Get Ready For The 2020 Health Insurance Tax

Insurers were given a pass in 2019 by Congress regarding their annual health insurance tax. The reason was that the government was concerned about consumers’ out-of-pocket costs. However, if the ACA’s health insurance tax resumes as planned, this ‘free pass’ might be over and insurers will face a $15.5 billion tax bill in 2020. The health insurance tax was created to fund the implementation of the ACA’s marketplace exchanges. For consumers, this means that insurers will raise premiums by more than 2% if the tax is implemented by the IRS.

Health Insurance Tax Over The Years

Oliver Wyman Actuarial Consulting recently analyzed the projected impact of the health insurance tax on health insurer premiums over the next 10 years. They found that premiums are likely to increase by 2.2% in 2020. 

The tax started at $8 billion in 2014, increased to $11.3 billion for 2015-2016, and had a suspension in 2017. The tax was then reinstated at $14.3 billion in 2018, and then given another suspension for the year of 2019.

Who It Applies To

A fully-insured health plan is the more traditional way to structure an employer-sponsored health plan. With a fully-insured health plan: The company pays a premium to the insurance carrier. The health insurance tax applies to all insurers offering fully-insured coverage. This goes for :

  • on-exchange and off-exchange individual markets
  • large and small group markets
  • insured public programs such as Medicare and Medicaid

The Rise In Premiums

Premium increases will vary by state. However, premiums are expected to increase annually anywhere from $154 to $479. A person in the individual market can face a $196 increase. A person in the small group market can expect a $154 increase, while a family of 4 faces a $479 increase. As for families in the large group market, the increase for an individual will be about $158, while a family faces a $458 increase. 

The Outcome Following The Tax

If the tax is implemented and is as high as almost $16 billion, then increased tax burdens on small employers will follow. Fully-insured small employers will face the repercussions, while private and self-insured public employers will not. Employers are not the only ones who will have to pay for the tax increase. State taxes will go up for everyone in order to cover the increased tax on Medicaid. 

More importantly, many people might opt out of insurance due to the increase in premium costs. Healthier individuals opting-out will cause an imbalance in the risk pool, meaning higher premiums for the (less healthy) people who are insured. 

As of now, there is no definitive answer if the tax will be implemented in 2020. Congress is considering bipartisan legislation that would suspend the tax through 2021, but it is not a guarantee. If the health insurance tax is implemented, insurance rates and premiums will be more expensive than it already is. 

Let Your Confidence Shine Through

Although this may sound like a counterintuitive idea, many new health insurance agents just starting out are often a bit uncertain about their products. It’s a lot to learn, a lot to remember and they do not yet have the hands-on “in the trenches” experience of an agent who has been selling for years. They may not be able to read, “buy” signals with any degree of precision. That’s a skill that develops over the years.

To bolster your confidence, always remember that potential clients, whether they want Medicare plans, group health insurance or a final expense policy, are looking to you to provide a solution to their problem. Have a solution? Have confidence? Have a sale. Sometimes it’s just that simple. If you have the inner confidence in your sales skills, knowledge and products, you can’t help but be a winner. If the potential client can see you know what you are doing and know what you’re talking about, chances are they’ll buy a plan through you.

Do Not Forget to Follow Up

This tip doesn’t always go over well with busy health insurance agents who don’t always have time to double back and re-connect with leads that did not want to buy. However, it is vital that you do not forget to follow up for the very simple reason that a “No,” does not always mean “never.” It may also mean “not right now,” and you won’t know that unless you make an effort to follow up with your leads.

This doesn’t mean bugging them continuously. It means sending some good information on Medicare or Medigap plans, or group health insurance, asking them questions about what they would like to see in an insurance policy and genuinely listening when you get an answer and take the time to find them a policy that may suit their needs.

There are also situations where a business owner or other potential buyer contacts you and asks for information. While it’s good that they contacted you, it may also mean they do not have the time to reconnect later. Don’t lose a good lead by not checking back in with them to answer questions or offer alternatives.

The longer you leave your follow up calls the easier it is for another insurance agent to step in and snag a sale. The competition is tough out there. Make the most of every single contact/lead that you have. It pays off at the end of the day.

Selling Group Health Insurance Can Be Highly Profitable

Selling group health insurance can be highly profitable but there does need to be a method to how you approach this kind of sale.

The first thing you need to do is focus on your target market. This is not the time to be scattered when devising a sales strategy for selling group health insurance. Every single individual you meet needs medical insurance, but you want to sell group health, so that means your market is employers/businesses. Whether the business you have in mind to approach is small, right on up to larger, most employers are always searching for a good deal on group medical insurance. They want to protect their bottom line in the process.

Knowing what drives an employer looking for group health insurance is the inside “coup.” It means you are better able to serve that market because you understand the mindset of companies and offer a good quality product that suits their needs. Of course you need to know your products intimately and be able to answer any questions asked. But you already know that, right?

Work the potential client from their point-of-view and be prepared to make more sales.

Use Conference Lines or Online Meeting Rooms to Promote and Sell Group Health Insurance to a Number of Companies

In today’s marketplace, we need to be mindful of the trend toward more personal service, easier access to the person actually selling a product and how we come across as agents to our existing and potential customers. In other words, we are not just marketing a health insurance policy, but also “US” personally and our record for great service.

Want to sell group health insurance to a number of companies that have subsidiaries? Use a conference line or an online meeting area and bring everyone together for your presentation and work the “room” like a top-selling professional agent that you are. Take any and all questions, ask for feedback, take notes, send information when it is called for and be the best you can be while handling the call. Make sure you also do a follow up with every company on that call to see if there is anything else you can help them with.

Make use of the tools at hand in the digital age and perhaps also consider some of the older methods to reach out and connect. Today, people are looking for good customer service and a seller they trust. Be that seller and your agency can grow steadily and turn a nice profit.

Don’t know what to write about when it comes to insurance article marketing?

Okay, this is a valid concern, but one that may be easily overcome by doing the research. What is trending on social media about insurance? For instance, what are people saying about Medicare, group health insurance or final life expenses? Find out. Stay current. Don’t market an obscure product that holds very little appeal to people.

An example of insurance products that hold little appeal to people is final life expenses. This is a demographic that needs to be approached when the timing is right for the customer.

Typically you’d target this niche by age and health factors. An example would be a 67-year-old male with diabetes about to go to hospital for a possible amputation. This individual may be very interested in final expense insurance. In other words, if you’re buying targeted leads, target older individuals with health issues. You can filter for those kinds of leads by asking your lead generation company.

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