Fees in Lieu of Commission

[Yagents]

Anybody had experience with a Aetna large group client where the discussion of fees has come up? I'm assuming premiums will not drop by the 4% commission rate, meaning same premiums + consultant fee = difficult value pitch, and larger costs to employers....another obamacare unintended consequence.

"In a letter sent to insurance brokers last month, Aetna explained that, beginning Feb. 1, brokers in certain states will be reimbursed based on a "service fee model" for employers with 51 or more employees. Under this structure, employers will compensate the broker directly.
"If other health insurers follow Aetna's lead, premiums will be more transparent and brokers will need to transform themselves into business consultants to justify their commission to clients, he adds. Brokers and agents "really are going to have to sell their services and the value that they bring more than ever before," Leavitt says. And some brokers might try to compete on commission rates as they struggle to keep their businesses afloat. "It's going to be very competitive out there because some agents are going to be fighting for their livelihood. They will be willing to negotiate in ways they maybe haven't before," he adds. And in an effort to save on the commission, there is a danger that some employers will bypass the broker and contact health plans directly."


Aetna’s Change in Payments to Brokers Could Prompt Others to Follow

 

[leevena]

Your assessment is correct...and wrong. It is correct in that the fee now being paid by the employer will be a difficult value pitch. It is wrong because it was not an unitended cosequence of Health Care Reform.

In the larger markets the compensation paid is easily identifiable, and many times the consultant/broker will line-item it up-front to make it transparent. We do this for all our groups. As you gravitate downward the size scale, it will become much more difficult for a broker to justify their "fee" and especially when the group is writing the check each month.

If you want to remain in this market, you will certainly need to develop a value proposition that will make the want to work with you and more importantly, pay you.

Good luck.

 

[Norwayguy]

Nice way for Aetna to thank you for bringing business to them....Fend for yourself on your commission.

 

[YouGotMyMoney]

F Aetna and the donkey they rode in on.

 

[COInsguy]

F Aetna and the donkey they rode in on.

LMAO...SOOOOOO True! In every way they are trying to Prove they don't need brokers.

So to them I say: Stop talking the talk and walk the walk. Lets see how your business looks when brokers will do anything to write any other carrier including PASSING on the deal.

 

[YouGotMyMoney]

write any other carrier including PASSING on the deal.

They clearly don't value us, so let them become ever more uncompetitive....and sink to the bottom of the ocean like the titanic of individual health ins.

 

[COInsguy]

They clearly don't value us, so let them become ever more uncompetitive....and sink to the bottom of the ocean like the titanic of individual health ins.

That was poetic!

 

[MedSuppPro]

Is this as bad as it gets? There must be a whole bunch of group agents going out of business. The sad thing is non of em will qualify for unemployment benefits as they are almost all 1099'ers.

 

[LGilmore]

the question will become will aetna (and any others) be able to maintain market share using this method? As others have posted, if competitors don't go this route you'll see less and less aetna proposed at meetings. It will fall upon the HR person to do the footwork and I have yet to meet an HR person who is willing to do the work and take on the risk of chosing a health plan for the company. In the past, it is always blame the broker for the plan, now it falls on the HR? don't think so.

If it doesn't work for them, they'll abandon it. I mean really, like this is the first stupid thing a carrier has done to agents and brokers?

 

[ABC]

Aetna has been losing money for some time now.
My guess is the 50-99 market they are getting killed and to get rid of their current block. What better way to do it than cut the brokers.

If the industry went this way a lot of brokers would have a difficult time justifying a high comp. Everyone would work for a flat fee the % would be gone.
I think there is a real misconception this size market has high comp. These size groups can take a lot of time with service.
If you are dealing with a weak HR then you really could have your hands full with a lot of liability questions. Then there is the education piece for the employees.

There has been talk about using this comp for the small group and Individual market.