Health Insurance premiums continue to rise.   Agents and Employers are running out of ways to offset annual double digit increases.   Traditional cost savings options (e.g. changing Insurance carriers, changing from PPO to HMO, modestly increasing deductibles and coinsurances)  have already been implemented.  Yet, Employers are still demanding more cost saving ideas from their Agents.

The result? Agents are left to sell “wrapping” to their employer clients.  “Wrapping” is the method where an Employer purchases a high deductible health plan, then directly (or indirectly through a Third Party administrator-TPA) reimburses his employees for any deductibles/coinsurances they incur.  In this strategy, also called “self insuring”, an employer hopes his/her combined “wrapping” costs plus lowered health insurance premiums will be less than the cost of a low deductible health plan.

Where wrapping is successful, Employers can see lower total costs without sacrificing top notch benefits.   Where wrapping doesn’t work well, unexpected claims costs and untimely cash demands will make employers yearn for a fully insured alternative. 

If you are an Insurance Agent, there is another unwanted consequence of “wrapping”:  “wrapping” is the quickest way to give yourself a pay cut!

According to Dick Chelten, Owner of Chelten Benefits Group, a wholesale supplier of marketing and supplemental worksite products to health Insurance Agents nationwide, “wrapping” transforms an Agent from a commission-based Insurance Sales Professional into a non-compensated TPA service representative.  At the same time, Wrapping converts a client from a Buyer of Insurance into a Buyer of Risk.

Chelten recommends Insurance Agents explore Medical “GAP” insurance, a great alternative to “wrapping”.  GAP Insurance products can effectively replace “wrap” plans with guaranteed premiums, strong commissions and historical “no increase” renewals.  See the attached comparison.  

WRAP vs GAP PLUS

As the 2011 renewal season approaches, Employers are now using GAP insurance and seeing $1,000 annual savings for every covered employee.  Historically great candidates for wrapping, with GAP insurance, Employers with 50 employees are saving $50,000!  Employers with 100 employees are saving $100,000!

Agents are averaging 12% commissions, Employers are controlling their annual health premium budgets, and Employees are eliminating virtually all deductibles and coinsurances. 

Why walk away from a fully commissionable solution to higher health insurance premiums?  Contact Chelten Benefits Group for a GAP proposal for your next 2011 renewal.  248-464-6544.  www.CheltenBenefitsGroup.com