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2 minute read
For many consumers, high-deductible healthcare plans are the most cost-effective plans and often the only plans they can afford. However, these plans have significant risks and exposure. Short-term medical was one way for consumers to avoid the high cost of ACA plans, but new regulations are making short-term medical more difficult to obtain in many situations.
Supplemental insurance can be a great way to fill gaps in ACA plans, particularly high-deductible bronze and silver plans. It can be an affordable solution for consumers while driving increasing sales for carriers, agencies, and agents.
The Value of Supplemental Plans
ACA bronze plans have an out-of-pocket maximum of $9,450 for an individual and $18,900 for a family. Considering that 58% of Americans have less than $5,000 and 42% have less than $1,000 in savings, that’s a risk that most Americans simply can’t afford.
Supplemental plans, including hospital indemnity and critical illness plans, can cover that risk for surgeries, cancer, heart attacks, strokes, and many additional life changing events.
Supplemental plans also cover accidents and injuries. In 2022, there were 63 million injuries in the US and the vast majority happened outside of the workplace where workers compensation isn’t applicable. Supplemental insurance can cover the deductible and insurance gaps associated with fractures, dislocations, lacerations, injuries requiring surgery, burns, paralysis, emergency dental work, and even concussions.
The insurance industry has an opportunity to give American families peace of mind that an accident, disease, or injury won’t create irrevocable financial hardship.
What Carriers Need to Succeed with Supplemental Plans
One national carrier we work with told us they had two different groups selling ACA plans. One had a 40% add-on rate for supplemental products and the other was less than 1%. Given the huge opportunity for supplemental plans and the clear win for consumers, it seems like it should be an easy sell, but it’s not for all carriers or agencies.
What can carriers do to be more successful with supplemental plans?
- Easy-to-use distribution systems: To sell a plan, agents need access to that plan. The most successful carriers make it easy for agents to access all non-ACA and supplemental plans in one place. Removing the friction of switching between many systems to find multiple plans is going to dramatically increase supplemental conversion.
- Agent training: Carriers need to invest in agent training to ensure agents are knowledgable in the plans they sell, including nuances, so that they provide products meeting the consumer’s needs, in turn establishing trust leading to policy persistence.
- Agent incentives: Agents sell what they are paid to sell. They need to have incentive plans to upsell and cross-sell supplemental plans. These incentives need to be kept top of mind through ongoing communication so agents remember to discuss them.
- Simplified commissions: The most successful carriers are adding commissions for supplemental plans to an agent’s existing commission statement that is accurate, transparent, and easy to read. If supplemental commissions are generated from a separate system that is error-prone or complicated, agents are likely to find it not worth their effort to sell these products, and then have to invest significant time reconciling commission statements for lower-commission products.
Supplemental Eligibility Can Be Broad
Beyond ACA plans, seniors also have options when it comes to supplemental products. For those enrolled in Medicare Part A and B, you have the ability to add on medicare supplement plans, known as Medigap, filling holes with deductibles, out of pocket maximums, and coverage when traveling abroad. For patients in rural areas, supplemental plans can provide additional benefits to travel to other areas for the treatment of a serious disease.
With such broad eligibility and consumer need, carriers, agencies, and agents can all diversify and grow their revenue with supplemental plans. These plans can fill a gap not just for consumers, but everyone in insurance distribution impacted by the regulations restricting the sale of short-term medical plans.
Ready to Ramp up Supplemental Plan Sales
Increasing sales of supplemental plans requires supporting, educating, and motivating agents. e123 can help with seamless distribution management and commissions for carriers. Contact us to learn more.
