Brokers Play Pertinent Role in Health Care Exchanges

As the pieces of the health care reform puzzle fall into place, a high percentage of consumers are in control of their health insurance coverage. Most have to be, since an increasing number of employers are turning to consumer-driven health plan options, including sending workers to an exchange to find coverage.

While some brokers believe public health care exchanges pose a threat to their business, the exchanges boast a massive opportunity for building revenue volume and diversifying revenue streams. With the individual mandate, the individual health insurance tax credits, and the new health insurance exchanges, a lot more consumers are buying individual coverage. And the topic of health insurance is hotter than ever before.

For many consumers, this is the first time in the driver’s seat for health insurance decisions. Brokers are arguably in greater need to help consumers understand options and help give them the knowledge and tools to make the best decisions for their family.

As brokers start to make some hard decisions on the direction of their business, including what products they’ll sell and what services they will offer in the future, don’t overlook the potential of exchanges and their natural fit with voluntary policies.

Regardless of if they use a private or public exchange, many consumers see the benefits of supplemental insurance, because they understand that life-changing accidents, disabilities and debilitating illnesses can bankrupt a family. They want a strong safety net to protect their finances.

Public Exchanges

If consumers are using the public marketplace, some will be eligible for government financial assistance, which frees up money. Government assistance, plus a monthly stipend from their employer, gives consumers the ability to customize their insurance – and many are considering voluntary insurance to supplement their major medical plan.

Although they have more responsibility in health care coverage, more than half (54%) of consumers say they’d prefer not to have more control over their health care expenses because they don’t have the time or knowledge to effectively manage them, according to the 2014 Aflac WorkForces Report, an annual study that examines the issues impacting benefits in the workplace.

The survey also found that 42 percent of workers say they are not prepared to pay for out-of-pocket expenses associated with a serious illness or injury. These concerns are a natural opportunity for brokers to help consumers make wiser decisions about their health care benefits and choices.

For brokers, revenues from voluntary space will grow because demand will be higher. In fact, Aflac research found that 52 percent of brokers plan to increase the amount of voluntary insurance revenue in their firm this year, while another 42 percent plan to keep the amount of voluntary insurance revenue the same. In addition, 90 percent of brokers expect sales of voluntary benefits products to rise in the next 12 months, finds Eastbridge Consulting Group’s 2013 Voluntary Industry Confidence Index.

The bottom line is for many producers, commissions from voluntary insurance products will be a higher percentage of overall broker revenue this year.

Private Exchanges

With the government red-tape of the public exchange, private exchanges are off to a head start. The private marketplace is ripe for brokers to generate revenue.

The private exchange increases employers’ ability to offer a wide variety of major medical health plans along with supplemental insurance products all in one place.

From the employee perspective, 68 percent of employees believe their employers will educate them about changes to their health care coverage as a result of health care reform, yet only 13 percent of companies named “educating our employees about health care changes” as an important issue for their organization. The disconnect enables brokers to fill a much-needed gap: the role of advisor and health care reform expert. For many employees, choosing a health insurance plan with a lower premium, freeing up funds for a voluntary plan tailored to their specific health needs, will be most advantageous.

Remain Relevant

Although it’s clear that the role of the broker is changing alongside the evolving health insurance landscape, Aflac research (link to broker insights) shows the brokers’ expertise is increasing in demand among companies and employees. What’s more, the smartest brokers will seize upon health care reform as an opportunity to even further demonstrate their value and encourage employers to satisfy workers’ expectations and needs when it comes to benefit protection and education.

Voluntary insurance industry offers a tremendous opportunity to not only remain relevant in the evolving health care landscape, but to drive new sales and diversify product offerings to meet consumers’ new needs. With 48 percent of employers expecting voluntary benefits, that help fill crucial gaps in employees’ health and wealth management, to become “very important” to their total rewards strategies over the next half-decade, 1 brokers can’t afford not to explore the voluntary market.


1 Towers Watson 2013 Voluntary Benefits and Services Survey.

This article is for informational purposes only and is not intended to be a solicitation.