The nation’s income tax preparers have been thrust into the front line of the health insurance enrollment battlefield whether they wish to be there or not.
Under new tax rules ushered in through implementation of the Affordable Care Act, these accountants are now charged with the responsibility of explaining the health insurance requirement, the government’s expectation of budget allocated for health insurance, the consequences of not having health insurance, how the subsidy works, what happens with out-of-pocket medical bills, what happens when Obamacare doesn’t work as planned, how to handle employer medical reimbursements, and the list goes on. It is a huge responsibility and significant burden on income tax preparers. Taxpayer clients are generally unaware of these new compliance burdens on the tax preparer and simply wish to see the same tax preparation service provided at nearly the same price as in prior years.
Meanwhile, health insurance agents are no longer compensated for providing this service to consumers and small businesses. The commissions that were formerly built into the premium have been reduced or removed for a majority of the nation’s most popular insurance products. Insurance carriers have taken a deliberate stance that they no longer wish to solicit business through insurance agents.
So the problem is that these tax accountants are not paid for all of this extra work dealing with health insurance issues. Their client contract remains the same – to prepare the tax return. Neither the government nor the insurance companies – both of whom benefit from the accountants’ efforts – bother to pay the accountants anything for their time.
In addition to individual health insurance issues, many tax preparers uncover additional small business health insurance-related problems for small businesses like potentially huge excise tax penalties. Yet they simply don’t have the time, resources of financial motivation to delve into these issues in order to help clients cope with health care reform.
This caused me to question why tax preparers aren’t receiving any portion of the huge revenue stream currently being generated for health insurance enrollment. There is no simple answer. There are many contributing factors including health insurance company transitions, structure of the navigator system, insurance licensing rules, removal of insurance agent commissions, fear of unintended consequences and a lack of resources.
But is it possible to reallocate some of this insurance enrollment revenue to tax preparers? I’ve had a series of meetings and conversations recently on this issue with marketing executives in the health insurance and employee benefits field. These discussion have evolved into an early-stage business plan. The discussion is ongoing and the Freedom Benefits insurance marketing associates I work with are generally optimistic about the idea. It may be possible to compensate tax preparers for their role as referrors in the insurance enrollment process. It will not be easy and the details are not visible yet. As I see it, this strategy would require a fully accountable multi-carrier referral tracking system for unlicensed referrers – something that is not does not exist in the health insurance marketplace now. My general belief about technology is that is will naturally evolve when there is a market demand.
Would tax preparers be interested? Based on initial response to this single blog post, it seems clear that this is a topic of interest to tax preparers. The next logical step is to gauge tax preparers willingness to become more involved in the health insurance enrollment process. I’m not proposing taking this step on my own but I would support insurance companies that choose this path. I’ll likely be posting more about this as soon as I hear more feedback.