Small Group Health

Companies that have less than 50 employees are considered small groups for health insurance. We provide multiple small group health insurance solutions.

The employer with less than 50 employees is considered a small group in the health insurance world. Here at Nefouse & Associates, we believe the small employer is the backbone of this country.  The small group employer encounters some of the same problems with group health insurance as they do the large companies and deserves to have broker representation that delivers solutions.

Types of Small Group Employers:

Multiple types of small business must be able to offer a comprehensive employee benefits package that includes group health insurance.

The first category of a small group is the startup company: 

The well-funded startup company typical has industry veterans that have left corporate America to launch their startup. Usually, these startups will have around ten employees when they begin.  Every aspect of their business plan has been fine-tuned but group benefits have not been addressed. Even the most well-funded startup can experience difficulties with installing a group health plan.  

The most common problem is that payroll has not started. Most Indiana insurance companies require a UC5 (wage N tax) to prove the company is a real business.  If there is no wage n tax, that limits the carriers that will offer a group health plan. Limitation usually means higher costs but still able to put a plan in place.

Another startup would be “bootstraps” small company.

These startups may have launched from thier home and may have been in business in the last couple of years. The owners are now ready to hire employees or retain the ones they have. Most of these small groups will have less than ten employees.

Established Small Groups:

The established small group employers have been in business for over ten years.  They have about 15-20 employees and the business culture appealing the owner is no stranger to group health insurance and is familiar with the process and procedures.  They also know they have to offer coverage to retain key talent, not only do they have to provide group benefits; it must be affordable to the employee.

The growing small group:

The small aggressive group has a business plan and wants to double the size of the business every year. This small group will not be considered a small group for long. They need to offer benefits that can attract talent from large companies while controlling costs and ease of administration.

Employers will less than 50 employees have experienced low levels of customer service from the broker community in recent years.  The main reason for this is a lack of agents & brokers in the health insurance industry in general. National agencies and most local have gone through a massive amount of acquisitions and mergers. This has led to agencies making decisions to not focus on companies with less than 50 employees.

Here at Nefouse & Associates, we specialize in the small group market. We have developed processes and procedures that have streamlined small groups administrations. With the streamlined administration, we can quickly move a small group to a new carrier.  This is a huge advantage that small groups have but few realize it.

Small Group Solutions

With the passing of the Affordable Care Act (ACA), small group fully insured health insurance moved to guaranteed issue, where the small groups claims experience did not determine the cost of the plan.  The process of installing a small group fully insured plan is relatively simple because the rates that are quoted, really will only change if enrollment changes.

Some companies that have high utilization will benefit from the guaranteed issue rates. It’s not uncommon for a group to move from the mid-market back down to small group to reduce the health insurance premiums.

As it stands, few carriers offer fully insured small group health plans, which creates a quick turnaround time on running rates for the market.  

There is a solution for groups that would step outside of the guaranteed issue small group market to reduce costs and even increase benefits.  This option has few different names, Level Funded, Partially Self-Funded or Fully funded self-insure. This option allows for a small group to go through underwriting, which can significantly reduce costs.  If a small group has younger employees, they are a prime candidate for a level-funded plan.

Small Group Network Options:

Small group plans designs can be flexible. First, there are multiple network types, PPO, EPO, HMO, & HMO Hybrid. Preferred Provider Organization (PPO) is the traditional medical care arrangement where member has coverage in network and out of network.  Exclusive Provider Organization (EPO) provides an extensive network but has no out of network services. Health Maintenance Organization (HMO) provides narrow network access with no out of network coverage. The Hybrid HMO includes access to the small network but if a member wishes to go out of network they can. The cost-sharing to the member out of network is usually triple compared to in network.

Each network has its pros and cons:  PPO appear to have the greatest network access, and there is something about knowing if you choose to go out of network, there is still coverage.

The EPO has gain popularity because it brings a certain level of savings to the health plan. The HMO typically will be the most cost-effective because the narrow network has deeper discounts on medical services.  The HMO Hybrid is used to help steer member into the cost containment narrow network.

Plan designs:

The plan of a small group health plan can be one of the most important aspects of attracting and retaining employees.    With small group, one common mistake an owner will make is to design a plan that they want for their family, in many situations the employees may not be able to afford that plan design, so it’s essential to keep that in mind.  The days of $500 deductible have passed with the rise in the cost of health care. The most common deductible in a small group today is $2,500, and this can be considered rich benefits. Offering multiple plans is beneficial with employees and what stage of their life in or what they can afford.  Some health insurance companies have requirements on employee count to offer a dual option, while others have no requirement to accept at least one employee taking the plan.

Composite vs. Aged based Premiums:

Most small group fully insured health insurance companies will offer two types of premiums.

Composite is the where there is one rate for each tier of coverage. Employee only rate would be the same for everyone no matter what their age is.   This rate is determined by the average age of the group and plan design.

Age-Based premiums are where the age of each member determines the premium:

Age-based premiums can help when trying to recruit younger employees. It also can require a high amount of administration due to premiums changing with a birthday.  Composite rate is much easier to administer and for the employee to understand. It can be harmful if the group average is high for recruiting younger employees.