When a startup company launches, one of the last issues that is addressed is Group Health Insurance & employee benefits. The founders of the startup company, may have years of experience in their industry or are on the cutting edge of new technology. When it comes to Indiana Group Health Insurance, leadership may lack experience. If they are coming from a large company, employee benefits may have been a topic handled by another department.
These new entrepreneurs, are now faced with placing Group Health Insurance plans in place, to attract and retain employees.
Indiana Group Health Insurance Carriers:
In the small group market, there are not a lot of insurance companies offering coverage in Indiana. The main 2 carriers are Anthem & UnitedHealthcare. There are regional companies like IU Health offering plans. Then you have carriers that are offering self-funded plans for small group. The size and nature of your Indianapolis company, can determine which carrier may be the best solution.
Each carrier has a different network and some carriers offer multiple networks. Most common is the Preferred Provider Organization (PPO). The PPO is going to allow for the greatest access to medical providers. A member can have a general doctor in one medical group, a specialist in another & then a pediatrician in another. Most PPO’s also have a national network, which may be the only option for companies with out of state employees. The PPO is also effective if there are employees that are commuting from rural communities. In Indiana, Anthem has one of the best PPO for small companies. Unitedhealthcare also offers a well-accepted PPO plan.
Indiana Group Health Insurance Plan Types
Exclusive Provider Organization (EPO)
Not as common in small Group Health Insurance is the EPO network. The best way to describe an EPO, is it’s a large accepted network, may even be national, but it does not offer coverage out of network. The plan may offer access to all of your providers & specialists in Indiana. Where it does not offer access is if you wanted to go to a specialist in a hospital for treatment. A good example, would be having access to a drug treatment center out of state. It can be viewed that medical groups that will not discount their rates are not included in the EPO.
Health Maintenance Organization (HMO)
The HMO network has had limited access (no pun intended) in the Indiana small group market. Currently, IU Health plans may be the only option for a true HMO. If your company & employees are located near the HMO medical providers, this can be a good solution. With most HMOs, members have to choose a primary care physician (PCP). That PCP should have a closer relationship with that member, which creates a more knowledgeable PCP with the patient’s situation. That knowledge is supposed to create better treatment plans and general oversight with any specialist services.
With traditional HMO plans now EPO plans offer/force a navigator or gate keeper on the member. The Navigator/gate keeper is the first point of service to the member. These plans go as far as listing the medical provider on the insurance card. If a member does not go through the navigator, the claim is not covered. This option can be effective if the insured is forced to have that PCP get to know them. At first, employees can be annoyed with having to elect a gatekeeper. Once they search the network, they maybe be surprised that their doctor is participating in the network. These networks allow for the employee to easily change their navigator/gatekeeper. Unitedhealthcare is one of the few Indiana carriers that offer a navigate plan on their EPO. Would could see this become a more common option.
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No Network/Indemnity Product:
A no network plan/indemnity is a health insurance plan that does not use a provider network. This means there is no pre negotiated price on medical procedures. These plans, use Medicare reimbursement rates as the bench mark for medical costs. Then they will add 50%-100% on top of the Medicare reimbursement rate. The insurance company/ third party admin will contact the medical provider after the claim is submitted. They then try to negotiate the reimbursement rate. In Indiana, the major medical groups have had issues with this type of reimbursement. They even have gone as far as to refuse to treat members on this type of insurance. This option is usually provided by a self-funded or level funded plan. Since medical providers refuse to accept these types of plans, this may not be the best option for a small group.
Group Health Plan Design:
The plan design will have a huge impact on cost and the value the employees place on the benefit. Ownership/leaderships health insurance philosophy can determine which plan design is elected.
The employer puts in a high deductible health plan (HDHP). The plan could have a $6,500 deductible and all claims go towards the deductible, once met then 100% coverage. The philosophy is the plan is here to cover you for major services.
Health Savings Account (H.S.A)
Plan design has a HDHP with a savings account that has tax advantages. Deductibles and out of pockets can range from $2,500-$6,500. Average H.S.A deductible is around $3,500, which is considered to be a rich benefit, even though the deductible has to meet first.
Traditional Co Pay Plan
Traditional group plans have co pays for office visits and prescription drugs. This is a first dollar benefit, you have an office visit and pay $35 for the medical service. Depending on employee’s situation, this plan can be a more acceptable insurance offering. If an insured is prescribed a medication, they may only have to pay RX copay, which can be more affordable vs. picking up the entire cost as it’s applied to HDHP plan.
