Indiana Health Insurance Company Updates
Recently, it was announced that Federated is leaving the group health market. They are exiting the state of Indiana and the rest of the country. They will end providing group health, life & disability on Dec. 31st of 2017.
“Federated does not see an end to the uncertainty surrounding the ACA” Federated said in a press release. This may sound familiar since most insurance companies have been using this type of language also when they announce they are exiting a market.
Federated provided group health insurance in the small group market. The majority of their clients appeared to be in “blue collar” industries. They also offered coverage in the property and casualty markets. Federated had the option of offering both liability and employee benefits to their clients. This did appeal to some Indiana companies and could have been a good solution.
Broker Assumptions:
The majority of their Indiana group health clients, may be on grand mothered or grand fathered policies. These would have been group plans, purchased prior to the affordable care act, which means they were purchased without having all the rules of the ACA. These plans had medical underwriting, which kept the premiums down vs ACA small group plans.
Federated may have been faced with multiple problems with their current business model. The individual market place, would had eroded membership. Small companies, especially in rural communities, took advantage of individual tax credits, which led to dropping group health. Another issue is the age of the group health members. A lot of Indiana small companies, blue collar, have an aging employee population. This can lead to a small group having a higher average age, which leads to higher premiums and the potential of higher claims. If the majority of their small groups fall in this category, they could have had issues with attracting lower risk groups. All of these assumptions, could be accurate, which means they could have been experiencing adverse selection. Without the ability to develop new small group health products, the decision to exit small group could have been made with math.
Impact to Indiana companies:
Federated group health insurance is good until the end of 2017. This gives you plenty of time to research the small group health insurance market. There are only a handful of insurance companies offering small group policies. It will not take much time to review the options. Most small group’s insurance proposals can be generated in less than 24 hours. Under the ACA, fully insured group plans do not have underwriting and no medical questions. The process of moving to a new small group plan is not difficult. Most Indiana group plans will have little to no disruption in medical services. With the move occurring at the first of the year, most deductibles will start over, so an employee will not be hurt by paying the deductible twice in one year. If the current plan is on a year plan, then there is a chance the member may be paying the deductible twice. In that situation, a group can request for a deductible carry over credit. The process of moving to a new group health plan, can be made easy, if you choose a brokerage like Nefouse & Associates. Click here to get in contact with us.
Assumptions from your Indiana Health Insurance Company
My assumptions, were formed from actual experience in the Indiana small group market. Working with blue collar companies and finding health insurance solutions.
Tony Nefouse
