Hundreds of independent financial advisers who signed up for a new trade group health insurance program this year will be stuck looking for new insurers in 2022.
About 900 advisors out of more than 30,000 members of the Financial Services Institute have purchased the health insurance that the organization mentioned would provide them with coverage for “themselves, their licensed personnel, and their families at a fraction of the cost of open-market plans.” The Washington, DC-based advocacy group for independent brokers announced this week that they will have to come up with new plans next year instead.
“While we have exercised due diligence, including retaining a highly respected international law firm to review the plan documents, and have received specific assurances from the health program operator, we now have reason to believe the program is not fully compliant with all regulatory requirements,” CEO Dale Brown said in an email dispatch Oct. 26. “As a result, we have terminated our relationship with the health program carrier for cause and no longer endorse or support the program.”
Brown said the organization’s focus now is on helping enrollees maintain their health coverage in 2022, and he promised to send an update as soon as it becomes available. Advisors who joined the program after FSI launched in April will receive one year of free membership in the organization.
“In the meantime, we encourage you to explore other coverage options that may be available to you,” Brown added. “We do not approve of continued participation in the 2021 program beyond this calendar year.”
ISP representatives declined further comment.
The organization had pledged that advisers, staff and their families could obtain cover at savings of up to 50% off open market rates. When the program began, FSI described the insurance as national Preferred Provider Organization (PPO) plans available in all 50 states and compliant with the Affordable Care Act, also known as Obamacare. The program offered three-level deductible plans of $2,500, $5,000, and $10,000 with maximum payouts at the same rates.
“The beauty of the independent model is the freedom it gives advisors to open their own business and run it as they see fit,” Chris Paulitz, FSI’s head of strategic initiatives, said in a statement to the company. ‘era. “Yet health care premiums higher than their mortgages can limit their ability to reach their full potential. Our health insurance plans level the playing field for financial advisors and they no longer have to shoulder the burden alone.
Scott Spiker, FSI board member and president of military and veteran-focused First Command Financial Services, released another statement this spring describing the plans as “exactly what our industry has long needed. “.
“Advisors should take a serious look at this plan and change now,” Spiker said. “I urge my advisers to do so and I urge all advisers to do the same.”
It’s not immediately clear what aspects of the plans failed to meet Medicare guidelines under the ACA, ERISA and other relevant laws. According to Carolyn McClanahan, a financial advisor, physician and policy expert, the FSI program was a self-insured group plan that was subject to the process in which insurers decided the price and level of coverage based on what they knew about the participant’s state of health.
“Self-funded schemes can get away with a lot. They had medical underwriting and they could drop people — so it wasn’t good insurance to start with,” McClanahan, the founder of Jacksonville, Florida-based Life Planning Partners, said in an email. “Something that sounds too good to be true probably is.”