The Rundown

• Some credit unions share fears about new health carelaw.
• Private exchange targets CUs for more coverageaccess.
• Colorado CU sees CUSO alliance as an opportunity tocompete.

When the tiny Saguache County Credit Union, plagued by lossesfor several years, was finally liquidated last spring, its 3,185members faced not having another financial institution in the areato serve them.

Through a purchase and assumption agreement, the $150 millionAventa Credit Union took over the $17 million cooperative aftera conservatorship that had been in place since July 2011 and thesubsequent liquidation by the Colorado Division of FinancialServices in March 2012.

Greg Mills, president/CEO of Aventa, said Saguache County CU was located in one of the lowest-incomecounties in the state of Colorado. With its demise, residents herebelonging to 6,500 households had no options to turn to.

It wasn't on his radar at the time but as the countdown to thePatient Protection and Affordable Care Act implementationdeadline approached, Mills started thinking about how Aventa couldoffer a health care service provider to the former members ofSaguache as well as Aventa's more than 20,000 members.

At a conference hosted by data system and technology solutionsprovider EPL Inc., in Birmingham, Ala., Mills listened to a pitchfor the Credit Union Exchange Blueprint, a new private exchange forcredit unions and members that provides online access to insurancecarriers and a resource for the upcoming health care reformrequirements.

“I was thinking, who would come to credit unions for this, andthen I thought, well, they come to us for a lot of things such asinvestments, health savings accounts and IRAs because they see us atrusted financial institution,” Mills reasoned. He emphasized thatthe partnership with CUEB was not primarily motivated by the creditunion's takeover of Saguache.

So Aventa signed on with CUEB. The exchange will train andeducate credit union personnel and members, provide all of thetools and technology, as well as supply marketing materials. Accessvia a custom branded Web portal allows around the clock memberaccess and is tied to a call center for answers to questions oninsurance and guidance on selecting the proper coverage.

Credit unions will also have entry to many health insuranceproducts in the marketplace and the assistance to facilitate thetransition on behalf of credit union members and employees.

Wayne Benson, president/CEO of EPL, said over the next threeyears, there will be a significant change in how people buy andgain access to insurance. Currently, 145 million Americans areprovided health insurance through their employers, he pointed out.Roughly 185 million consumers are estimated to receive coveragethrough the acquisition of personal policies.

“With the transformation occurring, we believe that creditunions can replace employers in that role of being trusted advisersto help consumers with access to products and services,” Bensonsaid.

CUEB will work with Health Partners America, a Birmingham,Ala.-based company that provides insurance brokers with the tools,training and technology to help businesses deliver health coverage.The firm said its private health insurance exchange has implementedmore than 100 arrangements.

The way it works after a credit union signs on to CUEB, ismembers click on a customized platform via their credit union'swebsite to choose the type of insurance coverage they prefer:health, life, car or homeowner. Once they find a carrier andcoverage, they can either apply online or contact CUEB's callcenter for assistance. After the member enrolls, they pay theircoverage costs directly to the carrier. CUEB is licensed to offerinsurance in all 50 states and the District of Columbia.

Regarding the revenue split between CUEB and the credit union,Benson said there are two approaches. Through the licensedagreement approach, credit unions work directly with CUEB with adirect revenue share. With the non-licensed approach, meaning ifthe credit union or CUSO is not licensed to offer insurance, itcan't share in revenue. In this case, Benson said CUEB will pay thecredit union a member access fee. Regardless of the approach, theyget a new stream of revenue, he added.

EPL has been engaged with more than 100 credit unions and anumber of them are discussing possible partnerships with CUEB,Benson said. He anticipates having 25 charter credit union membersfor the private exchange by the end of the year. Still, heacknowledged, there is some skepticism about the new entity.

“The feelings from credit union leaders are not unlike a lot ofleaders across the country. We have a law that is being implementedthat is still undefined. The greatest fear is the fear of theunknown,” Benson explained. “Some feel there's a lack of clarityfrom the government–and that's from both parties.”

Cathy Hulsey, vice president of human resources at EPL, saidwhile her HR peers are mostly familiar with the new health reformlaw, some credit unions and people in general, view it as a foreignlanguage.

“The law itself is five inches thick. But one thing I can assureis that it's happening and those who choose to be an ostrich andbury their hand in the sand, the opportunities will pass them by,”Hulsey said. “We don't see this as something fearful. I thinkemployers, once they understand it, will embrace it.”

With the new CUEB alliance, Mills said this will be the firsttime that Aventa has offered a health insurance access option toits members. However, the credit union's 70 employees have what hedescribes as a robust health plan that includes dental and otherservices with the cooperative picking up the entire tab forcoverage. Part-time employees also get partial coverage and pay adifference. All of that could change if there's an increase in plancosts. So far, Mills has had to cut back on part-time hours becauseof the impact of the PPACA.

“If health care rises to between 20% and 30%, which is what I'veseen estimates of, I couldn't handle that,” Mills said.

Aventa's current carrier saw the impact of new health reform lawabout three years ago and started an avenue that led to an exchangeoption, Mills recalled. The credit union is currently working on astudy looking at coverage costs and the multiple national, private and independent exchanges.

“So much of this is the unknown. We're certainly not trying toget out there and muddy the water,” Mills said. “We want to helpmembers with the fear of the unknown.”

Benson said this is exactly where credit unions can have anedge, particularly before the Oct. 1 date when the federalgovernment will open up exchanges, to offer subsidies to theestimated 50 million uninsured Americans who can also start signing up for state-runhealth insurance.

“There are a lot of people out there that really want Obamacareto go away. It's not going to occur,” Benson said. “We're trying tohelp credit unions position themselves on the front end.”