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.

Commercial Insurance Rates are Rising. Here’s Why

No one wants to pay more for insurance, but it is our unfortunate reality. Commercial insurance rates are rising, meaning higher premiums across the board for many businesses. Coverage affected ranges from Business Owner’s Policy to Worker’s Compensation. It is projected that prices will continue to rise throughout the rest of 2019. From underwriting to pricing, these changes come from two major sources: cars and catastrophes.

Vehicles

Auto insurance aside, vehicles have become a major factor in the rise of our commercial insurance rates. You may think “why does this matter to me?” It matters because vehicles are our main source of transportation, influencing our economic structure deeply. Everything you have as a business owner is brought to you by some type of vehicle. With more production and vehicles on the road come more opportunities for accidents to occur. This involves more than just passenger cars.

With our economic boost, we see an increase in areas like construction. Motorized vehicles operate in these zones, causing more concern for insurance companies. More work means more workers are needed to operate these vehicles. It only leads to an upward climb in insurance rates.

There is no easy solution for the car aspect contributing to this climb. We can only wait for legislation to step in.

Catastrophes

We’ve recently experienced a lot of natural disasters. In November 2018, California was ravaged by wildfires. While it is accustomed to fires, these were the worst in years, affecting areas as far north as San Francisco, and areas as richly populated as Malibu. The Woolsey Fire destroyed over 1600 structures (including most of Paradise, CA) and caused the death of three individuals.

Besides fires, hurricanes are a force to be reckoned with annually. In 2017, Texas’ southeastern area, including Houston’s almost 6 million people, were decimated by Harvey. This storm solely caused $125 billion worth of damage. Not to mention the opioid epidemic, which is heavily affecting our medical industry with 60,000 people dying from it in 2016. All of these things only scratch the surface of the disasters our country is experiencing.

This is causing rates to climb between 1-5% for insurance deductibles depending on how close you are to at-risk areas. As people scramble to make sure they are covered more for potential disasters, insurance companies raise their rates. At the same time, claim payouts are in the billions of dollars, forcing the capital in insurance companies to deteriorate. It’s simple supply and demand affecting the market.

While it may not provide much comfort, the reality is that an increase in productivity added to the disaster influx is causing inflation for commercial insurance prices. While it’s mostly liability markets that are affected, the results can be felt by everyone.

How to Maximize Your Productivity

As an agent, time management skills have a direct impact on your performance and sales. It goes unsaid that they are necessary to excel in your industry. However, even though everyone has the same amount of hours in a day, some people are able to accomplish so much more than others. Wondering how to maximize your productivity like some others do?

Perfectly organized planners and spreadsheets could explain smoothly handling a flood of tasks. But there are other solutions for the rest of us to navigate a variety of commitments and optimize our time effortlessly.

We have an answer to this dilemma – in a career where missing deadlines is not an option, the Covey time management grid is guaranteed to help you to manage your available time more efficiently.

Covey’s 4 Quadrant Theory offers a simple format to organize your tasks. Covey, an American keynote speaker and author of The Seven Habits of Highly Effective People , uses four quadrants that allow you to prioritize tasks in relation to their importance and urgency. This helps you to decide whether you need to address a task immediately or if you can postpone it.

Responsibilities are grouped into four categories: Important, Urgent, Not Important, and Not Urgent.

Quadrant I – Urgent and Important

In this section, we find tasks that have skipped out of the non-urgent category and have a significant time sensitivity associated with their completion. Urgent responsibilities require immediate attention. These activities are often tightly linked to the accomplishment of someone else’s goal. Not dealing with these issues will cause immediate consequences. While careful planning can help avoid tasks entering this quadrant, tasks will pop up or increase in urgency to land themselves here.

The real skill is to commit time to processes that enable you to work on tasks more quickly and with ease. It also ensures that they get done more efficiently.

Examples: Crises, deadline-driven work, medical/other emergencies, last-minute preparations.

Quadrant II – Not Urgent but Important

Covey’s time management system proposes creating time to focus on important tasks before they become urgent. Quadrant II activities are not urgent, but they are important.

These tasks are your long-term strategies and goals. Staying on top of these in a consistent manner will ensure that you are always one step ahead of where you need to be. This prevents you from ending up in Quadrant I on a frequent basis.

In addition, there are important activities that fall in this category including relationship building and recreation. We often read about organizing our professional lives, but personal lives need to be weighed into the equation as well. To avoid burnout, we need to focus on ourselves, family and friends as part of the equation rather than an afterthought, and Covey realizes this as part of his structure.

Examples: Preparation and planning, relationship-building, exercise, nutrition, and regular doctor checkups to prevent urgent health emergencies.

Quadrant III – Urgent but Not Important

The third quadrant is reserved for tasks that are urgent, without being important. Covey recommends minimizing or even eliminating these tasks as they do not contribute to your output. Delegation is also an option here. At best, these are distractions with high urgency.

Tasks that land in this quadrant often come from sources that regard the task as urgent and important (Quadrant I). Because of emotion, they fail to delineate between the two. When approached with tasks in this quadrant, it is best to delegate, as previously stated, but do so in a way to subside the crisis-level emotion and guide the task into its true “not-important” category.

