If you are a small business owner or a controller of a small group then you have had to deal with participation on the group health plan. The particapation issue commes up with groups that have high premiums. The high prmiums could be the result of many different things. This post is about how you tackle the problem of particapation so the group stays compliant.
If a group is running rich benefits then some of the employee are unable to afford their portion of premium. This can happen when small group owners are more concerned about their families benefits than the entire group. There are a couple of fixes that might help here and the first one is to have the employer pick up a larger portion of the premium. This is not a popular fix with owners! The 2nd is to look at changing the plan design to make premiums more affordable. This comes in the form of cost shifting.
Another issue that can add to lack of participation is employer contribution. If the employer pay 50% of the employee portion that might work for most of the company but if there are lower compensated employees this could be a problem. It’s important to look at contribution levels to see if they are realistic for all of the employees.
Aging population can add to a decline in participation. If a group is running age base premium rates then it can be difficult for older employees to afford them. A easy fix to this is composite rates where all the employees pay the same rate. Now composite rates can all have a negative impact on younger employees. If the premium is averaged out then some of the younger employee could go out to market and pick up individual plans. These type of situations one really has to look at the demographics of the group.
High claims can be the big obstaclefor a small group or any group for that matter. High claims can increase the premiums very quickly and then all of your healthy people come off the plan because of high premiums. This is a form of adverse selection. When high claims become obviously a owner or controller has to get to work. Tough decisions have to be made about plan design, wellness programs, and disease management. If high claims are not addressed the group health plan can go into a death spiral with in a couple of years and then you have no more group health plan.
We have seen all of these situations and more when it comes to participation. Carriers do have the ability to audit your group for participation and they can drop you if you do not get compliant.
Keep an eye on your participation!