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Health insurance brokers turn focus to individuals

April 4, 2015

Health insurance brokers are adapting to the Affordable Care Act by shifting their focus from employers to individuals.

Brokerage and employee benefits firm FirstPerson Advisors, for example, recently started an arm called My Choice to appeal to individual consumers confused by the range of options. Neufouse & Associates Inc. is catering to individuals and small businesses most likely to drop health insurance.

Sparking the movement is anticipation of employers’ dropping their group health plans, thereby forcing workers onto Obamacare exchanges in search of coverage.

“This was a known outcome of the Affordable Care Act,” said Mark Minner, an adviser with locally based FirstPerson Advisors. “It was designed to really support the individual.”

Signed into law in 2010 by President Obama, the Patient Protection and Affordable Care Act was designed to ensure universal coverage by providing tax credits, eliminating pre-existing condition clauses, and easing access to coverage via public exchanges.

Projections call for up to 75 percent of U.S. employers dropping company health plans by 2025. This would mean some 150 million Americans will access coverage on Obamacare exchanges in coming years as employers refuse to absorb rising health care costs.

Leading the migration toward individual coverage are small companies in industries with lower-than-average compensation such as retailers and hotels. Employees and their families making less than 400 percent of the federal poverty level—$97,000 for families and $47,080 for individuals—are eligible for tax credits on the open exchanges.

Beyond employer finances, younger workers also want more flexibility—not just with their health insurance plans, but with their ability to move from job to job.

“Many are saying that they don’t want their benefits to be tethered to their employer,” Minner said.

Nefouse & Associates owner Tony Nefouse has tried to catch individual insurance customers by setting up informational websites with catchy addresses, such as indianahealthinsuranceexchange.com. Nefouse also expects more and more small-business owners to drop group coverage, creating a need for user-friendly approaches that demystify some of the confusion stirred up by Obamacare.

Toward that goal, FirstPerson’s MyChoice service aims to help companies and its employees make the transition by better understanding the changes brought on by Obamacare and the options available on health care exchanges.

“It helps [the individual] through the enrollment process,” Minner said.

Replacing one contact point at an employer with several individual contact points is adding to the workload for brokers like Nefouse and Minner.

But it’s a necessary step toward keeping brokers in business and fulfilling the promises of Obamacare. For Nefouse, it’s adapt or die.

“We’re looking at investing more time to take care of seven employees on individual plans [versus] one group plan,” Nefouse said. “We use side-by-side comparisons to explain the benefits of keeping a group plan and the benefits of moving to the marketplace to see if they can get a better deal.”

FirstPerson’s Minner said the business could be lucrative: “Depending on the industry, those can be meaningful dollars.”

Not everyone sees the stampede to individual coverage occurring anytime soon. Seema Verma—a local consultant who worked with former Gov. Mitch Daniels’ administration on health care policy at the time Obamacare was passed—said the anticipated trend is slow to take off.

“It hasn’t quite played out,” Verma said, citing the widespread logistical and technical issues that plagued last year’s launch of healthcare.gov, the federal government’s portal for online enrollment.

Verma, who now works with the state developing health care policies related to Medicaid, said employers are reluctant to drop coverage until they better understand the needs and circumstances of each employee.•

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