Outside the Exchange

Yagents said:
400% poverty level is equivalent to about $45,000 for an individual and $90,000 for family. (or close to these numbers). I would bet that 60-70% of your existing book of individual business make over these dollar amounts.
Click to expand...

The income level really depends on the region. Yagents, you and I are both from Arizona, and I agree that 60-70% of our existing clients make more than that. But there are areas of the country, especially the midwest, the south, and rural areas where $88,000 is a high income for a family.

It's important for agents to know how the tax subsidy is calculated, then take a look at your book of business to see what damage might be done, and how you should position your business. Let me explain.

The tax subsidy is dependent upon 3 things
  1. the client's income level as a percentage of the Federal Poverty Level (FPL)
  2. the premium for the plan the client chooses
  3. whether the client has a family or is just single
The tax subsidy is on a sliding scale. It ends at 401% of FPL. I'm going to give some examples at various ages and income levels. For now, let's just assume it's a typical "medium" premium. I'm using Kaiser's subsidy calculator at Health Reform Subsidy Calculator - Kaiser Health Reform

MINIMUM COST THE CLIENT MUST PAY
At 400% of FPL the client must spend 9.50% of his/her income on premium and the government subsidizes the rest.
At 250% of FPL the client must spend 8.05% of his/her income on premium and the government subsidizes the rest.

In the examples below, you'll see the subsidy is lower at the younger ages, because the premium is lower.

400% of FPL, family of 4, client spends 9.50% of income on premium
45 year old, family of 4 - $5,344 subsidy
35 year old, family of 4 - $2,202 subsidy
25 year old, family of 4 - $ 238 subsidy

250% of FPL, family of 4, client spends 8.05% of income on premium
45 year old, family of 4 - $9,531 subsidy
35 year old, family of 4 - $6,389 subsidy
25 year old, family of 4 - $4,425 subsidy

400% of FPL, SINGLE, client spends 9.50% of income on premium
45 year old, single - $1,237 subsidy
35 year old, single - $ 0 subsidy
25 year old, single - $ 0 subsidy

250% of FPL, SINGLE client spends 8.05% of income on premium
45 year old, single - $3,293 subsidy
35 year old, single - $1,647 subsidy
25 year old, single - $1,075 subsidy

401% of FPL and above
at all ages, the client pays the full premium - no subsidy

By the way, here are the income levels for those percentages of FPL
  • 400% of FPL for a family of 4 - $88,000 in today's dollars or $93,500 in 2014 dollars
  • 400% of FPL for a single person - $45,000 approx..
  • 250% of FPL for a family of 4 - $58,500 approx.
  • 250% of FPL for a single person - $28,700 approx.
Another thing to remember is that the subsidy is also dependent on the premium for the plan the client chooses. If the client chooses a higher premium plan, or if the client lives in a high premium area, the subsidy will be greater. For these examples, I used a "medium" premium.

Also, remember, the way the law is written currently, the subsidy is only available through the Exchange. It's up in the air as to whether agents will be compensated FAIRLY through the Exchange. Right now, we're nothing but a small paragraph in the law that says we're included. In some conservative states, we may be paid fairly, in other states paid squat.

In addition to this premium subsidy, for lower-income households there can be a subsidy to help the person with cost-sharing (help them pay the deductible, co-insurance and copays).

So, look at your book of business and ask yourself some hard questions:
  • How old is your typical client?
  • How much money do they make?
  • Do they receive Employer paid benefits?
  • How likely are they to choose a plan in the Exchange?
  • If the Exchange doesn't pay agents fairly, how likely are they to dump the agent for that tax subsidy?
You can see from the examples above that you might want to market to higher income people. Not many 25 year olds make $88,000 for a family of 4, but most 45 year olds do. The older, financially established client may be your better client. A 25 year old might get a substantial subsidy because they make less money, then purchase a higher benefit plan to maximize that subsidy. Or else, they might take the "cost sharing" subsidy. 25 year olds tend to have less respect for a professional agent's advice (at least until they grow up and become the 35-45 year old!). You might want to bypass the young, lower-income clients, preferring instead the older, higher-income clients who value your professional services. These clients also typically look down on "exchanges" or other government run bureaucracies.

There are individuals who might forgo the subsidy, in favor of purchasing outside the exchange anyway. If they must spend 9.05% of their income on premium in order to get a subsidy, it might not be worth it to them. Perhaps a policy purchased outside the exchange would result in a lower net cost, or better quality service.

I recommend that you get to know the subsidy, evaluate your book of business, modify your marketing to add more clients in the areas that would benefit you most, and hope that we are compensated fairly inside the exchange anyway (or hope Congress liberates the subsidy from being only available to those who purchase inside the exchange as an unfair trade practice).
 
I can't sleep!
Mark what are you doing up?Working leads in Hawaii? Oh hell your not working, what am I thinking! I'm going back to Pandora......
 
It's 12:40 here, and I'm quitting for the day. At least here in AZ, the weather is going to be nearly 70 degrees tomorrow, but in your states it will be freezing. Sleep well, and Happy Thanksgiving!
 
0b1kanobee said:
COinsguy you and I are on the same page. It's like you are in my head or something lol which is a little wierd.
Click to expand...

lmao, the truth of it is most agents barely know the health products they've been pushing and will never make this model work moving forward. Since i've changed how I approach and present myself to clients i've Doubled my commission per client even if I completely removed the major med commission.

I love how may agents are dropping out of the biz! Seeya later buh bye. Go sell med supps or just give in and get a j.o.b. I'll gladly enroll people to get a stupid subsidy even help with the tax forms....while they have em out (which is where I found my last annuity doing a risk pool client last week) i'll be able to see everything I need to start making my next sale.
 
