Individually Written Group Health?

[Franz Kafka]

I just started doing individual health and am also learning about group health. I have a prospect who has a group coverage on 4 employees. I asked if any had a health issue and he said 'none'. My questions is can the employer offer them individually underwritten coverage and deduct the premiums as employee benefit plan (and save $$)? If he can what are the details we need go over? I'm in CA.

 

[Invain15]

I don't know if list bill is available in CA but I would check. Why not sell them all indy health policies and have the employer reimburse the amount of there premiums.

 

[djs]

Franz -

This question gets asked on a regular basis, try doing a search.

In short, about half of the people here will tell you it is very doable, others will mention that the reimbursement side can get you in trouble, others (like me) will ask why?

If any person has any health issues, or a dependent has health issues, a group is the way to go. The prospect would probably have almost no way to know of some medical issues that might cause an underwriting decline.

Dan

 

[Franz Kafka]

Thanks guys. I've been reading some posts on HRAs. Would something like group HDHP with HRA be a good option for cost-sensitive employers?

 

[somarco]

It is possible to change the traditional plan to an HDHP (HRA or HSA) and save money. Group rates usually don't have the same level of discounts when moving from copay to HDHP so the savings may not be significant. I have trouble moving my group clients off copay plans because the savings is negligible.

I have to agree with Dan, I don't see what the problem is in using list bill but apparently some states (or agents) feel it is prohibited.

The 4 employeess may or may not have health issues. When you factor in dependents the odds increase.

I have a 5 life group we tried to move to individual policies at the last renewal only to have it fall apart once the applications were completed. Out of 5 employees + 8 dependents 1 employee and 1 dependent were uninsurable, and another dep was borderline. There were a few others that would be rated up but no need to even bother with prescreen due to the uninsurables.

In the group of 13 we had 2 who had gastric bypass surgery in the past.

Small employers usually have a group plan for a reason. Replacing the entire group with individual is almost impossible. You might be able to carve out some dependents and generate savings, but replacing the entire group will most likely be difficult.

 

[ABC]

Yes this can be done if the 4 employees & dependents are healthy. You will need to address the issue of maternity as this usually increases the indiviudal premium to the same level as group.

Check with your state laws regarding employer's contributing to indiviudal plans. If its allowed then the employer & employee may use pre taxed dollars to pay their permiums.

 

[Franz Kafka]

Thanks guys for your generosity. I think I understand the risks involved with writing individuals for group.

 

[Executive Benefits]

Thanks guys. I've been reading some posts on HRAs. Would something like group HDHP with HRA be a good option for cost-sensitive employers?

personally I would not do an HRA unless it was with a group, not guaranteed renewable, and to much liability for my taste. look into your state group carrier and see what low plans that have to offer. I'm in Fla, and often times I find that BCBS or UHC low base plans work best for HRA's. I use BCBS Plan 3800-3801 see if their is something compatible in your state. These plans are stripped and low cost, but guaranteed issue and offer some copays and generic only drug card. Also I hear Aetna has a good mini med program but I have no experience with it.

 

[warrenins]

One more thing to keep in mind when you replace group with individual (may or may not be a concern with a small group such as this) is the onwers ability to hire a new and or key employee. With group coverage the owner can basically "guarantee" that the new employee will have coverage when he or she comes on board. Individual coverage is always underwritten (in Georgia) so the new employee would have to go through the underwrting process and may or may not qualify for coverage and the owner might lose that employee. Obviously you don't want to guarantee coverage and hire chronically sick people but I have seen some insurance companies decline coverage for some pretty stupid reasons. Just a thought

 

[Franz Kafka]

Thanks guys!