Commission Reductions for ACA ?

[TXINSURANCE]

Advances are sometimes a necessity and can be used if balanced against a large book. I have a large staff, overhead, massive advertising, etc etc. Taking no advances would simply not be possible. People would literally lose their jobs.

Not everyone works out of their house and can have low overhead. You do have to be careful though.

 

[FLM2]

Those of you who have built a solid business on an As Earned basis should be commended, it isn't easy.

Everyone has a different business model and advances can work if you have high persistency and understand how to budget. Churning advances into lead purchases without an acceptable ROI is a sure way to fail.

I take advances when offered without interest charges or commission reductions, it's always worked OK for me but also understand that new agents who are living commission check to commission check can easily fall into an almost unrecoverable debit hole.

 

[KennyWest]

Here is what I have suggested to agents (and agencies for years)

1. Start out taking advances if necessary for cash flow.

2. Over time move from low % of business to as earned then increase over time

This way you build the earned commissions so they offset the advances. Of course not all carriers allow you to choose to be advanced or not on a weekly or what not basis though some do. If not could simply change one carrier to earned at some point to pick up the %.

A 9 month advance will take (have a spreadsheet I created on this a while back, would have to dig it up) with 15% lapse ratio over the life of the plans, will take approx 31 months to pay out to earned. A LOT OF variables can move this shorter or longer though; inconsistency in volume of business, rate increases, interest the carrier charges on outstanding balances, are chargebacks against new advances or added to the debit, etc., etc.

While a 15% lapse ratio may seem out of whack, it is not calculated by looking at the EOL of plans and reducing by 15%. It is of course more complicated and gradual than that.

 

[somarco]

15% lapse ratio may seem out of whack

Back in the "old" days that assumption might work.

Today policyholders (I refuse to call them clients) are free to move every year if they want.

FFM business is even more volatile.

Enroll America, Champions for Coverage and other "social work" entities have a list of those who registered with goodluck.gov and are calling to let them know they can change their plan every year.

And you thought your competition was the carrier.

 

[TXINSURANCE]

Back in the "old" days that assumption might work.

Today policyholders (I refuse to call them clients) are free to move every year if they want.

FFM business is even more volatile.

Enroll America, Champions for Coverage and other "social work" entities have a list of those who registered with goodluck.gov and are calling to let them know they can change their plan every year.

And you thought your competition was the carrier.

You would be surprised how many $20 premiums have lapsed. I had one for under $1 lapse. They must have hit the dollar menu at McDonald's that month...

Lol.

 

[somarco]

You would be surprised how many $20 premiums have lapsed. I had one for under $1 lapse. They must have hit the dollar menu at McDonald's that month...

Lol.

Probably not as surprised as you may think.

Years ago I enrolled a group of 150 or so that worked in a textile mill. Their contribution was $0.60 a week ($2.40 per month) for a health insurance plan. Granted, it wasn't much of a plan but it was real health insurance (by 1975 standards).

We just barely got 70% participation the carrier required to issue the policy. It was cancelled at renewal because participation had dropped below 50%.

 

[Ann H]

The lapse rate on those highly subsidized plans is amazing. Some carriers are not even doing collections for premiums that low to avoid lapses.

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Just goes to show you that we don't value something that's free or extremely low cost.

 

[somarco]

Some carriers are not even doing collections for premiums that low to avoid lapses.

Isn't that a form of rebating?

 

[TXINSURANCE]

Isn't that a form of rebating?

In most states rebating on small amounts is not applicable. Isn't all of ACA a form of rebating? Lol.

 

[starproducer]

im new to the under 65 health market. I have an establish book of business in the Medicare 65 + market and about 20 + agents in my downline. We have extremely high retention at 90% or better. If someone falls off we know about it and most times are the AOR switching them into a new plan. With med supps very seldom do these people fall off the books. We have very good relationships with our clients and than usually call us if there is an issue.

I guess im not understanding is why would you have a large slew of chargebacks if you are putting these people in the most appropriate plan at the most competitive cost? Plus if their situation changes and they need to switch why would they not call you as the AOR to switch them . I prefer to have clients vs just accounts. If you have a real client and have built that trust and relationship you will get referrals and cross selling opportunities. I have over 650 clients so i know from my own experience and have trained my agents to be the same