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One of the most important employee benefits, an Indiana company can offer, is group health insurance. With the implosion of the individual market, group health insurance will be a key component in attracting and retaining employees. The type of group health insurance that a company offers and how much the employee must contribute can play a huge factor in company morale.
Indiana companies that have not offered group health insurance are starting to invest in group health plans. A lot of companies, under the Affordable Care Act, dropped their group health plans. It was a combination of lack of employee participation and employee cost. Many Hoosiers were eligible for tax credits through the Federal Exchange. The tax credit was more than what the employer was contributing towards the premiums. Under the ACA, if you qualified for tax credits, you would pay no more than 9.5% of household income towards your health premium. With most employers, they contribute to the employee only premium and little towards the dependents. This lead employees in droves to elect coverage from the marketplace. One condition to qualify for the tax credits is you could not have group health insurance being offered at work. Small employers quickly realized, offering group health insurance was no longer a benefit that employee’s valued. Indiana companies that had lower wage employees, was not faced with not being able to hire these types of employees if they offered a group health plan.
Now these companies are coming back to Indiana Group Health Insurance. Their key employees no longer want to deal with the individual markets. The individual markets starting in 2017, started to be less desirable from both a cost standpoint and network access. Hoosiers that did not qualify for tax credits were now face with extremely high premiums and large out of pockets. Small group employers have quickly realized they can no longer not offer group health. 2018, there will be only 2 individual carriers for the state of Indiana. Both companies have limited networks and could only be purchased through the Federal Exchange. Indiana small group owners, under 65, now are being impacted on a personal level. They and their loved ones, will no longer have access to the healthcare providers of their choice. Small group employers, are now impacted from a personal and employee level, forcing them back to the Indiana group health insurance markets.
Indiana companies that have offered group health insurance benefits are looking at types of plans being offered in their industry. This knowledge is being used in plan design, employee & employer contributions. Humana resources departments and CFO’s all want to know that they are competitive in recruiting employees. This is especially important when it comes to an aging workforce that will need to be replaced. Group health insurance is a key component to this equation.
Indiana small companies (under 100 lives) have always struggled with group health insurance vs a large employer. The group health plan design and cost are a key factor. If you’re a small group employee that is being recruited, the group health plan and cost to the employee will go into the equation. If the employee has family coverage on the group health plan, they could be contributing $12,000 a year towards the premium. If the large employer, pays a higher % of dependent premium, the employee could reduce their cost which could be viewed as a pay increase. In some cases, this can be a difference of low five figures.
Another strategy to recruit employees is the employer funding the custodial account on a health saving account. This is another benefit of the health insurance plan, that could be viewed as higher compensation. Large employers can leverage group health insurance. This is done through self-funded arrangements where they can control more aspects of the health benefits.
Small employers must take a proactive approach with their group health insurance. This can be done with different type of health insurance vehicles. Partially Self-funded plans, also known as level funded, can offer small groups a competitive advantage. Offering employees dual health insurance options can also reduce costs, while still employees a choice. A common strategy in both large and small group is to offer a traditional co pay plan alongside a health saving account. Another approach is for an employer to pick up a higher % of the premiums on a lower costing plan design. Then if the employee wants to buy up, they pick up the difference.
In Indiana, we only have a hand full of companies offering health insurance in both the small and large group markets. There is a lot of reasons why we lack carrier competition. The biggest reason may be the development of the proprietary carrier networks. If we look back about 15 years ago, there were multiple mutual insurance companies offering group options. This was a glorious time for group health insurance competition. Employers would have multiple broker bidding on Indiana Group Health Insurance. This was because there was not that many group carriers in Indiana. These companies would rent PPO networks. Sagamore was such a common PPO network, many people thought it was the insurance company. When the health insurance companies started to merge and acquire companies, they started to build their own PPO networks. This was a key component to a carrier’s success. Once they built their membership, then they could reduce what they were paying medical providers. This gave companies a huge cost advantage in pricing their products and profit margins. Now the mutual companies that were renting PPO networks did not have the reimbursement rates and had to pay access fees to rent those networks. This also was the case with many Third Party Administrators (TPA’s). The insurance companies offering large groups benefits that owned their own network, were able to offer Administrated Service Only (ASO) plans in the self-funded markets.
Now we look to 2018, we have less than 10 carriers that have filed small group insurance rates with the Indiana department of Insurance. There are even less carrier competition in the large group markets.
No matter if you are a small or large employer, the group health insurance plan still remain on the highest valued employee benefit. Contact us to learn more about group health insurance.
