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Limited Medical Plans

There is no limit to the sales advantages these affordable plans can provide.

By Brian Robertson

With renewal season for health insurance completed, many health-insurance advisors will be taking a fresh look at their existing clients and realizing that they have to inform them of medical rate increases. This is one of the most difficult tasks advisors have to perform, whether they are advising a small-business owner or someone who represents a large corporation. While I don?t have a magical solution to this problem, I can offer some ideas to help you present yourself as a creative, alert and active broker.

First, back to renewals. In most regions of the country, brokers and their competitors in the group major-medical business request identical quotes from the three to five prevailing carriers in your marketplace. In other words, everyone is selling virtually the same product and program to their clients. But new clients are hard-earned and any edge you can find to differentiate yourself from your competitors will help you succeed. Therefore you may want to consider these strategies when discussing renewals with your client this year.

Approaching the employer with a plan he may not have seen before establishes your value as a broker.

Limited medical plans
One of these strategies is the use of limited medical plans, which have proven successful, particularly with employers who have part-time, hourly and nonbenefit-eligible employees.

LMPs are designed to meet day-to-day medical employee expenses for items such as wellness visits and prenatal check-ups. They are not meant to be substituted for major medical plans. Instead, they are aimed at employees who may not have been covered by health insurance. As such, these plans must be easy to access and use. If you point a client toward a plan that is not embraced by this group of employees, he will not renew the plan next year.

Your existing accounts
Your first step is to review your current book of business. Remember that eligibility requirements are your friend and will become the tool you use to increase the amount of business you generate. As you review your business, ask yourself these questions:

  1. How many nonbenefit-eligible employees work for my current clients?

  2. Would a higher eligibility standard create more nonbenefit-eligible employees?

Many employers will be looking for ways to mitigate the rate increase you will tell them about. Eligibility for the major medical plan is the primary tool you can use to accomplish that task. Creating a class of employees who are not eligible for a major medical plan will reduce the major medical ?spend? the employer is experiencing and provide the new class that will be eligible for an LMP.

Chances are that many of the employees in that group are not currently participating in the major medical program because of the program?s high cost, so do not concern yourself with the value proposition of offering an LMP. Realize instead that many employees are desperately searching for an affordable way to buy coverage to take care of the day-to-day medical expenses of their families.

That?s right?you are now offering your client two health-insurance programs, with valuable coverage for the appropriate class of employees. You will cover more lives in the group and will have creatively approached and met the needs of your client. Approaching the employer with a plan he may not have seen establishes your value as a broker.

Writing LMPs
Once you have examined your current clients and answered the questions above, you can focus on the number of lives to write on an LMP. Position yourself well by writing multiple-plan types on a single client, who will appreciate your solutions-based approach and your expertise as a broker. On average, 120 individuals covered on an LMP will generate over $10,000 of new annual revenue. Many brokers are experiencing a tighter marketplace and a decrease in the number of groups and lives they cover under major medical plans; so understanding LMPs can provide new revenue for you.

Brian Robertson is executive vice president of Fringe Benefit Group in Austin, Texas. His firm designs and administers limited benefit medical plans. Robertson can be reached at  


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