People are living longer today, and many want to retire earlier than the traditional age of 65. That means that many of America’s 79 million baby boomers could spend up to 40 more years in retirement. That presents a significant sales opportunity for group retiree health insurance. The Hartford recently polled producers about their greatest barriers to tapping the group retiree market. The study revealed several myths that agents hold regarding that market; you can use these myths to bolster your confidence in this fairly new market and to bust the same myths that employers may buy into.
Myth: “Few employers can afford it.”
Reality: Higher rates are common for plans where the retiree population is bundled in with the same group as active employees. While including Medicare-eligible retirees (those 65 and over) may help subsidize pre-65 retirees, this practice may blur the actual costs and claims of these diverse populations. Employers might consider covering retirees under a separate plan. By offering a fully insured retiree medical program, the risk is shifted away from the employer along with the administrative hassle.
Myth: “Employers do not want to offer medical coverage to retirees.”
Reality: A majority of companies offering retiree medical benefits have no plans to eliminate them in the next five years, according to a June 2006 survey by Watson Wyatt Worldwide. Only 6 percent of employers plan to end the benefit for current retirees who are 65 years old or older, and 14 percent said they’ll stop it for future retirees in that age bracket.
True, employers are struggling with rising retiree health care costs — which were up 10 percent in 2005 from 2004, according to a Kaiser-Hewitt study — and maintaining a healthy bottom line. They also want to honor their commitment to providing retirees with medical insurance.
To maintain this balance, there are a growing number of companies that have turned to plans that are fully or partially funded by the retiree, known as voluntary benefits. Sixty-four percent of employers in the Watson Wyatt study said they plan to increase contributions for their current retirees, while 65 percent reported future retirees will pay more.
Myth: “Helping the buyer understand how this product works is difficult.”
Reality: Retirees — in fact most Americans in general — are familiar with health care insurance. Eighty-four percent of Americans completely or mostly understand health insurance, according to a 2005 study by The Hartford.
Myth: “The requirement for group size is too large.”
Reality: Not necessarily true. Carriers have stepped up to the challenge of the ever-growing pool of retirees. Take a look, and you’ll find insurers whose group retiree health products are designed to be adaptable to your clients’ retiree group size and participation requirements, in some cases going down to group sizes of just two retirees.
Jeff Amell is assistant vice president of group retiree health products at The Hartford Financial Services Group Inc. He can be reached at Jeffrey.Amell@ hartfordlife.com and 860-843-4195. For more information, visit www.groupretireehealth.com.