High Deductible with Co pays:
This would be a combination of the traditional with first dollar benefit. The view is the plan is going to cover your office visits and prescriptions, but surgeries are going to go toward a high deductible. We see this option with groups that really don’t want to offer a group health plan, but have to keep current employees.
This option allows an employer to offer multiple plan designs, then the employee can choose the plan that best fits their needs. There may be a base plan offering with a buy up option to richer benefits. With most carriers (Anthem), the company needs at least 10 employees taking coverage to offer a dual option. Unitedhealthcare, will allow a company to elect as many plans as they want with no employee requirement.
Group Health Insurance Cost:
In fully insured small group, premium is determined by ages of the employees and plan design. Under the Affordable Care Act, there is no underwriting for small groups.The average of age of the employees has the biggest impact on cost. Plan design would be 2nd and PPO, EPO, HMO, Navigate would be 3rd. On a level funded/Self-Funded plan, the case would go through underwriting. The employees would answer medical questions, then a group risk factor would be determined by ongoing health conditions.
Under most insurance contracts, the employers is required to pay at least 50% of the employee only Starts ups that are well funded, are picking up 75% on average of the total costs, which includes employee and dependents. Not all startup companies in Indiana, are in a position of being able to pick up 75% of the entire cost of the Group Health Insurance plan. Employer contribution can be guided by the industry and what type of employees the company is looking to attract. To attract employees from large companies, benefits can be a huge issue. With any new start up, the cost of a Group Health Insurance plan may not have been addressed with correct data during the business planning. Under the ACA in Indiana, the average cost for employee only is around $500 a month, a family is around $1,500 a month. For any start up to be successful, an investment into the group health is a must.
With any employee benefit package, group dental is important line of insurance coverage. Employees want to get their teeth cleaned at no cost to them. The majority of dental plans will offer 100% coverage for preventive care. For most small group dental plans, the employer need to contribute toward the premium. If the plan is set up as voluntary meeting the participation requirements can be difficult. When choosing a dental plan, you may find better coverage at a competitive price using a carrier outside the health plan. With smaller companies, it’s easier to bundle the dental coverage through the health insurance carrier.
A group vision policy is a nice benefit for employees as more and more people are wearing glasses. Maybe there is correlation with staring at screens and the need for vision services. Vision insurance usually provides a copay for an examination and materials. Group vision usually offers richer benefits than what can be purchased in the individual market.
Life insurance can be one of the least expensive benefits a company can offer. A company can offer $100K in life insurance for about $20 per employee per month. For a startup company to offer this level of benefit can have a huge value towards employees.
Long Term & Short Term Disability
Offering disability insurance really is determined by the industry and employee compensation. If the startup company is recruiting higher income employees, long term disability may be essential to an employee benefit offering. With a startup, getting disability coverage may be difficult until the company has been established for 2 years. There are carriers that will offer a disability plan to a 1st year company. This benefit is usually 100% employer paid. As for short term disability, this benefit can be added with the Long Term.
Supplemental/Work Site Coverage
With small group, voluntary products can be added through supplemental policies. These policies can reduce the health insurance deductible and out of pocket. With any voluntary product, it’s completely up to the employees if they want the coverage, they are responsible for the cost. The one benefit is some of the policy premiums can be paid pretax. The supplemental policies should be tailored to the Group Health Insurance plan. Minimum participation is usually just 2 employees electing the coverage.
Being a startup, you may not have the staff to allocate to the benefit administration. A benefit platform can significantly reduce the time spent on the employee benefits. The platform will aide with employee enrollment & changes. Reduce paper application and include all the benefits in one place for the employee to access the information. Then to add reporting features for HR, which can be used with premium reconciliation or educating the employee on total compensation. With the advancement of technology, the new benefit platforms can also be used for employee onboarding. Many of the system come at a price to the employer, with Nefouse & Associates we provide this platform as one of our services at no cost to our clients.
Indiana Group Health Insurance Benefits Tips
When a small company is ready to put benefits in place, all of these options can be overwhelming. Determining what benefit package is going to work best for your company starts with choosing the right broker. A good broker can advise what health insurance design is going to work best for your organization. There is a fine balance between cost and benefit design. What works in one industry may not work in another. Nefouse & Associates has worked with startup companies for over 30 years. The benefits that you put in place the 1st year, will change over the year. When a company first launches, they may be a micro company with less than 10 employees. As a company grows, the health insurance and benefit philosophy may need to change. That change can be forced by cost or industry trends. We have witnessed this business life cycle over & over. Having the experience to successful consultant our clients from startup to going public is quality few Insurance brokers have. We pride ourselves on being one of the last insurance agencies that can help companies of all sizes. Contact us today!