Group Health Insurance
Insurance companies in both Indiana and the rest of country have always enforced participation requirements. Small groups (under 50 employees) and “Large” groups (50+ employees) have had to have at least 50% of the full time employees elect coverage. Insurance companies do vary on employee participation.
Group Health Insurance for Small Groups
Fully insured small group carriers have not altered from the 50% rule. There is a provision in the ACA, which allows for companies to enroll in small group health insurance without meeting participation. This is only allowed for Jan.1st effective date.
Fully insured large group carriers do have different participation levels. Anthem requires the 50% of the employee to be eligible. Unitedhealthcare does not have a participation requirement in large group.
How can 2 companies have different participation requirements?
Broker assumption:
If a company in Indiana is considered large group, this means they go through underwriting for the group health plan. Anthem may be concerned with a level of adverse selection. Unitedhealthcare may feel that since they are underwriting the group, they are able to assess the amount of risk they are taking on. That assessment can lead to an increase in the health premium, which is an extremely effective tool for an insurance company.
Employee Class Carve out:
An effective technique to meeting participation, is carving out a class of employees for the health insurance plan. Example, a company with 40 employees and benefits are only being offered to management. Companies that have low income employees, have had a difficult time meeting participation because the low income employees can qualify for Medicaid benefits. This was true prior to the Medicaid expansion, now it is a major issue within certain industries. There are only a handful of insurance companies that will allow this technique.
Level Funded/Self-Funded participation:
The self-funded or partially self-funded insurance plans, have different participation requirements. Some carriers still require the 50% employee rule, then there are a few that will insure less than 50% as long as the waiving employees currently have qualified coverage. Qualified coverage waiver includes, Individual plan, Spouse group, VA, Medicaid, Medicare, or a parents plan. For small groups, that want to offer coverage to all of their employees, the level funded plan may be the best option. The group still has to go through the medical underwriting process but at least this option exists.
Employee Participation under the ACA
Since the Affordable Care Act (ACA) went into place, employer sponsored health insurance participation has been negatively impacted. The ACA created guaranteed issues in the individual health insurance market. Prior to the ACA, Indiana, the only way to get a guaranteed issued policy, was through a employer plan or Medicaid. Now employees were no longer “stuck” to their group health plan because of preexisting conditions. This allowed employees to go out to the individual market and shop for an alternative policy. For an employee or spouse, to take the time to research health insurance usually meant they felt they were paying too much on the employer plan. The other reason could be the out of pocket max on the employer plan. If a family knew they were going to have claims, they were able to purchase an individual policy with a lower out of pocket. Another reason is an employer composite rating. This is where the group health plan has the same employee cost for all the employee coverage. If the group was running rich benefits or had an older employee average age, the composite rate could have been much higher that what was being offered in the individual market. Medicaid expansion does have an impact on the group plan. Employees with families, are able to take advantage of Hip 2.0 & Hoosier Healthwise.
Companies all over Indiana and the rest of the country have had their participation rate impacted. In rural communities with lower average incomes, companies have been forced to drop their group health coverage. Blue collar industries with lower entry wage employees, have lost the 50% participation.
2018 Participation Predictions:
With the individual market imploding in Indiana and across the country, group participation will increase. Most employers have had lower costs because of a lack of employee participation. This is about to change in 2018 and I’m not sure all small and mid-size employers are preparing.
With individual plans not having network access, those Hoosiers are going to be looking for plans that keep access to their doctors. Group plans with either PPO or EPO networks, will give access which will lead to a huge increase in participation. This will also increase employer contributions.
Employee may be tired of dealing with the individual market and be happy with their employer making the health insurance decisions for them.
Employees Need to be Proactive With Group Health Plans
With this segment of the employees coming back to small or large group, employers need to be proactive. If this influx is younger employees, this may create an opportunity to lower the cost of the group coverage. If you are in the small group fully insured market, this average age decrease could reduce the premiums by as much as 30%. Unfortunately, this may not lead to lower overall employer cost but can help reduce the increase.
If a company has more than 20% of the employees waiving coverage, they should be concerned. The time to reevaluate the health plan, is prior to December 1st. Look at the employees that are currently waiving coverage, determine if it’s a spousal waiver or Individual. If the majority of the waivers are because of Individual coverage, you will be impacted. Once those individual plans end on December 31st, that is a qualified life event to join the group health plan. There is also discussion about forcing HIP 2.0 participants to work certain amount of hours a week. This could lead them to being qualified for a group health offering. Small and mid-size business, should budget a accordingly. Review the currently plan offering, look at making adjustments or even changing the plan offering completely.
If a company is facing a 30% increase in participation, this could open new options for health plans. Offering a dual option or even a multi option could create an effective strategy. If the company’s philosophy is offering a consumer driven health plan, the group may want to keep that philosophy, but add a lower costing health saving account.
If you have a company of 20 or more employees, it would be wise to look at the potential impact.
Here at Nefouse & Associates, Inc. we will provide the attention needed for you to make an informed decision.
