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The rules around health insurance exchanges are dynamic and evolving all the time. Some agents fear these exchanges could displace us-in the way Travelocity displaced many travel agents. Others argue that because health insurance is a far more complicated purchase than an airline ticket, and because consumers are likely to be confused by these new channels, our expertise and advice will be even more crucial.

Hopefully, the role of agents will become clearer as time goes on. In the meantime, here’s an overview about what we do-and don’t-know about health insurance exchanges.

Health Insurance Exchange: A Definition

A health insurance exchange is an online marketplace where individuals and small businesses can shop for, compare and purchase health insurance. Think of it as an Expedia or Travelocity for health insurance. No one is required to use an exchange; it is an additional channel being added to the marketplace.

Some states, including Colorado, where Alliance Insurance Group is based, are taking the initiative to build their own exchanges, which are permitted by federal law but subject to certain guidelines. States that choose not to create their own exchanges by 2014 will be required to use the federal exchange.

States building their own exchanges typically cite the desire to control their own destiny and customize their exchange to the needs of the local population. States that have rejected exchange proposals often mention their reluctance to support any aspect of the federal reform bill, which they hope will be repealed by the Supreme Court.

In general, insurance exchanges allow consumers and small businesses to:

Shop for and compare health plans, which must include certain standardized benefits.
Determine eligibility for premium relief in the form of tax credits.
Call or sit down with someone who can help explain various benefits and plan features.
Enroll in a plan.

Following are some of the most relevant aspects of the health insurance exchanges for independent insurance agents.

Consumer Access to Agents

The National Association of Health Underwriters (NAHU) is lobbying for the inclusion of an agent-contact option within the exchanges’ online systems. This could be structured similarly to the national Web-based portal for home sales, which presents listing information in a standardized format, but also connects potential homebuyers with a state-licensed realtor.

Importance of Certification

NAHU also believes all agents participating in the exchanges should be required to pass an annual exam that addresses private coverage, public assistance and subsidy-eligible options to ensure familiarity with all coverage choices available to consumers. This knowledge is important for agents as well as individuals filling the new role of “healthcare navigator.” Navigators will receive federal funding to help educate the public, distribute information about enrollment and premium credits, and provide enrollment assistance. NAHU believes navigators duplicate the role of licensed agents and questions the wisdom of spending federal money on these positions. But if navigators are used, they should be subject to the same rigorous licensing and continuing education requirements as agents.

Marketing and Commission Limits

There has been talk of restricting agents’ marketing activities and commissions related to their activity within the exchanges, which NAHU strongly opposes. The rationale is that the precedent for such constraints-Medicare Advantage-does not apply here at all. For the under-65 and small-business health insurance markets, prospective clients often want agents to provide additional information about life, dental, disability and other elements of the typical employee benefits package, within a single meeting.

With regard to commissions, we believe these should be determined by private health insurers, as they are today. That said, health plans have already begun cutting commissions in response to other aspects of healthcare reform, such as administrative vs. medical-loss-ratio requirements. The best insulation from commission cuts is to join forces with a Managing General Agency (MGA) that can consolidate the sales activity of many agents, guaranteeing insurers a high volume of business.

Will Exchanges Really Help?

It’s safe to say that “the jury is out” on this matter.

Will exchanges lower premiums? The answer depends largely on how the risk pools are structured. Some argue that separate pools for individuals vs. small businesses are fairest, as premiums more accurately reflect the risks of these two very different markets. Others say combining the pools would allow risk to be spread across a larger base, facilitating lower prices for all.

Will the exchanges improve the overall health of the population? The hope is that, among other things, costly emergency room visits will decline once a larger percentage of citizens are covered. Others counter that those with low-benefit/high-deductible plans are also reluctant to seek preventive care or even acute care until absolutely necessary. Will exchanges improve the healthcare purchasing experience? Possibly. In theory, lining up benefits “apples to apples” should make shopping easier-as long as it doesn’t result in slew of indistinguishable, look-alike plans that blur together and further confuse the consumer.

Health Discount and Dental Discount Programs: Will They Help Someone Like Me?

There is a new health care delivery system on the market called “Consumer Driven Health Care,” more commonly known as Health and Dental Discount Programs. As with many cutting-edge concepts, this one has created a bit of controversy.

It will come as no surprise to learn that the people making the most noise on one side or the other of the issue are the ones who are make their living in the health benefits industry.

Unfortunately, this professional “siding up” just leaves the general population stuck in the middle, confused and wondering what is best for them.

In reality, there is no reason to be up in arms over the new Health and Dental Discount Programs. These programs are not meant for everyone, but rather they were designed specifically for the people who have slipped through the cracks in the current health care coverage system.

If you have health insurance now, keep it! If you can get comprehensive health insurance, get it.

If, however, you are in one of the following situations, becoming a member in a dental and/or health discount program may very well help you:

1. You have been turned down for all health insurance due to a pre-existing condition.

2. You have a pre-existing condition, have been accepted for “high risk” health insurance, and are left paying out of pocket for your care until (or unless) the cost reaches a set deductible that is very high (for example until you have paid $6,000/year out of pocket – or more).

3. You have health insurance, but you still have to pay full price for one or more of the following services: at the dentist, for new glasses or contact lenses, for your prescription medicine, for chiropractic care.

4. You already have one of the tax-free Health Savings Accounts set up, along with the required catastrophic health insurance policy, and you are paying full price – either out of pocket, or out of your HSA, for your health care until (or unless) you meet the high deductible of the health insurance policy.

5. You have talked with your insurance agent, have gone over your budget, and you truly cannot find traditional insurance coverage that you can afford.

If you are in one of the situations described above, by all means add health and/or dental discount programs to the options you look into.

As you would when selecting any service company or professional, it is important to do your homework. Check the internet web sites to see which health and dental discount companies have providers in your area.

Look at the value of the programs … how much will you pay per month to be a member of a specific discounts program, and approximately what type of savings will you receive in the various care areas of care.

Find out if you have to sign a contract for a certain length of time on the discount program. See if the company offers any type of satisfaction guarantee.

Check into the company’s credentials … in other words, how they stand with the Better Business Bureau, Consumer Health Alliance, and American Association of Dental Plans. Check to see if the company is listed with Dun & Bradstreet to make sure they are financially fit.

If you have any question about whether a discount program will work for your situation, contact a representative from both the benefit discounts company and the traditional health insurance industry.

Expect true professionals in either segment of the health benefits industry to show a willingness to investigate ALL the options that are available to you at the present time. Insisting on this high level of service by your professionals will ensure that you receive the very best personalized package of health care protection possible.