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Small Business Employee Benefits and HR Blog

Brokers: Expand Your Business with Individual Health Insurance

expand_your_businessWith open enrollment 2015 less than a month away now, brokers are preparing for one of the busiest times of the year for individual health insurance policies. While most brokers concentrate on selling to individuals and families, many of them are missing out on taking advantage of selling to small businesses during this time.

Small businesses are canceling group health insurance because of cost, participation requirements, or more affordable options on the individual market. These small businesses are looking for more affordable ways to offer health benefits, and they’re turning to health insurance brokers for alternatives.

The emerging solution? Many small employers are dropping group health insurance to help their employees pay for individual health insurance. This article outlines four practical ways individual health insurance helps brokers expand their businesses with employer-funded individual health insurance.

How Does it Work?

With employer-funded individual health insurance, the employer sets up a premium reimbursement plan to reimburse employees for individual health insurance premiums.

  • Brokers partner with premium reimbursement software providers to offer clients an easy, online, and compliant reimbursement solution.

  • Employers use premium reimbursement software to set up the reimbursement plan, enroll participants, and record reimbursements.

  • Employees receive a monthly healthcare allowance, purchase individual health insurance through their broker, and submit reimbursement requests through the online premium reimbursement software.

1. Increase Individual Health Insurance Policy Sales

With employer-funded individual health insurance, brokers become an advisor for individual health insurance. Employees have a budget for health insurance, and brokers help employees pick the best health insurance plan for their family. If the business has recently canceled group health insurance, all employees will be eligible to purchase individual health insurance outside of the annual open enrollment period. As a result, employer-funded individual health insurance becomes a lead generation tool for individual health insurance policy sales.

2. Earn Commissions on Premium Reimbursement Referrals

In addition to commissions from policy sales, health insurance brokers typically earn one-time and on-going commissions from premium reimbursement referrals. A premium reimbursement software provider should provide compensation for employer client referrals, as well as for broker colleague referrals (sub agents).

3. Access an Untapped Market

Over 2.3 million U.S. small businesses don't offer health insurance. However, the majority of these businesses want to offer health insurance to recruit and retain key employees. Presented with the right solution, this market has formidable buying power. Employer-funded individual health insurance is the right solution for this untapped market because employers can:

  • Set any amount to contribute

  • Control their budget 100%

  • Define which employees are eligible, and provide different benefits to different classes of employees

4. Retain Clients Cancelling Group Health Insurance

Employer-funded individual health insurance helps brokers retain clients who are canceling group health insurance because of cost, participation requirements, or more affordable options on the individual market. Employer-funded individual health insurance is an ideal solution for these clients because:

  • The employer can cancel group health insurance at any time during the year, and set up a premium reimbursement plan.

  • When the employer cancels their group policy, all employees become eligible for a special enrollment period (allowing them to purchase individual coverage outside of the annual open enrollment period).

  • This makes employer-funded individual health insurance an excellent option during, and outside of, annual open enrollment.