducts. 

“I do know that Aflac, Colonial and AllState are trying to beefup their education to their current brokers and agents because theyknow it fills a gap for employees, but also for the agents,”Freeman says. “They're really reaching out to brokers to startselling their plans. Aflac has made push to include benefitsbrokers to push their products because we already have therelationships.”

For many brokers and agents, one of PPACA's greatest impactswill be on their bottom line.  Adding supplemental optionsto a menu of offerings gives brokers and agents a way to make upfor lost revenue stemming from Obamacare's implementation.

“Health care reform plays into it,” says Zach Zinser of Zinser Benefit Service inLouisville, Ky. “Brokers that wouldn't normally be selling theseproducts are trying to get new streams of income. If I see that myincome is going lower and lower, and I have a client base I cansell these to, that's probably one reason why you're seeingsupplemental grow.”