4% for IFP... is It Enough

[AllenChicago]

Agreed. Blue Shield tells us most families they contacted valued their coverage and wanted to increase beyond basic bronze and silver plans. Anthem says their market research says most families will shy away from gold and platinum. Both use said research to justify their commission schedules.

Anthem's (and every other big health insurer's) market research also told them that they are going to be:
1. Selling policies that Cost 20%-80% more than they do today.
2. Adding many more customers to their block of IFP business.
3. Enjoying benefits of having a greater percentage of their customers saddled with higher standard deductibles...and even higher out-of-network deductibles, due to the downsizing of their provider networks.
4. Comfortable in the knowledge that the U.S. Government has pledged $10 Billion dollars to offset medical claim costs that go above a certain threshold.
5. Will be able to keep 20% of a MUCH LARGER revenue pie.

These items are on the other side of the coin.. The side that health insurers don't talk about when explaining how they arrived at our "generous" commission schedules. If anything, there should be a commission increase from 2013 levels. You can bet your sweet turnip that the people at the top will earn RECORD incomes and pay giant dividends to stockholders next year...just like they did in 2012...after our big 2011 commission cuts.
-ac

 

[houcoogster]

Can you tell us the carrier?
So let me make sure I got this correctly.
In order to make just $40,000 a year you need to bring in $1,000,000 in annual premium? That's insane!

Indeed you have to be careful with a carrier's representation of how your commission will end up being the same as it was before. Today, I received a new commission schedule from a carrier that is going to 4% level (down from 10% street rate). It's 2% for bronze plan, and 4% for all other tiers. Their example was that a male age 29 with a current premium of $79 nets the agent $7.90 at 10%, and that same male age 29 with an ACA premium of $198.95 nets the agent $7.96 at 4%. But, the category receiving the greatest rate spikes are young males. Run that same scenario for a female age 45, or a male age 55, and you can see quite a difference.

 

[Quotebroker]

Can you tell us the carrier?
So let me make sure I got this correctly.
In order to make just $40,000 a year you need to bring in $1,000,000 in annual premium? That's insane!

Health Net AZ and Blue Shield CA both paying 4% level.

 

[FLM2]

I take a longer term view on compensation than many of you but $12 PMPM renewal commissions, if it includes children, would make me really happy.

One of the benefits of ACA is that switching companies and terminations are going to be way down-I have very high persistency anyway (85%+) but I would think that having 1,000 total members isn't going to be tough for most experienced agents, particularly when your existing book is going to be protected (by most carriers) during the transition.

1,000 members x $12 x 12= $144,000 in renewal income

500 members is $72,000

The value of each enrollment during this open enrollment is probably 3-4X the first year compensation, that's the way I look at my Medicare book and that is the same way I'm looking at this opportunity.

 

[Quotebroker]

I take a longer term view on compensation than many of you but $12 PMPM renewal commissions, if it includes children, would make me really happy.

One of the benefits of ACA is that switching companies and terminations are going to be way down-I have very high persistency anyway (85%+) but I would think that having 1,000 total members isn't going to be tough for most experienced agents, particularly when your existing book is going to be protected (by most carriers) during the transition.

1,000 members x $12 x 12= $144,000 in renewal income

500 members is $72,000

The value of each enrollment during this open enrollment is probably 3-4X the first year compensation, that's the way I look at my Medicare book and that is the same way I'm looking at this opportunity.

I agree the persistency is going to probably improve, but the flat dollar amount ensures no raise in comp with inevitable raise in premium. Also, with that increased persistency comes fewer clients moving from old, lower renewal comp rates to new higher first year rates.

I can see how this is beneficial for those clients that were previously lost to other agents though.