Group Health...yes or no?

[TonyC]

Please Pardon the question from a newbie....

I have been prospecting companies and i don't know if this is true or not. (As a matter of fact...i think it could be a loaded question).

QUESTION:

1) Assuming all things equal and everyone in a Group can get insurance....What are the advantages of getting Group insurance policy vs. taking the same group and giving them individual coverage?

2) I know it helps retain good employees...but ECONOMICALLY is it more expensive for the employer?

3) What kind of Tax breaks can the employer get to justify any additional expense (should there be one).


any constructive input is greatly appreciated...

 

[susieQ]

Depending on the state you are in -- I'm in TX. The TX Dept of Ins "frowns" on agents going in and doing individual policies in a business setting. But it's done all the time with list bill. So there you go. Where you can get in trouble with TDI is when the group coverage is going away and an employer is helping employees get individual policies.

A lot of employers are very open minded to the concept of individual coverage. You can send the health-challenged individuals to the risk pool but it has to be done a certain way. If a company has any type of cafeteria plan, whether health ins. premiums are involved or not, then it gets interesting. Doesn't make any sense right? That's our government for you. If it's done right you can save an employer 40 to 50% doing individual plans compared to group coverage. Right now, I've seen group coverage for a family in TX run up to $1,500 a month for the family. Who can afford that? The idea of employer sponsored coverage is that everybody gets coverage no matter what their health is. Great idea, right. But the system has been so abused that most small business owners can no longer afford the premiums.

Depends on the health of the group and what their current rates are. I'm partnering with another agent here to market it. We've been working on it for over two years now. Read Paul Zane Pilzer's book. My understanding is that it's being done successfully in most other states.

Also, picture yourself going into a business and having 50 individual applications all at once. Sounds like a good situation, right? Follow up on underwriting, customer service, etc. can be a nightmare!!!

 

[djs]

Please Pardon the question from a newbie....

I have been prospecting companies and i don't know if this is true or not. (As a matter of fact...i think it could be a loaded question).

QUESTION:

1) Assuming all things equal and everyone in a Group can get insurance....What are the advantages of getting Group insurance policy vs. taking the same group and giving them individual coverage?

2) I know it helps retain good employees...but ECONOMICALLY is it more expensive for the employer?

3) What kind of Tax breaks can the employer get to justify any additional expense (should there be one).


any constructive input is greatly appreciated...

This answer can vary greatly. What state are you referring to? Also, "Everyone can get insurance" is a baited statement. How would you know, and does this include dependants?

Dan

 

[LGilmore]

Check with your state's OIC. It can and will vary between states. Be your own advisor as a newbie, just cause a sales manager tells you something is so, check it out for yourself.

In my state group offers a better RX, better copays for visits and guaranteed issue, with no underwriting for most plans. Individual wasn't sold for several years as we adopted the first Clinton health plan. Individual has returned and is better than a poke in the eye with a sharp stick. The plans all have something attractive in them, but... if you could combine the best "parts" you'd have a kick ass individual plan. Each individual is a thing or two off of being top drawer.

Insurance carriers here stopped list bills a while ago.

 

[The Rabbi]

Group insurance is on it's way out, so an expert says. If there are only a few employees and they are healthy, it is a lot less money to get individual.

 

[djs]

Group insurance is on it's way out, so an expert says. If there are only a few employees and they are healthy, it is a lot less money to get individual.

Interesting..... where is it going? The only thing that would make group health go away is a government program, though most politicians are now talking about mandatory coverage paid for by your employer (which would basically be group).

I would not hold my breath for group coverage to go away, unless individual plans as we know them today also go away. I'm not an expert, but I'll stand by this statement for the next few years.

Dan

 

[LGilmore]

"Group insurance is on it's way out, so an expert says. If there are only a few employees and they are healthy, it is a lot less money to get individual."

That would depend by state and carrier wouldn't it?

 

[NewHealthStrategies]

Group insurance isn't on the way out any more than National Health Care is on the way in..... it would take at least another 5-8 years if we started down either path TODAY.

So... how do you make a living today?

Group health is cheaper as a collect group of inviduals because you'll have at least 2 out of 20 (hmmmm.... is that equal to 1 out of 10) that won't qualify for individual coverage (depending on state's risk pools).....

Also, there is the convenience factor.... individual coverage is paid for by individuals..... not through payroll deduction (yeah, you can go list bill, but good luck with that)

Group insurance premiums aren't taxed and employers pay a portion of the bill.... again, the path-of-least resistance model wins.

Also.... employers provide group coverage for 2 reasons and 2 reasons only.... to recruit and retain employees...... if they've given up on those... then individual coverage makes sense to protect the employees.

You'll find it normally a great conversation point but rarely do ER's follow through with any drastic action such as dropping group and throwing his employees to the individual underwriting wolves.


Just remember... You Are Unique.... Just like everyone else.

 

[Dave020]

Group coverage is not going away in lieu of another model, however we are starting to see (at least in CA) a reduction in the number of employers willing to provide group coverage. If they are not big enough to self-fund, then it comes to the bottom line and that line, in this market and economy, is wearing thin for a lot of employers.

Group is directly proportional to the employer's need to recruit and retain. With the exodus of jobs to places like India, shrinking budgets and less of a need to retain, many employers are looking at reducing expenses, the first of which is the employee benefits plan.

Ford Motor already figured out they could save a ton of money by eliminating retiree group benefits and helping pay the costs of Med Sups.

I have had at least a dozen calls in the last week from people who were on continuation and the company (in CA) just dropped the group plan completely. Not changed carriers, completely dropped group coverage.

 

[NewHealthStrategies]

I agree with Dave and am going to go get my hair-cut just like his......