COInsguy said:
lmao, the truth of it is most agents barely know the health products they've been pushing and will never make this model work moving forward.
Click to expand...

I can't argue with that!


COInsguy said:
I love how may agents are dropping out of the biz! Seeya later buh bye. Go sell med supps or just give in and get a j.o.b. I'll gladly enroll people to get a stupid subsidy even help with the tax forms....while they have em out (which is where I found my last annuity doing a risk pool client last week) i'll be able to see everything I need to start making my next sale.
Click to expand...

Now I understand your point here, which is the health sale is the foot in the door, but who says you will be helping anyone with health ins at all? I think that will be taken over by the "Navigators", reminds me of the Disney movie from when I was a kid "Flight of the Navigator"...Raise ur hand if u remember that one!
 
I'm sure people will need help with health insurance for a while. Navigators have no incentive to help anyone. Have you tried going to the DMV lately? I tried to throw money at them to renew my license and they had every excuse in the book why they couldn't and I had supposedly everything I needed when I got there. If someone would of helped me with that it sure would of been nice because the people that work there are not helpful at all and the state keeps crying how they don't have any money. It's gonna be a mad house I tell ya!

 
Last edited by a moderator:
Ann H said:
The income level really depends on the region. Yagents, you and I are both from Arizona, and I agree that 60-70% of our existing clients make more than that. But there are areas of the country, especially the midwest, the south, and rural areas where $88,000 is a high income for a family.

It's important for agents to know how the tax subsidy is calculated, then take a look at your book of business to see what damage might be done, and how you should position your business. Let me explain.

The tax subsidy is dependent upon 3 things
  1. the client's income level as a percentage of the Federal Poverty Level (FPL)
  2. the premium for the plan the client chooses
  3. whether the client has a family or is just single
The tax subsidy is on a sliding scale. It ends at 401% of FPL. I'm going to give some examples at various ages and income levels. For now, let's just assume it's a typical "medium" premium. I'm using Kaiser's subsidy calculator at Health Reform Subsidy Calculator - Kaiser Health Reform

MINIMUM COST THE CLIENT MUST PAY
At 400% of FPL the client must spend 9.50% of his/her income on premium and the government subsidizes the rest.
At 250% of FPL the client must spend 8.05% of his/her income on premium and the government subsidizes the rest.

In the examples below, you'll see the subsidy is lower at the younger ages, because the premium is lower.

400% of FPL, family of 4, client spends 9.50% of income on premium
45 year old, family of 4 - $5,344 subsidy
35 year old, family of 4 - $2,202 subsidy
25 year old, family of 4 - $ 238 subsidy

250% of FPL, family of 4, client spends 8.05% of income on premium
45 year old, family of 4 - $9,531 subsidy
35 year old, family of 4 - $6,389 subsidy
25 year old, family of 4 - $4,425 subsidy

400% of FPL, SINGLE, client spends 9.50% of income on premium
45 year old, single - $1,237 subsidy
35 year old, single - $ 0 subsidy
25 year old, single - $ 0 subsidy

250% of FPL, SINGLE client spends 8.05% of income on premium
45 year old, single - $3,293 subsidy
35 year old, single - $1,647 subsidy
25 year old, single - $1,075 subsidy

401% of FPL and above
at all ages, the client pays the full premium - no subsidy

By the way, here are the income levels for those percentages of FPL
  • 400% of FPL for a family of 4 - $88,000 in today's dollars or $93,500 in 2014 dollars
  • 400% of FPL for a single person - $45,000 approx..
  • 250% of FPL for a family of 4 - $58,500 approx.
  • 250% of FPL for a single person - $28,700 approx.
Another thing to remember is that the subsidy is also dependent on the premium for the plan the client chooses. If the client chooses a higher premium plan, or if the client lives in a high premium area, the subsidy will be greater. For these examples, I used a "medium" premium.

Also, remember, the way the law is written currently, the subsidy is only available through the Exchange. It's up in the air as to whether agents will be compensated FAIRLY through the Exchange. Right now, we're nothing but a small paragraph in the law that says we're included. In some conservative states, we may be paid fairly, in other states paid squat.

In addition to this premium subsidy, for lower-income households there can be a subsidy to help the person with cost-sharing (help them pay the deductible, co-insurance and copays).

So, look at your book of business and ask yourself some hard questions:
  • How old is your typical client?
  • How much money do they make?
  • Do they receive Employer paid benefits?
  • How likely are they to choose a plan in the Exchange?
  • If the Exchange doesn't pay agents fairly, how likely are they to dump the agent for that tax subsidy?
You can see from the examples above that you might want to market to higher income people. Not many 25 year olds make $88,000 for a family of 4, but most 45 year olds do. The older, financially established client may be your better client. A 25 year old might get a substantial subsidy because they make less money, then purchase a higher benefit plan to maximize that subsidy. Or else, they might take the "cost sharing" subsidy. 25 year olds tend to have less respect for a professional agent's advice (at least until they grow up and become the 35-45 year old!). You might want to bypass the young, lower-income clients, preferring instead the older, higher-income clients who value your professional services. These clients also typically look down on "exchanges" or other government run bureaucracies.

There are individuals who might forgo the subsidy, in favor of purchasing outside the exchange anyway. If they must spend 9.05% of their income on premium in order to get a subsidy, it might not be worth it to them. Perhaps a policy purchased outside the exchange would result in a lower net cost, or better quality service.

I recommend that you get to know the subsidy, evaluate your book of business, modify your marketing to add more clients in the areas that would benefit you most, and hope that we are compensated fairly inside the exchange anyway (or hope Congress liberates the subsidy from being only available to those who purchase inside the exchange as an unfair trade practice).
Click to expand...


thank you for this post.. it was very helpful

Joe
 
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