New Strategies in Health Insurance

Why your small employer clients should cancel their group health  insurance...

… and why their employees will love them for it

JANESVILLE, WI—As an insurance company broker you know your employer customers are fed up with group health insurance. Each year you deliver the same message: “Sorry, rates are going up again.” (Health insurance inflation has hovered around 12 percent for years.) And each year the employer must either bite the bullet and pay the increase or change to a different plan, one with a higher deductible and/or less coverage. Either way, the employer isn’t happy with this confusing, time-consuming, and increasingly expensive system—and neither are you. If only you could offer your employer groups some good news for a change.

Greg Hellmich, vice president of agent distribution at Smart and Simple insurance development (SASid), says you can. But first you must realize that, for small companies with fewer than 50 employees, group health insurance no longer makes sense.

“In the past, employers provided health insurance for two reasons,” says Hellmich. “First, it was more affordable to buy a group plan. Second, it was a way to guarantee coverage to employees or those with family members who may be denied it on the open market.

“Now, though, the Affordable Care Act has removed the reasoning for group coverage for small employers,” he adds. “Government subsidies often make it less expensive for employees to buy their own coverage, and now, nobody can be turned down. So it actually makes more economic sense for companies and employees to get rid of group health insurance altogether.”

Of course, few employees would be happy to hear that their group policy is going away and that they are on their own. (And neither would insurance brokers, obviously!) That’s why Hellmich suggests that employers replace the archaic system with something better—and he points to his company’s new Benefit Credits module on the Smart Insurance Marketplace as a solution that makes sense for everyone.

SASid’s Smart Insurance Marketplace and new Benefit Credits together comprise a new technology-based system that makes it easy for employers to offer smarter benefits to their employees. Here’s how it works:

  • STEP 1
    Small companies with fewer than 50 employees cancel their group policy. (Incidentally, large companies with 50 employees or more can keep their group policy and incorporate it into the Smart Insurance Marketplace.)
  • STEP 2
    The company sets up Benefit Credits for each employee. That is a fixed amount of dollars—say, for example, $400 per month—for the employee to use as he or she wishes.
  • STEP 3
    The employee signs on to his or her account and shops a variety of insurance policies from different carriers—major medical, yes, but also supplemental health, accident, dental, and life insurance policies. But he or she isn’t simply left to figure it all out alone. Depending on how the company chooses to structure their enrollment process, the employee either works directly with insurance agents or enrolls through SASid’s call center (which is staffed with licensed agents).
  • STEP 4
    SASid consolidates the cost to the employer and sends them a single bill each month.

Hellmich says this is one of those rare “win-win-win” scenarios. Everyone in the transaction, well, benefits from the Benefit Credits on the Smart Insurance Marketplace. Here’s how:

  • The employer saves money. For example, SASid recently enrolled a company of 17 employees into voluntary benefits using Benefit Credits on the Smart Insurance Marketplace and saved the employer $2,500 a month. And since healthcare premiums typically increase year after year, over time this savings can be substantial. Hellmich adds that SASid can do a case analysis for employers so they can see the savings for themselves.
  • The typical employee saves, too. Hellmich points out that for the aforementioned 17-person company, every employee except one ended up getting better coverage than they had before. Many companies will have a similar outcome, because such a high percentage of workers qualify for government subsidies when they purchase an ACA-compliant policy.
Especially for small companies, continuing to offer group coverage is doing employees a disservice,” says Hellmich. “Why? Because it denies them access to subsidies

“Especially for small companies, continuing to offer group coverage is doing employees a disservice,” says Hellmich. “Why? Because it denies them access to subsidies. With the Benefit Credits, they can enroll into many voluntary insurance products (dental, vision, life, disability, and more) through the Smart Insurance Marketplace and use the remainder on major medical—or perhaps even take the remaining balance as part of their income.”

Of course, for a few highly compensated employees who don’t qualify for subsidies, Benefit Credits might not be favorable. But there are ways around that problem, too.

“An employer may choose to contribute more to high-earner accounts,” says Hellmich. “They are probably saving so much on the other employees that they’ll still come out far ahead.”

  • Participating insurance companies get to sell more products. Because so many employees find that their premium costs for major medical coverage have decreased thanks to ACA, they’re able to use the remainder of their Benefit Credits to purchase dental insurance, life insurance, or other types of insurance they’ve never considered before. Obviously, this is great news for employees. And it’s also great news for insurance brokers and agents, as these products tend to generate much higher commissions.
  • Benefit Credits and the Smart Insurance Marketplace remove the hassle factor for everyone. Employers no longer have to worry about the confusing world of health insurance. Employees get to see all the options online, at their fingertips—and if they need help, an agent can walk them through the entire process.

“Benefits can be confusing for employers and employees alike,” said Hellmich. “Benefit Credits and the Smart Insurance Marketplace are more than just a way to offer benefits. The Smart Insurance Marketplace is a full-service marketplace for employees. We take care of everything, from customer service to billing. It can’t get easier than this.”

Hellmich says systems like this represent a major paradigm shift in how employers and employees alike think about health insurance. Employers get to control the costs. Employees get to control the benefits. Everyone wins.

“The fact is, brokers and employers are tired of group health renewals,” he says. “Benefit Credits are a good solution for today and most importantly tomorrow. No more meetings discussing how to decrease cost or make plan design changes to limit the increase. Renewal meetings can be fun now: ‘Let’s see what new plans we can add to the Smart Insurance Marketplace this year!’

“For companies to actually see their health insurance bills go down for once, and employees to finally be able to customize their own benefits package—well, it’s a game changer,” adds Hellmich. “Offering this option to your employer groups is like giving them a gift. This truly is a better benefit system than anything that has come before.”





About SASid, Inc.
Located in Janesville, WI, Smart and Simple insurance development (SASid, Inc.) is a privately held company with a solid reputation for building products and insurance marketplaces. Our SASid team enjoys helping people with their insurance needs and consistently providing best-in-class administrative, enrollment, billing, and claims customer support. SASid is strategically looking for long-term partners to grow, learn, and develop with. Let’s make insurance Smart to have and Simple to understand.