With nearly half of U.S. employees working at small to midsize businesses (SMBs) and 54.5% relying on employer-based health insurance, SMBs are responsible for connecting a significant portion of American families with crucial healthcare. However, current market conditions make healthcare increasingly difficult for SMBs to provide.
Factors including rising pharmacy costs, the trend of commercial insurance providers raising rates to offset climbing Medicare enrollment, and the ongoing shortage of healthcare professionals are contributing to fully insured plans growing more impractical for SMBs. The rising cost of providing health benefits significantly outpaces overall inflation, with the average employer spending over $24,000 each year per employee family.
Enter Benefit Advisors
The current market clearly isn’t working for SMBs, but benefit advisors have an opportunity to create change. Instead of perpetuating the status quo, benefit advisors can expand their offerings to include alternative funding models, such as level funded plans and medical stop loss captives. Alternative funding solutions grant SMBs greater control over employee health benefits and offer the potential for significant cost savings.
That’s right — alternative funding solutions help benefit advisors as well as employers. Learn five ways below.
5 Reasons Why Benefit Advisors Should Align Themselves with Alternative Funding Solutions
Benefit advisors who embrace alternative funding solutions can…
- Position Themselves as Progressive
Benefit advisors who don’t seize the opportunity to familiarize themselves with the solutions shaping the alternative funding landscape now, risk falling behind as peers race to help the growing number of employers drowning under oppressive fully insured plans.
- Take Responsibility
Benefit advisors not only have a moral and ethical obligation to help the SMB clients who trust them to provide the best possible solution for their needs, they have a fiduciary duty to reasonably avoid negligence when performing their role responsibilities. Embracing alternative funding solutions is a way for benefit advisors to assure employer clients that their needs are priority number one.
- Stay Competitive
In the cutthroat world of insurance, casting a wide net is a winning strategy! A broad tool belt of solutions empowers benefit advisors to handle more types of employer risk and expand their network of prospective clients. To put it bluntly: Benefit advisors who want to take orders offer fully insured plans. Benefit advisors who want to manage risk provide alternative funding solutions.
- Maximize Compensation
Benefit advisors who create more value for employers by exploring alternative funding solutions reap the rewards. Benefit advisors who offer alternative funding solutions have the potential to maximize their compensation, compared to those who rely exclusively on a fully insured model.
| Fully Insured | Self-Funded |
| Commission Benefit advisors usually receive a percentage of the premium paid to the insurer, typically ranging from 3% to 6% depending on the size of the group and the insurer’s arrangements. | Flat Fees or Consulting Fees Benefit advisors may charge a flat fee (PEPM or an annual consulting fee), which is typically negotiated upfront with the employer. This model aligns more with the consultant role benefit advisors play in these plans. |
| Bonus/Override Payments Some insurers may offer performance-based incentives or bonuses for meeting certain sales thresholds or client retention goals. | Commissions on Stop Loss Insurance Since self-funded plans still involve purchasing stop loss insurance, benefit advisors may receive commissions on the premiums for stop loss coverage, which typically range from 2% to 4%. |
| Level Payments Since premiums are generally stable and predictable, benefit advisors have consistent compensation tied to the premium structure, which usually increases as the employer’s group size and premiums grow. | Administrative Fees Benefit advisors may help employers select TPAs to handle claims and plan administration. In some cases, benefit advisors can receive a portion of the administrative service fees as part of their compensation. |
| Incentive Structures Like in fully insured cases, some stop loss carriers or TPAs may offer incentive payments. |
- Gain Protection from Broker of Record (BOR) Hunting
Progressive benefit advisors are far less likely to lose their clients. ClearPoint Health ensures benefit advisors continue to reap the rewards of their hard work. Agencies that successfully integrate clients into ClearPoint products are rewarded with exclusive rights to represent that client for its tenure in the product.
Alternative Funding Solutions: A Win-Win
Alternative funding helps SMBs navigate the rapidly rising cost of providing health coverage for employees and their families. Benefit advisors who take the time and make the effort to learn about alternative funding solutions and incorporate them into their current offerings enjoy the satisfaction of connecting employers and plan members with critical care as well as the financial, reputational, and competitive advantage of being on the cutting-edge of their industry.
Benefit advisors who align with ClearPoint Health can access robust training and education, ranging from full-day intensives to bite-size online training via ClearU and enter the market with a broad catalogue of customizable marketing collateral for all audience types.
Still not convinced offering alternative funding solutions is the right move? Be on the lookout for Part 2 of this blog post, featuring five more pros of embracing alternative funding solutions!
