Obamacare: CUs Put Coverage on the Services Menu
When the tiny Saguache County Credit Union, plagued by losses for several years, was finally liquidated last spring, its 3,185 members faced not having another financial institution in the area to serve them.
Through a purchase and assumption agreement, the $150 million Aventa Credit Union took over the $17 million cooperative after a conservatorship that had been in place since July 2011 and the subsequent liquidation by the Colorado Division of Financial Services in March 2012.
Greg Mills, president/CEO of Aventa, said Saguache County CU was located in one of the lowest income counties in the state of Colorado. With its demise, residents here belonging to 6,500 households had no options to turn to.
It wasn’t on his radar at the time but as the countdown to the Patient Protection and Affordable Care Act implementation deadline approached, Mills started thinking about how Aventa could offer a health care service provider to the former members of Saguache as well as Aventa’s more than 20,000 members.
At a conference hosted by data system and technology solutions provider EPL Inc., in Birmingham, Ala., Mills listened to a pitch for the Credit Union Exchange Blueprint, a new private exchange for credit unions and members that provides online access to insurance carriers and a resource for the upcoming health care reform requirements.
“I was thinking, who would come to credit unions for this, and then I thought, well, they come to us for a lot of things such as investments, health savings accounts and IRAs because they see us a trusted financial institution,” Mills reasoned. He emphasized that the partnership with CUEB was not primarily motivated by the credit union’s takeover of Saguache.
So Aventa signed on with CUEB. The exchange will train and educate credit union personnel and members, provide all of the tools and technology, as well as supply marketing materials. Access via a custom branded Web portal allows around the clock member access and is tied to a call center for answers to questions on insurance and guidance on selecting the proper coverage.
Credit unions will also have entry to many health insurance products in the marketplace and the assistance to facilitate the transition on behalf of credit union members and employees.
Wayne Benson, president/CEO of EPL, said over the next three years, there will be a significant change in how people buy and gain access to insurance. Currently, 145 million Americans are provided health insurance through their employers, he pointed out. Roughly 185 million consumers are estimated to receive coverage through the acquisition of personal policies.
“With the transformation occurring, we believe that credit unions can replace employers in that role of being trusted advisers to help consumers with access to products and services,” Benson said.
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 implemented more than 100 arrangements.
The way it works after a credit union signs on to CUEB, is members click on a customized platform via their credit union’s website to choose the type of insurance coverage they prefer: health, life, car or homeowner. Once they find a carrier and coverage, they can either apply online or contact CUEB’s call center for assistance. After the member enrolls, they pay their coverage costs directly to the carrier. CUEB is licensed to offer insurance 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 licensed agreement approach, credit unions work directly with CUEB with a direct revenue share. With the non-licensed approach, meaning if the credit union or CUSO is not licensed to offer insurance, it can’t share in revenue. In this case, Benson said CUEB will pay the credit union a member access fee. Regardless of the approach, they get a new stream of revenue, he added.
EPL has been engaged with more than 100 credit unions and a number of them are discussing possible partnerships with CUEB, Benson said. He anticipates having 25 charter credit union members for the private exchange by the end of the year. Still, he acknowledged, there is some skepticism about the new entity.
“The feelings from credit union leaders are not unlike a lot of leaders across the country. We have a law that is being implemented that is still undefined. The greatest fear is the fear of the unknown,” Benson explained. “Some feel there’s a lack of clarity from the government–and that’s from both parties.”
Cathy Hulsey, vice president of human resources at EPL, said while her HR peers are mostly familiar with the new health reform law, some credit unions and people in general, view it as a foreign language.
“The law itself is five inches thick. But one thing I can assure is that it’s happening and those who choose to be an ostrich and bury their hand in the sand, the opportunities will pass them by,” Hulsey said. “We don’t see this as something fearful. I think employers, once they understand it, will embrace it.”
With the new CUEB alliance, Mills said this will be the first time that Aventa has offered a health insurance access option to its members. However, the credit union’s 70 employees have what he describes as a robust health plan that includes dental and other services with the cooperative picking up the entire tab for coverage. Part-time employees also get partial coverage and pay a difference. All of that could change if there’s an increase in plan costs. So far, Mills has had to cut back on part-time hours because of the impact of the PPACA.
“If health care rises to between 20% and 30%, which is what I’ve seen estimates of, I couldn’t handle that,” Mills said.
Aventa’s current carrier saw the impact of new health reform law about three years ago and started an avenue that led to an exchange option, Mills recalled. The credit union is currently working on a study looking at coverage costs and the multiple national, private and independent exchanges.
“So much of this is the unknown. We’re certainly not trying to get out there and muddy the water,” Mills said. “We want to help members with the fear of the unknown.”
Benson said this is exactly where credit unions can have an edge, particularly before the Oct. 1 date when the federal government will open up exchanges, to offer subsidies to the estimated 50 million uninsured Americans who can also start signing up for state-run health insurance.
“There are a lot of people out there that really want Obamacare to go away. It’s not going to occur,” Benson said. “We’re trying to help credit unions position themselves on the front end.”