News
Now is the Time for Cost Saver!
By Bill Ashley, Allied National CEO
Our agents make their living off the backbone of the American economy - small employers. Unfortunately, many small employers are being severely challenged during this period of economic distress. It's predicted that in 2009 increases in medical premiums will climb significantly compared to the last few years. The excellent underwriting experience of 2006 and 2007 has eroded, risk pools are shrinking as employers drop coverage and carrier surpluses have fallen significantly because of the loss of value in the equities market.
It's times like this when small employers most need you, the professional insurance agent, to help them. In spite of the challenges, what remains true is that quality employers still need to recruit and retain quality employees. For many employers this includes offering employee benefits. It is a truth that today, and going forward, not all employers are able to afford comprehensive group insurance coverage for all employees. A $400 a month individual premium costs roughly $2.50 per wage hour. If an employee is making $10-12 an hour, that $2.50 an hour cost adds 20-25% to the cost of that employee. Furthermore, that employee is the last one to benefit from ever-rising deductibles to keep premiums in check. When was the last time you met a $12 (or even a $20) an hour employee who felt they had enough money to pay for prescriptions, a trip to the doctor's office or the kid's visit to the emergency room? "Joe Lunch Bucket" needs and appreciates first dollar benefits as a critical source for covering day-in and day-out living expenses.
Cost Saver is designed for that employee. With premiums ranging from $100 to $250 per month, Cost Saver is a highly affordable first dollar benefit medical package. To be clear, Cost Saver is not for everyone, but it is clearly for low and moderate wage workers who need, want and appreciate first dollar benefits. Like dental insurance, Cost Saver is designed to be used. Low copays and low deductibles make it easy for the employee, and their family, to get access to care. It is designed for "Joe Lunch Bucket" to feel there are actually benefits from the plan. Have you ever heard, "I contribute a lot toward my health insurance plan, but the plan stinks - I never get any benefits"?
Okay, so you're ready to sell Cost Saver. You see the value, but whom do you sell it to and how can it be used? Excellent prospects are nursing homes, beauty parlors, construction, restaurants, motels, convenience stores and gas stations, to name a few. Any industry that has a segment of the population that is low to moderate wage, where the employer is having troubles sponsoring a group plan, is a prospect. Remember, Cost Saver isn't for everyone, so in most groups don't plan on selling it to everyone, just those that will appreciate having a plan.
In fact, one excellent way to utilize Cost Saver is in a dual class plan where the low and moderate wage employees get Cost Saver and the higher wage employees have a comprehensive plan such as Cost Saver Plus Major Med (Cost Saver with a catastrophic rider) or an HSA plan. Indeed, a very attractive structure is an employer-sponsored base Cost Saver plan with a Cost Saver buy-up option for those in that class and a comprehensive plan for the other classes. This allows the employer to control their base plan costs while still providing a plan that is valued by their employees and gives the employee the ability to either buy-up for themselves or have a family premium that is affordable. You don't even have to write both classes with Allied. We'll take a carved out class. We can take groups from 2 to 500 lives and there is no medical underwriting (quoted rates are not subject to change due to health status). Cost Saver belongs in your portfolio as the right product for some portion of your clients.
Occasionally agents will say, "I would never sell a plan like that. It's not right, there's no catastrophic coverage." The key question is, would your clients and employees rather have a quality benefit plan with limited benefits, or no benefits at all? The feedback received from Cost Saver insured members proves this benefit plan is very much valued by those that have it and considered by most to be of more value to them than a $3000 HSA plan that "never pays any benefits".
Now is the time for Cost Saver! As an insurance professional, you owe it to your clients to show them alternatives in benefit plans that meet the needs of both the employer and the employees.
Cost Saver sales tip for the day - when you convert the $2.50 an hour comprehensive medical premium cost to $1.00 an hour with Cost Saver, why not have the employer put in $.25 to purchase Dental Design coverage or a short-term disability benefit? Think of the perceived value to the employee of $1.50 a wage hour that buys them first dollar medical benefits, term life insurance, dental and some short-term disability coverage. You will make your employer look like a hero while saving them a lot of money!