Selling Individual to Businesses

May 2, 2008

  1. the do
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    the do Expert

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    I've been focusing on selling group to businesses however I have repeatedly heard about selling individual to small employers. How do you guys make that sell? What are the advantages to doing that? Do you only offer insurance to companies who don't offer insurance to their employees? who pays the premiums the employer or employee?

    Sorry If the answers to these questions are obvious I'm in california and with all the employers around here mostly offering group insurance I'm interested in trying something new if it seems feesible
     
    the do, May 2, 2008
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  2. somarco
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    somarco That Medicare Guy

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    Carve out's are usually the easiest way.

    You have to watch participation because if it drops too low (employee count) the group carrier will cancel the policy. If you just do dependent carve outs you shouldn't run into problems.

    I have quite a few dependents who were paying $500 - $800 per month as their share of dependent group premium. We drop them down in the $300 range and look like a hero.

    You can also carve out individuals (with or without dependents) that are healthy (keeping in mind participation). Do it by class or pick and choose.

    One way to enhance this pitch is to put the carve outs (especially where it is the employee that is leaving the group plan) on an HSA. If the employer was paying $300/month before then shift that to a contribution to the HSA and let the employee pay the premium. Over time you have changed a defined benefit health plan to a defined contribution health plan.

    If presented correctly it is a win-win for everyone (except the group carrier).
     
    somarco, May 2, 2008
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  3. djs
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    djs Super Moderator Moderator

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    And the person who gets declined for individual coverage......

    I think the answer to this varies a bit by state as well. Here in California, small group is guaranteed issue, and a max RAF of 1.1. Since the health problems tend to be on the dependants side, trying to issue an IFP for the dependants can sometimes be an exercise in futility, with very little true savings.

    If dependants are healthy, it's not as much a problem, except for what I call the 'mom' problem. Mom's tend to like to take their children to the doctor and pay the $10/$20 copay. Group plans are usually much more feature rich, and if you want that first dollar coverage for your cold, a better deal. Mom's want that.

    You can explain copays / deductibles / savings / benefits / etc till you are blue in the face. Somebody who has been on group all their life will have a hard time comprehending what you are talking about.

    Dan
     
    djs, May 2, 2008
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  4. susieQ
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    susieQ Super Genius

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    Do a search for Paul Zane Pilzer. He's written a book on the subject.

    TX DOI doesn't care for the concept. They put out a bulletin about it. Don't know about CA.

    Okay, I'm setting myself up here......... There are ways to do it in Texas, not 125 plan. Sounds like a terrific idea, right? Write individual aps, get paid 20% commission instead of 5%. But picture this -- you go into a business and write 20 individual aps. One of the main people is declined or ridered and they decide they don't like it or they just decide they don't like you, you can very easily lose the whole deal.

    The other thing is you need to work with a TPA to do it right and if you think FMOs are bad wait until you've dealt with TPAs. (No offense to TPAs but I even had one of them tell me they're a bunch of flakes and crooks.)

    Now a lot of my clients are families that can't afford the family coverage through the spouses work but that's a different story.

    Make sure your E & O is in good order!!!
     
    susieQ, May 2, 2008
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  5. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    I've done plenty of these in conjunction with an HRA, and it hasn't been a problem.

    Declined? When group coverage is canceled, they either qualify for the state risk pool (if it's a state where it exists), or they become "HIPAA eligible" and get a guaranteed issue, no pre-x conversion policy.

    Either way, it works.

    I never "lose" deals. Probably because I don't do "deals".
     
  6. somarco
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    somarco That Medicare Guy

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    I don't submit an app on them.

    It does vary, quite a bit. Max RAF in GA is 1.7 on top of premiums that are (generally) 30 - 40% higher than individual on similar plans.

    Varies by state, composition of the group, etc.

    Sti does it with some frequency as does M&M . . . so do I.

    Heh, heh, heh . . .
     
    somarco, May 2, 2008
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  7. djs
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    djs Super Moderator Moderator

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    I do a fair amount of 'micro' group, 5 and under. Usually the reason they want group is due to a dependant in the first place.

    For a feature rich plan, group is higher, but not astronomically higher, than IFP. If we had RAF's of 1.7, I would change my mind on this.

    Now is it just me, or is this somewhat silly. If the goal was to save premium dollars, and then you put them on a HIPAA plan, doesn't the overall premium go up? Nod your head up and down. At least in California, this is a strong advantage of small group.

    California does have a major risk pool, but the pool is only ankle-deep, and has more limitations than you can count. Not a good deal.

    Dan
     
    djs, May 2, 2008
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  8. the do
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    the do Expert

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    What's a carve out?
     
    the do, May 2, 2008
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  9. the do
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    the do Expert

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    DJS you are in ca also? Do you try offering group to the 5 EE employer who already has group or do you suggest to the employer that it would be better if they all went IFP?
     
    the do, May 2, 2008
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  10. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    It's you.

    I can't speak for California. Even with the additional cost for the 10% that have to go HIPAA/GI conversion, limited to 200% (or double) the standard premium, it's never failed to save any employer at least 25%.

    You have to understand that some employers at at the tipping point where they are ready to cancel the group health due to cost.

    There are no "perfect" solutions.
     
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