Another kind of supplemental plan popular among blue-collar employees is accidental death or dismemberment policies. Dental and vision policies are considered supplemental as well.  

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

Meanwhile, employers are seeing new strategies for providing supplemental health insurance coverage—as well as ways to reduce costs—while employees can realize more stable pricing, more choices and other advantages. Benefits brokers and agents are finding that supplemental is steadily working its way into their conversations with clients and can provide another product to add to their lineup of offerings.

“Employers offer health insurance to make their employees feel safe and secure,” says Trish Freeman of Trish Freeman Insurance Service in Gonzalez, La. “PPACA is a great unknown, so voluntary plans can help replace some of that security. And in the end, they'll provide a sense of security where PPACA is filling everyone with fear.”

For the workers

For starters, supplemental health insurance plans give employees more options in their benefits packages. And, industry veterans say, employees always like to see more choices. Employees with family histories of illness, for example, could opt to purchase a critical illness plan to help offset expenses should they contract that illness. Beyond choice, though, supplemental plans have the ability to reduce overall costs and liability for employees, which becomes critical as Obamacare takes full effect.

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

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

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

Freeman adds that the demand for supplemental health insurance sometimes comes from within an organization as employees share their experience with the benefit.

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

For the bosses

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

“With voluntary products, I see it growing, especially for smaller business,” says Sue Emery of Emery Benefits Solutions in Auburn Hills, Mich. “Larger employers are moving along, but with smaller businesses, it gives them access to a lot of other products and it integrates them to an access level they didn't have before.”

Because supplemental plans are so cost effective, employers of all sizes also are able to offer an expanded roster of voluntary benefits, which sends a positive message to their employees. 

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

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

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

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

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

For the brokers

For some brokers and agents, there wasn't much thought put into selling supplemental health insurance—they either left it to another agent or the “Aflac guy.” But because of Obamacare, more and more brokers and agents are including supplemental plans in their consultations with clients as part of a larger plan design.

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

For their part, the big supplemental health insurance providers are reaching out as well.  Industry sources have noticed over the past few years an increased outreach effort on the part of supplemental health insurance companies in hopes of getting more independent brokers and agents to start selling their products. 

“I do know that Aflac, Colonial and AllState are trying to beef up their education to their current brokers and agents because they know it fills a gap for employees, but also for the agents,” Freeman says. “They're really reaching out to brokers to start selling their plans. Aflac has made push to include benefits brokers to push their products because we already have the relationships.”

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

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