Consumer directed health care (CDH) is growing as a viable sales avenue for agent/brokers. At the same time, stakeholders within this sector are beginning to see the value of educating and supporting agent/brokers as they make the gradual recognition that CDH options are viable alternatives to more traditional plans. Stakeholders, such as banks, insurance companies and third party administrators are also coming around to the idea that they must offer more than just information to agent/brokers.
At a recent conference of bankers involved with health care offerings such as health savings accounts (HSAs), the topic turned to strategies for co-opting agent/brokers into the custodial account sales process. Several major banking groups said they were actively seeking ways of rewarding agent/brokers for steering clients to their custodial offerings.
While several financial institutions currently offer rewards, these larger institutions said they were seeking alliances with broker/agents as well. What’s more, they were looking to create significant rewards programs that would get the attention of agent/brokers.
There were three thoughts bandied about at the conference, all of which bode well for agent/brokers in terms of help and compensation. One bank said it was encouraging its local branch managers to seek out agent/brokers as partners in the CDH area. They were encouraging their managers to share leads and to build joint sales programs with local agent/brokers. Another bank said it was developing a sales support program to work with agent/brokers to identify business clients in need of educational and enrollment support. This bank said it would begin offering agent/brokers materials and even joint call options to help business clients adopt CDH offerings. Implicit in these discussions was the idea of financially rewarding agent/broker partners. These banks recognize that there is still a fundamental impediment to growing HSA sales.
Many agent/brokers are still wary of CDH offerings because they result in lower commissions due to reduced premiums associated with CDH offerings. Given regulations concerning such rewards programs, they are treading carefully.
At the conference, many financial institutions said they were looking at ways of legally rewarding agent/brokers who provide leads and support as they seek custodial accounts from business owners. For financial institutions, these custodial accounts represent significant sources of new deposits.
The recent changes in the HSA regulatory program also gives agent/brokers extra clout when it comes to custodial accounts. Agent/brokers are still major influences to small- and medium-size corporate managers.
The new regulations enable companies to designate the financial institution that will manage their custodial accounts, and through which they will fund employee deductibles.
As companies have found, funding the deductible in some fashion doubles the rate of acceptance by employees of a CDH plan, particularly HSAs. These new regulations are expected to affect the funneling of more than $3 billion in deposits over the next 18 months. The agent/broker, according to Information Strategies, Incorporated’s (ISI) studies, is an important influencer of just where these accounts are placed.
As the conference banking participants pointed out, it is not unnatural for the agent/broker to seek some reward for working with a financial institution that gains those deposits. Given state regulations concerning rewards programs, banks must be careful about how these agent/broker reward programs are set-up and administered. Some financial institutions offer $5 referral fees to agent/brokers but this is a relatively small reward given that customer service is often a key stumbling block to positive experiences by business owners.
One possible solution is giving brokers independent tools to help them install HSAs in client companies. There is no doubt that HSAs require more education and effort on the part of agent/brokers. The time needed to install these programs takes away from other selling activities. Combined with the lower commission income associated with these plans, they are not attractive unless they lead to additional sales, either to new clients or by adding other products.
One additional sell-through product is long-term care insurance that can be paid for with HSA pre-tax dollars. Others include self-pay for Cobra, Medicare part A or part B and Medical HMO Insurance premiums. Smart agent/brokers are starting to offer these plans as part of the overall insurance package. Some financial institutions are also starting to bundle proprietary or licensed long-term plans into their offerings. This can be the basis of a profitable relationship between financial institution and agent/broker.
A number of agents on the www.HSAfinder.com partner page are also going up as they seek alliances and help. Another alliance opportunity discussed was the need for HSA-compliant offerings that reduce the cost of out-of-pocket expenses for employees. One such offering, from Fontis Health provides a series of products and services that agent/brokers can use to help employers implement HSA programs.
As the nation’s business community enters the year-end enrollment and change process it is evident that HSAs and other CDH offerings are gaining momentum. ISI estimates that more than 2 million additional employees will be starting their HSA programs in January 2008. For agent/brokers this will mean significant new challenges in terms of servicing these accounts.
