How the ACA changes your group insurance
- Small Business Health Options Plan (SHOP); What is it?
- Am I a small or large employer?
- Should I keep or drop my group coverage?
- Do group policies still make sense?
- Why are my rates going up?
- How do brokers and agents get paid?
- Can one broker get better rates than another?
The SHOP marketplace is probably NOT the best place for you to buy your group health insurance. While the SHOP has been widely touted as a great way for small business owners to save a lot of money on their health insurance, most companies will be better off to continue buying directly from an insurance company or private health exchange with the help of a good broker or agent. The main reasons are the limitations within the SHOP, fewer plan designs to choose from, limited flexibility to offer multiple plan options and administration provided by the Marketplace itself.
The only companies who should consider buying directly through SHOP are those who will qualify for premium tax credits. These are generally smaller companies who are paying low average wages. Those same companies should,consider cancelling their group policy because employees are likely to receive substantial subsidies directly from the marketplace, making their insurance less expensive. Back to top
Many business owners think of their business as a small company. Whether they have 10,employees or 210, it seems they know someone larger. The ACA defines a small business as one with with 50 or more "Full Time Equilivents/Employees" (or FTEs),which can be a very difficult target to measure. Groups with 51-100 employees dodged a HUGE bullet when Congress decided expand the "small group" rules to those with up to 100 employees. This is now a state by state decision and Tennessee has chosen to protect these larger companies from the high cost, highly regulated ACA plans.
Small companies had to begin complying with all the new rules and mandates beginning on January 1, 2014. New groups have to buy the ACA plans with all the mandates while those with current group coverage have been able to keep a "grandmothered" plan if it made sense for their emploees. About 50% of our small groups are still on the older, less expensive "grandmothered' plans but will be forced to move to the higher cost ACA plans in 2016. Some companies, such as those with older or less healthy employees, may,see lower costs because,insurance companies can no longer give large rate-ups based on medical or industry risk.
Large companies will see moderate changes going into 2016, but none of the expensive mandates (guarantee issue, community rating, EHBs) that the smaller companies will be required to comply with. Of course, all fully insured groups will have to pay the higher taxes and fees required to pay for all the subsidies and tax credits.,Back to top
This question has and will be asked many times over as companies see the effects of PPACA and the new rules/plans and rates. For most employers, the answer,may be no. It's better to continue offering coverage for the same reasons you do today:,Health insurance is one of the most important benefits employees receive from their employers, and they trust you to do the homework to identify good coverage,from bad. There are tax advantages for everyone, and it keeps your employees from having to try and figure out their best options on their own.
Some business owners,will conclude,they are doing their employees a disservice by,providing,health insurance. Because of the way the law is written, employees are not eligible to receive premium or benefit credits and subsidies they are offered "affordable coverage. However, what the government deems affordable and what your employees see as affordable may be very different. The biggest challenge,is paying for dependent coverage. Most companies pay all or part of the cost for insuring an employee but not for spouses or children, which can be very expensive. A lower income employee may qualify for substantial premium subsidies through the Marketplace if insurance is not offered. If,group coverage is available, they are not,eligible for a,subsidy and may,will go uninsured because the group policy is unaffordable.,Back to top
There are many reasons a company provides medical, dental, disability and other employee benefits for their staff. Despite the tremendous cost, it is very important to know that the employees who make your company successful will be taken care of in a time of need. No one wants to get sick or hurt, nor,do they want to be burdened by the financial hardship that follows if there is not good insurance to help pay the bills. Additionally, a good benefits package helps recruiting, retention and increases the overall satisfaction of a job or career. It's easy to see the savings a company can realize by cutting out the benefits package, but at what cost? Who can't you hire because they recognize the slightly higher salary you are offering does not compare with a similar job with benefits?
This is a complicated answer with many variables that change from company to company, state to state, and carrier to carrier. It's also important to note that some companies and individuals will see their costs decrease for the same reasons. In short, the main drivers in costs will be the elimination of pre-existing conditions, the inability to rate groups based on their medical status, limiting rating differentials from the youngest to oldest with a 1 to 3 ratio, and the new fees and taxes needed to pay the subsidies and tax credits that will make coverage affordable for those with lower incomes.,For a full review of each of the cost drivers click here.,Back to top
Your Agent or Broker can be one of the best resources you have to help your HR Department manage the employee benefit plans at no additional cost to the company. Many brokers consider themselves part of a company's staff and are there to help the employees, manage large claims, fix enrollment issues and make sure the company has the best plans at the best pricing. The insurance companies pay commissions or fees to the "agent of record" to provide these services. Commissions are built into the premiums and are generally not negotiable if there are less than 100 to 150 enrolled employees, so playing one agent against another won't reduce commissions. But different agents may have unique ideas to reduce costs through plan design and creative plan design strategies.Back to top
Another misconception of the insurance industry is that getting prices from a lot of agents will save you money. Sorry, that's not how it works. It only creates a lot of work for the HR department and frustration between agents and the carriers. Buying insurance is not like buying a car where agents can mark up the prices (or down) because the agents,have no control over,pricing. The only way pricing is different is if the census or other specific information is not the same between quoting agents. The best recommendation here is to choose two (three at the most) agents and give them the same specific information (census, employer contribution, preferred plan designs, large claimants, etc.) and let them show you what they think your best options are.Back to top
Have questions about employee benefits and group insurance? Want a second opinion? We have help business owners from every industry build better plans and save money, give us a call. 615-724-1699
Why are health insurance rates going up?
How do premium subsidies help small business owners?
Changes to health policies under ACA