Today I am happy to pass along a very informative piece
that my brother Scott Church has put together for our clients and prospective
clients. Scott is a technician when it
comes to health plans. He is a 16 year
veteran of the health insurance industry and is also a certified insurance
consultant. Scott has the unique ability
to dive deep into coverage and regulatory issues and find solutions to problems
that most people give up on. He is a
tremendous agent and a great person to have on our team (and in the
family) I hope you find this information
as useful as I have. To contact Scott directly with a question, please go to
our web page at Logan Lavelle Hunt.
If you
have 50 or fewer full-time employees, and you offer a group health plan to your
employees, your rates will probably increase more than usual next year.
·
Starting in 2014, under the Healthcare
Reform Law, insurance carriers are allowed to rate small groups only on age,
tobacco use, and location.
·
This will compress the rates in the small
group market. Groups rated the highest
under the current system may get a decrease, but most groups will get
increases. Groups rated the lowest under
the current system will see significant increases.
You
should consider these alternatives:
o
The rest of the small business insurance
market will change drastically, but Association Plans will not change nearly as
much. Association Plans have been
restructured into large group plans.
This will allow small employers in an Association Plan to be rated as a
large group and continue to use many of the rating factors not allowed for
other small groups. For most employers,
this will be beneficial.
·
Partially
Self-Insured Plans
o
Partially Self-Insured Plans will also not
change very much. Under a partially-self
insured plan, you insure the employees, a re-insurance policy covers large
claims, and a third-party administrator processes the claims and billings. Your total cost = claims you pay +
re-insurance premium + admin fees.
·
SHOP
Healthcare Exchange
o
The SHOP Exchange is a program designed for
small groups in a Healthcare Exchange. These
plans are subject to the new rating restrictions, but tax credits are available
to help pay your share of the premium for the first two years. To qualify, your company must have 25 or
fewer employees with an average salary of $50,000 or less. Owners and their family members are not
counted, and part-time employees are prorated.
Regardless of how many employees you
have, if you offer a group health insurance plan to your employees,
·
That pays 60%+ of covered medical expenses
on average (most plans do), and
·
The employee cost for single coverage is
less than 9.5% of his/her W2 earnings, and · Family coverage is available through your group health plan, then
Your
employees and their dependents will not be eligible for subsidies through a Healthcare Exchange they
might get otherwise.
· This will be true even if the employee cost for family coverage on your group plan is more than 9.5% of the your employee’s household income.
· This will be true even if the employee cost for family coverage on your group plan is more than 9.5% of the your employee’s household income.
Some
of your employees and/or their families may qualify for better, more affordable
coverage through a Healthcare Exchange, depending on several factors:
·
The cost of your plan to your employees for
single or family coverage
·
The age, tobacco use and health status of
you and your family, and your employees’ and their families· The household incomes of your employees
This
chart shows the maximum monthly premium on a Healthcare Exchange, after Premium
Subsidies, with no tobacco use, for the second lowest cost Silver Plan.
·
A Silver plan pays 70% of covered medical
expenses on average.
Persons in family /
household
|
Annual Income (% of FPL)
|
Maximum Monthly Premium
(% of Income)
|
Annual Income (% of FPL)
|
Maximum Monthly Premium
(% of Income)
|
Annual Income (% of FPL)
|
Maximum Monthly Premium
(% of Income)
|
Annual Income (% of FPL)
|
Maximum Monthly Premium
(% of Income)
|
Annual Income (% of FPL)
|
Maximum Monthly Premium
(% of Income)
|
Annual Income (% of FPL)
|
Maximum Monthly Premium
(% of Income)
|
134%
|
3.00%
|
150%
|
4.00%
|
200%
|
6.30%
|
250%
|
8.05%
|
300%
|
9.50%
|
400%
|
9.50%
|
|
1
|
15,397
|
38.49
|
17,235
|
57.45
|
22,980
|
120.65
|
28,725
|
192.70
|
34,470
|
272.89
|
45,960
|
363.85
|
2
|
20,783
|
51.96
|
23,265
|
77.55
|
31,020
|
162.86
|
38,775
|
260.12
|
46,530
|
368.36
|
62,040
|
491.15
|
3
|
26,170
|
65.43
|
29,295
|
97.65
|
39,060
|
205.07
|
48,825
|
327.53
|
58,590
|
463.84
|
78,120
|
618.45
|
4
|
31,557
|
78.89
|
35,325
|
117.75
|
47,100
|
247.28
|
58,875
|
394.95
|
70,650
|
559.31
|
94,200
|
745.75
|
5
|
36,944
|
92.36
|
41,355
|
137.85
|
55,140
|
289.49
|
68,925
|
462.37
|
82,710
|
654.79
|
110,280
|
873.05
|
6
|
42,331
|
105.83
|
47,385
|
157.95
|
63,180
|
331.70
|
78,975
|
529.79
|
94,770
|
750.26
|
126,360
|
1,000.35
|
% of covered medical
expenses paid by plan on average with Cost Sharing Subsidies.
|
||||||||||||
94% with Subsidy
|
94% with Subsidy
|
87% with Subsidy
|
73% with Subsidy
|
70% (no subsidy)
|
70% (no subsidy)
|
|||||||
·
The Healthcare Reform Law allows insurance
carriers to charge 50% extra for tobacco use.
The extra premium for tobacco-use is not subsidized and is based on the
full premium before any subsidy.
In
some cases, it may be better to offer a group health plan to only some of your
employees’ families, or none of your employees’ families, or not at all.
·
Not offering coverage to your employees or
families will probably be better for those that qualify for a substantial
subsidy, but it will probably be worse for employees or families who do not.
·
To offer family coverage to some of your
employees and not others, you must offer the coverage by “classes” of
employees. Classes of employees are groups
of “similarly situated” employees that already exist in your company and were
not created just for insurance purposes.
Examples include: hourly and salary, management and non-management,
years of service, etc.
·
Starting in 2015, companies with 50 or more
full-time equivalent employees (part-time employees are prorated and seasonal
employees are excluded) that offer no group health plan to their full-time
employees will pay an annual penalty of $2000 X (number of full-time employees
- 30).
In
other situations, it may be best to only offer group
health plans
the Healthcare Reform Law considers “not affordable”.
·
The Healthcare Reform Law considers a plan “not
affordable” if it pays less than 60% of covered medical expenses on average, or
costs the employee more than 9.5% of his/her W2 earnings for single coverage.
·
This also would allow your employees to get
the subsidies they qualify for through a Healthcare Exchange.
·
Starting in 2015, companies with 50 or more
full-time equivalent employees offering a group health plan the Healthcare
Reform Law considers “not affordable” will pay an annual penalty of $3000 X the
number full-time employee that receive a subsidy on a Healthcare Exchange.
What
is the best option for your company, your employees, and your employees’
families? We are here to help.
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