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Health Insurance tips for Employers

Small vs. large employers​

Health insurance laws apply differently to small and large employers. So, it is important to know the size of your employer.

  • Small employers with fewer than 50 employees do not have to cover employees or their dependents.
  • Large employers with at least 50 full-time equivalent employees face a tax penalty if any full-time employee receives financial help to buy health insurance through an exchange such as HealthCare.gov.
  • Employers with fewer than 25 full-time equivalent employees may be eligible for tax credits to offset up to 50 percent of their premium costs.
  • Self-employed people with no employees can buy an individual health plan through healthcare.gov and may qualify for a subsidy to help with costs

What Type of plan is right for your business?

Group Health Insurance falls into a couple of different categories you have the most common which is the traditional Fully-insured and we have Self-Insured or Partially Self-Insured.

With Both options coverage is based on many factors, Claim History, Age of Employees, number of employees, CO-Pays and deductibles.

The Biggest difference is that with the fully-insured you pay a higher administration costs and the carriers make a profit.  In many cases you are put into a risk pool that includes many of the other Business in your area.

With The Self-insured or the partially-self insured the administration cost are lower and there are no profits for the carrier, there is more work to set-up one of these plan but in a matter of a few years the cost could be substantially lower. This option works best for companies with 25 or more Employees.

How does Group Insurance Work

Group medical coverage refers to a single policy issued to a group (typically a business with employees, although there are other kinds of groups that can get coverage) that covers all eligible employees and sometimes their dependents. Individual medical coverage, on the other hand, is a single policy issued to a single person or family.

The rules are quite different for group coverage versus individual coverage, in large part because the insurer’s risk is calculated differently. With individual coverage, the insurer has historically based its premium rates (or denied coverage) on the detailed medical history of the person or family. (The Affordable Care Act will bring important changes to the individual market, including eliminating the ability of insurers to deny coverage based on preexisting conditions.)

With groups such as small businesses, the insurer determines a premium price based on risk factors balanced over the entire group, using general information on members of the group, such as age or gender. Insurers are required by law to offer coverage to small groups.

In the last few years we have see huge increases to the cost of health insurance, many companies have been trying to find ways to keep their premium low the most common way is to higher the maximum of out pocket (MOOP) per family and increasing Co-Pays and deductibles. With Fully-Insured plans premiums are set by the carrier based on number of employees, age, and claim history. If you have more than 25 employees you might benefit from a partial-self funded plan.

“THE PREMIUM FOR WORKERS AND EMPLOYERS HAS INCREASED MORE THAN 80% IN THE PAST TEN YEARS.”

- Seif

“SELF-FUNDING ALLOWS FOR GREATER COST CONTAINMENT OPPORTUNITIES. THIS GIVES ORGANIZATIONS CUSTOMIZED PLAN COVERAGE FEATURING THE BEST OPTIONS TO MEET THE SPECIFIC NEEDS OF THEIR WORKFORCE.”

- Seif

Benefits of Partially-Self funded Health Plans

The ability to lower fixed insurance costs is but one of the reasons to sponsor healthcare benefits on a self-funded basis. Avoidance of state-mandated benefits and premium taxes as well as the ability to better manage variable claim costs are other reasons, with the latter having the biggest impact on cost. As fully insured options include more restrictions, self-funded health and medical plans have become a more viable alternative for many employers.

ERISA MAKES SELF-FUNDING MORE ATTRACTIVE

Self-funding isn’t for everyone, but federal law gives employers the latitude to make that decision for themselves. In 1974, the Employee Retirement Income Security Act (ERISA) became law, preempting state control over self- funded plans, allowing for the avoidance of otherwise mandated benefits and taxes.
A self-funded plan is better able to meet an employer’s unique health funding needs. For example, plan design can ensure uniform benefits for all workers in companies with locations in multiple states.

PPACA REDUCING CUSTOMIZATION IN FULLY INSURED PLANS

Mandates included in the Patient Protection and Affordable Care Act also restrict custom design that might have been previously possible in fully insured health plan design. While these constraints affect most employers, they have a particularly strong impact on small businesses. Previously, insurance companies worked with smaller companies to offer at least a minimum level of customization. Employers of any size also may have benefited from having favorable claims experience. Now, PPACA has wiped away many of these advantages, leaving self-funded plans as the alternative for more customized medical plan design.

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