It is no secret that our country is experiencing one of the most severe economic downturns in recent history. One of the negative results hitting close to home is that many New Jersey residents have lost their employer-sponsored health insurance, typically due to one of the following reasons:

• they have lost their job due to company "downsizing";
• their employer has terminated the group medical plan due to costs; or
• their employer has gone out of business.

Countless New Jersey residents are now being presented with difficult decisions concerning what to do about health coverage for themselves and their families.

If a person is eligible for continuation of coverage under Federal COBRA or State Continuation, the resulting 102% of the employer-billed premium may not be affordable, forcing many people to roll-the-dice and go without coverage for the short-term, or worse yet, for even longer periods consisting of several months or much more.

The Vitale Reform Act, which became effective January 5, 2009, may be a solution for many in these tough times.

The Vitale Reform Act allows health insurance carriers to change their individual health insurance rating structure from 100% pure community-rated (same rate for all, regardless of age or gender) to age-banded rating.  This new age-banded rating structure now allows carriers to offer lower rates to younger members. While in general, older members’ rates are higher, the bill does site limitations on how much more an insurance carrier can charge.

Many insurance brokers are already promoting individual health insurance to their group clients for their terminated employees.  Unlike COBRA or State Continuation offerings, individual health plans can provide the former employees with multiple plan and carrier options, and do not require any continued interaction with the former employer.

Brokers are often asked by their group clients for assistance in the continuation notification process in the event of company downsizing/layoffs.  In addition, many brokers also may receive termination paperwork for employees directly from their group clients.  A savvy broker should now recognize these termination notices as opportunities to write individual health insurance and thereby salvage income lost from terminated group contracts.

Access to individual health insurance by no means relieves any employer from their obligation to advise terminated employees of their NJ State or Federal COBRA continuation rights.  However, promoting individual health insurance to terminated employees can be beneficial all around:

• Ex-employee(s) get access to additional plans with lower-cost options when otherwise they may not have been able to afford the continuation coverage costs.
• The employer is not saddled with administrative hassles/liabilities and potential claims costs (on an experience-rated group) if the ex-employee chooses individual coverage over group continuation.
• The broker, in offering individual products, has an opportunity to recover some lost commission income in a shrinking economy.

Brokers are also promoting individual health insurance to their group clients in the event that the employer must cancel their plan entirely.

We had a good example of this recently where one broker’s client had to aggressively adjust the employee contributions for their health plan, in order to afford the post-renewal premium.  As a result, many employees dropped off with no other coverage, causing the group plan to terminate due to falling below the mandatory 75% employee participation level.

Intelligently, with the employer’s endorsement, the broker scheduled employee meetings and helped enroll 28 people – many with families - in individual health plans.

Savoy Associates has made this process easier for you and your clients by introducing our consumer-facing, individual products website, www.eInsurancePeople.com.  The www.eInsurancePeople.com website has information regarding individual and family health insurance rates, benefit summaries, and online enrollment.

In an effort to make it easier for you to market these individual health insurance plans, you can post a link to www.eInsurancePeople.com on your website to which you can direct potential enrollees.

Savoy Associates can provide you with your own unique, company-specific Uniform Resource Locator (URL) which you can post on your website behind a "Get NJ Individual Health Insurance" image or the eInsurancePeople.com logo (click here to view).  Upon clicking this website link, the user is directed to the eInsurancePeople.com home page and your agency gets electronically recorded as the broker of record.

If you are interested in taking advantage of this unique marketing opportunity, or have any additional questions concerning individual products, please contact me, Colin Scheifler, Savoy Associates Account Executive, Individual Products via email ColinScheifler@savoyassociates.com or phone 973-377-2220 ext. 123.