Examples: Emails, calls, meeting other people’s priorities instead of completing one’s own tasks.

Quadrant IV – Not Urgent and Not Important

The fourth and last quadrant focuses on tasks and responsibilities that do not yield any value—items that are unimportant and not urgent. These time wasters should be eliminated in designated work time as they have little to no value. However, this quadrant can be used as a reward.

While you want to remain out of this quadrant while trying to drive results, some tasks in this quadrant do have there time and place. An effective use of your time would help you operate in this quadrant by choice rather than venturing into it as part of a by-product of aimlessly wandering through your day.

Examples: Busywork, mindlessly watching tv, scrolling through social media, procrastinating important responsibilities.

How Does This Apply To My Career?

If you’re like most people, you probably spend most of your time on activities that either fall into Quadrant 1 or Quadrant 3 because they’re urgent. And, as an insurance agent, you cannot afford to be scrambling to complete a never-ending list of urgent tasks because they weren’t addressed when they fell into the second quadrant – important, but not urgent.

You must manage promoting and selling insurance products and services to your customers above all. But you also have to balance doing your own research on the plans so you can give sound financial advisory services and customer support to your clients. Marketing strategies must be drawn and redrawn from time to time, keeping in mind your customers’ preferences.

If you sell a variety of insurances, such as health, life, commercial, or medicare – you must complete these objectives for each vertical. Long story short, you have your work cut out for you. But through implementing this model, your load will become significantly less daunting.

The Difference Between AEP and OEP

Medicare Supplement, Medicare Advantage, Medigap, Open Enrollment, Annual Enrollment. There are so many buzz words associated with Medicare insurance sales that it is often difficult to differentiate what it all means. One of the most confusing things to understand as an agent, let alone as a consumer, is what the difference between AEP and OEP is.

We are quickly approaching Annual Enrollment Period (AEP) for Medicare Advantage plans, not to be confused with Open Enrollment Period (OEP) that is correlated with Medicare Supplement plans. AEP is an 8 week period from October 15th through December 7th where consumers can sign up for Medicare Part D and/or Medicare Advantage plans.

OEP and Medicare Supplement plans (aka Medigap) is a little more complicated than AEP. OEP is a six month period from the beginning of a consumer’s Part B effective date. This is when a consumer can receive coverage without any health questions being asked. There are a few circumstances that would begin an OEP including:

  • -Particular circumstances for someone on disability before their 65th birthday
  • -An individual’s 65th birthday
  • -Retirement and therefore loss of current group health plan after the age of 65

Once an individual has timed out of the six month period, they forfeit the opportunity to buy a Medicare Supplement plan without any medical questions being asked. A consumer can sign up for a Medicare Supplement plan after that six month period, but they will be subject to health questions that could disqualify them for coverage by some insurance companies.

This graphic from boomerbenefits.com easily explains the differences we have explained above. We recommend using this to help engage and explain the difference with your clients searching for information on their Medicare options.

Medicare insurance is an incredible investment for new agents or agents looking to expand their product portfolio, but it is exactly that; an investment.

Through our research and discoveries with our long term clients, we have found that Medicare consumers are likely to remain on an agent’s books for upwards of 8 years. Though forming a client book will happen over time, lead services are a great way to guide consumers your way over a local competitor. While the marketing costs may be higher than referrals, the volume of potential clients is immediate, and the return over that consumer lifecycle pays for itself.

When you are ready to increase your typical Medicare Supplement volume with exclusive leads, give us a call, because together we succeed!

Being Reliable Is A Major Plus For Insurance Clients

One of the most competitive advantages you can have as an insurance agent is being reliable. If you say that you will do something, then keep your word. Whenever, you offer to provide something you need to do it.

Even if you do not know something it is crucial to you communicate that to your clients and let them know that you will find out. Being diligent, punctual and responsive are the key factors in great customer service.

If people can count on you to live by your word, give good service, always be there when you are needed and continually attend to your client’s needs, then that means you are reliable. This is a vital trait in the insurance sales business. It is a trait that people talk about. In today’s business milieu, word-of-mouth referrals are on the rise.

To take back more control of your business’ brand, start promoting more of your personality. This may sound counter intuitive, but is not. It is not because you are your business and a key part of its marketing strategy a strategy that relies on being reliable and trustworthy. It is just a slight shift of focus on what you emphasize. Be more personal.

Benepath Agent Success Series Webinar – Calling Like a Professional

How do your phone communication skills size up according to your clients? Closing sales for insurance agents on the phone is hard enough, but if your phone call delivery is lacking in even one aspect, your efforts could be . We at Benepath want to help ensure your phone calls are as effective as possible, for this reason we are thrilled to announce our first Agent Success Series Webinar.

In this 30 minute webinar hosted by Benepath President, Clelland Green, and Revity Sales Consulting Partner, Morgan Smith, we will coach you in effectively calling your consumer leads to make the most of every second on the phone with them. Clelland and Morgan get right to the point, coaching you topics including:

  • The importance of tone throughout your call
  • Effective messaging to guide a consumer into a sale
  • Proper contact etiquette

We also give you the ability to ask your specific questions to the professionals that will be answered at the end of the webinar!

Sign up here.

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