Group Question

Mar 19, 2007

  1. Golddoor
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    Golddoor Guru

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    I had some one call me and request a group quote for his business. He has 120 employees but does not want to contribute for any of the employees insurance at all, nor does he have enough that want to participate, because they are already on a spouses plan, so group is not an option. I recommended individual policies or even HSA's and he could even possibly contribute to the HSA account. He said no way, they were not going out give any insurance benefits. He just wants to be able to offer it? I have had a lot of business owners wanting to offer it, but not pay for any of it. What do you say in that situation?
     
    Golddoor, Mar 19, 2007
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  2. insuremojo
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    insuremojo Super Genius

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    I have limited experience in the group market with only a few 2 person groups on the books but if I remember correctly employees with "credible coverage" can be waived from the requirements and some plans allow a "flat" contribution from the employer (like $50 or $100) might be different from state to state. Don't know if that helps but good luck...that's a lot of employees! Have him do a census and go from there.
     
  3. Dave020
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    Dave020 Super Moderator Moderator

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    Allowing for variances in state rules, there are some issues here.

    First, as Mojo points out, any employee declining group coverage in favor or Medicare, Medicaid or another group health plan is deemed to be a valid waiver and does not count towards the minimum participation rules. I actually have 1-person groups in CA as the spouse is waived for Medicare. Here you just need the two employees, but not necessarily for both to have to enroll. So recheck the participation numbers on that group and I bet you will find the vast majority of waivers will not count against the participation rule and the group will fly.

    I know in CA employer must make contribution to the group coverage. I assume same in your state although, again, that may vary but with 120 EEs it definitely falls under federal group rules and it seems likely that there are universal contribution requirements.

    Personally, I would walk away from that employer. They want to look good to the employees without actually doing a damned thing for them. Some will not pass underwriting thereby creating all sorts of discrimination problems. If the employer won't at least provide the minimum contribution, the case won't go anyway so why waste your time? Also, it would seem to me that actions you take regarding insuring some of those employees or whatever scheme the employer comes up with could at some point place you in a vulnerable E&O position.

    Just me $.02, but if it was me I wouldn't waste 1 more second on this employer.

    Dave
    www.davefluker.com
     
    Dave020, Mar 19, 2007
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  4. Golddoor
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    In Texas for small group(2-50) it 75% participation rate and 50% contribution and Im not sure about large groups.

    One person groups? How did you work that? Was it a husband and wife only business?

    How would discrimination come into play if I wrote a bunch of individual policies out of that group?
     
    Golddoor, Mar 19, 2007
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  5. Dave020
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    Dave020 Super Moderator Moderator

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    Usually the one person groups are spousal or family businesses where one of the two employees is declining in favor or Medicare or another group coverage plan. It is not a common thing, but they are out there. In those cases, there are two legitimate employees however since the second employee is on a legitimate waiver (Medicare or other group) that employee still counts as the second employee but is not required to enroll with the group. The remaining employee (officer/partner) then makes up the 100% participation since the waivered second employee is not counted against the 75% participation rule.

    As long as you wrote the individual policies just as that without any endorsement from the employer, then that would not be a problem. However, if the employer endorses them as an "employee benefit", anyone who cannot get a policy for underwriting reasons could claim that they are being discriminated against by the employer (and you) and being denied benefits. And it is unlikely you'd get much support from your state as state's are not happy with these arrangements as it screws up the risk balancing that occurs in group benefit pricing.

    Generally individual health insurance risk in not pooled, that is why 4 healthy twenty-somethings can't buy you coverage for a not-so-healthy 50-something. No balance, everyone stands on their own. In groups, generally the group is balanced with RAF (risk adjustment factor) being used to get proper pricing (in CA .90 to 1.10 of the standard cost depending on size and overall health of the group).

    Bottom line, this employer wants something for nothing and I personally would have nothing to do with an arrangement like that.

    Dave
    www.davefluker.com
     
    Dave020, Mar 20, 2007
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