The Financial Services Institute has launched a program to help advisors, staff and families get what FSI representatives say are affordable, high-quality health insurance plans, with one calling it a “game-changer” for advisors operating in the independent space.
Participants will have coverage via national PPO plans that comply with Affordable Care Act requirements and will be offered at three deductible levels. According to Chris Paulitz, FSI's head of strategic initiatives, the program is a culmination of several years of work and is particularly beneficial because it offers advisors the option to get individual plans. In January of last year, FSI announced it would offer health insurance plans for small groups via its CoveredAdvisor2.0 program; Paulitz called that initiative “phase one” in getting affordable health plans for FSI members.
Paulitz said many advisors who sought out a small group plan with two or three staff members could face skyrocketing costs, as many of them currently obtain plans through ACA online marketplaces.
“(Advisors are) relatively more healthy than the general public and more wealthy than the general public, so the typical advisor is not getting a subsidy from the ACA,” he said. “They’re both the lowest utilizers of an ACA plan and they’re paying the most.”
Paulitz called health care the “single biggest non-business related hurdle” advisors face when becoming, or remaining, independent. He said thousands of advisors told FSI their monthly premiums exceeded their mortgage. Last year’s program was the group’s first effort to offer health insurance. The group began offering group disability and life insurance in 2014. Under the FSI’s CoveredAdvisor group, 10,000 advisors were covered in the past seven years (FSI includes more than 80 independent financial services firm members with their more than 130,000 affiliated financial advisors).
Paulitz found advisors would run into a number of obstacles when trying to get group insurance plans, including employing licensed staff that would often have insurance through a spouse’s plan.
Even with a group plan, costs could balloon precipitously if one of the members had health issues. Access to individualized plans removes those challenges for advisors, Paulitz said.
“You’ll see 30 to 50% savings; in a state like New York, you’re seeing 70 to 80% savings,” he said. “We think this is the future of health care for advisors and it’s exciting to see it taking off.”
Paulitz expects the insurance plans to be a boon for recruiting and entrepreneurship among independent firms. While an independent advisor with a thriving business would be unlikely to give up their model, for advisors doing "adequate" business, with a young family, health care premiums may be their greatest monthly expenditure.
“Now that pressure is greatly reduced,” he said. “If you were paying $2,000 a month, maybe you’re only paying $1,000 per month or a little less or a little bit more,” Paulitz said. “You’ll say, ‘This I can actually manage; I’m going to keep at this even when I have a young family because now it’s manageable.’”
According to the FSI, advisors (and support staff) will qualify for plans provided they have a federal tax ID, are currently an FSI member and have an active CRD number, and interested advisors can visit a dedicated website for the program to learn what their rates would be. According to Paulitz, the initiative was off to a quick start. With a first effective date of March 1, he said they’d hoped to have 250 individuals enrolled by the start of July (anticipating a slow start because most people renew their insurance at the start of the year); in the first four weeks alone, the institute was already approaching 450 enrollees.
Paulitz hoped the new plans would have a significant impact, including encouraging nonregistered staff to see the opportunity for affordable insurance as an incentive to further their career.
“As we look back on this maybe five years from now, I think we’re going to sit back and it was about a lot more than health care,” he said. “This really fundamentally changed the industry in good ways and impactful ways.”