Finding the time and resources to cope with the questions and requests that may ultimately overwhelm agent/broker resources, particularly in the first three months of 2008, should be a concern. Finding the right allies that make this financially rewarding should be a key component of their efforts next year.
*For further information or to contact this author, please use the forum below.
At a recent conference of bankers involved with health care offerings such as health savings accounts (HSAs), the topic turned to strategies for co-opting agent/brokers into the custodial account sales process. Several major banking groups said they were actively seeking ways of rewarding agent/brokers for steering clients to their custodial offerings.
While several financial institutions currently offer rewards, these larger institutions said they were seeking alliances with broker/agents as well. What’s more, they were looking to create significant rewards programs that would get the attention of agent/brokers.
There were three thoughts bandied about at the conference, all of which bode well for agent/brokers in terms of help and compensation. One bank said it was encouraging its local branch managers to seek out agent/brokers as partners in the CDH area. They were encouraging their managers to share leads and to build joint sales programs with local agent/brokers. Another bank said it was developing a sales support program to work with agent/brokers to identify business clients in need of educational and enrollment support. This bank said it would begin offering agent/brokers materials and even joint call options to help business clients adopt CDH offerings. Implicit in these discussions was the idea of financially rewarding agent/broker partners. These banks recognize that there is still a fundamental impediment to growing HSA sales.
Many agent/brokers are still wary of CDH offerings because they result in lower commissions due to reduced premiums associated with CDH offerings. Given regulations concerning such rewards programs, they are treading carefully.
At the conference, many financial institutions said they were looking at ways of legally rewarding agent/brokers who provide leads and support as they seek custodial accounts from business owners. For financial institutions, these custodial accounts represent significant sources of new deposits.
The recent changes in the HSA regulatory program also gives agent/brokers extra clout when it comes to custodial accounts. Agent/brokers are still major influences to small- and medium-size corporate managers.
The new regulations enable companies to designate the financial institution that will manage their custodial accounts, and through which they will fund employee deductibles.
As companies have found, funding the deductible in some fashion doubles the rate of acceptance by employees of a CDH plan, particularly HSAs. These new regulations are expected to affect the funneling of more than $3 billion in deposits over the next 18 months. The agent/broker, according to Information Strategies, Incorporated’s (ISI) studies, is an important influencer of just where these accounts are placed.
As the conference banking participants pointed out, it is not unnatural for the agent/broker to seek some reward for working with a financial institution that gains those deposits. Given state regulations concerning rewards programs, banks must be careful about how these agent/broker reward programs are set-up and administered. Some financial institutions offer $5 referral fees to agent/brokers but this is a relatively small reward given that customer service is often a key stumbling block to positive experiences by business owners.
One possible solution is giving brokers independent tools to help them install HSAs in client companies. There is no doubt that HSAs require more education and effort on the part of agent/brokers. The time needed to install these programs takes away from other selling activities. Combined with the lower commission income associated with these plans, they are not attractive unless they lead to additional sales, either to new clients or by adding other products.
One additional sell-through product is long-term care insurance that can be paid for with HSA pre-tax dollars. Others include self-pay for Cobra, Medicare part A or part B and Medical HMO Insurance premiums. Smart agent/brokers are starting to offer these plans as part of the overall insurance package. Some financial institutions are also starting to bundle proprietary or licensed long-term plans into their offerings. This can be the basis of a profitable relationship between financial institution and agent/broker.
A number of agents on the www.HSAfinder.com partner page are also going up as they seek alliances and help. Another alliance opportunity discussed was the need for HSA-compliant offerings that reduce the cost of out-of-pocket expenses for employees. One such offering, from Fontis Health provides a series of products and services that agent/brokers can use to help employers implement HSA programs.
As the nation’s business community enters the year-end enrollment and change process it is evident that HSAs and other CDH offerings are gaining momentum. ISI estimates that more than 2 million additional employees will be starting their HSA programs in January 2008. For agent/brokers this will mean significant new challenges in terms of servicing these accounts.
Finding the time and resources to cope with the questions and requests that may ultimately overwhelm agent/broker resources, particularly in the first three months of 2008, should be a concern. Finding the right allies that make this financially rewarding should be a key component of their efforts next year.
*For further information or to contact this author, please use the forum below.
