The small-group health insurance market has been turned upside down over the past year and is about to get more interesting.
If you’re like most small employers, you renewed your health plan for Dec. 1, 2013, and pushed off the hard decisions for at least another year. A lot of things have happened in the market since the 2013 early renewal – which is going to make this year’s decision either incredibly difficult or incredibly easy.
Here are some of the options and challenges you will have as you explore your benefit package for 2014:
• Keep the plan you have
That’s right; President Obama announced that health insurance carriers can allow small employers to keep their noncompliant, existing coverage for policies that begin on or before Oct. 1, 2016.
That means some customers can stay on their plans into 2017. So, for those employers that renewed for Dec. 1, 2013, you will be given an “offer” for at least this renewal to keep your existing plan.
Most insurance carriers are allowing for plan changes, but you can’t switch carriers in this scenario.
Most carriers in the Lehigh Valley have chosen to make these offers, including Capital Blue Cross, Highmark Blue Shield and Aetna. The offers have begun with renewals this past month but have not looked that attractive vs. the Affordable Care Act-compliant policies.
And stay tuned if that will change for the huge Dec. 1, 2014, renewal date.
• Composite rating vs. age-banded rates
Since things aren’t confusing enough, the law requires age-banded rates to be used by health insurers for 2014 but composite rating is allowed to be reintroduced for 2015. This was a revision to the law late last year but not effective until 2015.
In an age-banded setting, the insurer will charge you for every member based on his or her individual age and smoking status, along with that of dependents. You will be billed this way all year based on the covered individuals at any given time.
The insurance carrier will provide you with a rate that appears to be a composite in your ACA-compliant renewal, but dig deeper and you will find the rate tables that will be used for your actual bill.
We have seen many employers just “deal with it” and base their employee contributions on the composite rate, then pay the individual billing on the back end. They have made this decision because their older workers are their key employees.
Composite rating is what small employers are used to from previous years and most currently have after their 2013 early renewal. The insurer comes up with the average rates based on your renewing population at that time, and you are billed those average rates all year.
As noted above, the composite rating “should” return in 2015 and also will be used for the “keep the plan you have” offering this year.
• Self funding for small groups
There are now plenty of products available to small-group customers that allow them to self-fund with minimal risk.
Insurance carriers such as Capital Blue Cross have developed these “level funded” products in which you know your maximum exposure going into the plan year. You are protected from any high claimants by a stop-loss policy that you buy.
All components of the product are packaged together into a level rate that you are billed monthly, just like small employers are used to paying.
Based on your employee demographics and health status, you may find this product very attractive while allowing you to have a product that will be rated on your individual group’s experience.
Since the age-banded community rated pool now exists, the risk element is taken away. If you have a bad year, you can just jump back into the community pool with no questions asked at renewal time.
Overall, employers must decide which method of rating gets the best deal for their company. Once this decision is made, there are many different plan design offerings that are gaining in popularity:
• Limited network plans – Carriers such as Aetna and Highmark have released products of this nature in the Lehigh Valley which provide cost savings through coordinated care.
• Health Savings Accounts – Best-priced plans in the market and will continue to be. Get creative with them.
• Private exchange – Very popular option that allows employees to build their own benefit package based off of an employer-defined contribution amount.