Mid Size Case Scenario

[skibum1]

I've recently run across a very unusual case, was wondering if I could get some expert advice on. I was talking to the owner of a company in NJ who started his company with 2 employees. He started a small group health plan approx 10 years ago. Since then, his company has grown now to approx 150 full time employees. Last year, on his renewal, he was told that because he has over 50 full time employees even though only 49 were covered under his plan he was no longer eligible for small group but he was being bumped up into the mid size market (50-150 ee's). He ended up going with a carrier that offered an association type plan which only required approx 50% participation of all eligible employees. The company has a very low contribution strategy. The company only pays roughly 30% of the premium for the employees, hence the low participation. His company is now coming up for renewal again, January 1st 2012. He currently has 150 full time eligible employees however only 51 are currently covered on the association plan he has now. He is clearly under 50% participation. His concern is that the carrier he is with now is going to drop him, although nothing has been said from the in force carrier. He has not received his renewal yet. I managed to get an updated census from his HR dept and have marketed it out with all the carriers to get their feedback. I'm already getting "decline to quote" letters from all the major carriers (Aetna, Horizon BCBS, Cigna, United) due to low participation. I know the "easy" solution would be to have him/company pay more of the premium to try to get more ee's on the actual health plan, bumping up the participation. My question is that if he/company does not do this are there carriers out there that will quote a group that has less than 50% participation? He said he was going to also look into other association plans within his industry but to be honest, other than the association he is a part of now, I dont know of any others he could join and/if what their participation requirement might be. Any feedback would be greatly appreciated. Just trying to do the right thing for him. Thanks.

 

[ABC]

You as the broker have to address why enrollment is so low and try to find a solution.

The only angle that I can think of is a multi choice plan where the employees can afford the lowest option.

This is a tough situation and the group may not keep a group health plan because ownership does not put any value on the health benefits.

Let me guess what industry it might be
Hotel, Janitorial, Trucking, Home health services ?

 

[skibum1]

I'm not the broker yet. I've already addressed the issue that the owner(s) of the co simply better buck up and get more ee's on the plan or they"ll be dropped. Someone mentioned looking into a self funded plan but even there they need a minimum participation requirement.

 

[insur4u]

You could help the employer set up a HRA from which employees could purchase individual coverage for themselves at much cheaper rate (for most) than what they are paying on group. Does your state have a risk pool for those that won't qualify for individual?

 

[somarco]

If the employer can't or won't pony up more money to increase the participation you need to walk away.

If you insist on pursuing this, consider pitching a worksite product line. At least you might make some money and won't have to worry about participation.

 

[ABC]

Since you are not a broker why do you think you would be able to obtain proposals in the first place?

 

[leevena]

If you cannot get the group up to 75% participation, this will not work out. I like the ideas of offering a very low-cost alternative, but you still will need to get close to 100% contribution. Try eliminating some of the employees by making sure they are all truly eligible. By the way, self funding is not an option here. To begin with you have only the higher risk employees taking coverage and when self-funded you ae subject to non-discrimination testing, which is not present in fully insured.

If you cannot get the employer to raise the contribution, don't waste your time.

 

[skibum1]

I've already beat the in force broker to the punch. The HR mgr has already provided me with a census. I've already marketed out to all the carriers. The in force broker has not done anything as of yet. The carrier they are with now obviously I cannot ask for quotes (yet) but the group is already talking about naming me the broker of record for the work I have done so far. ALL of the other carriers have declined to quote due to the low participation. The group is basically pinned against the wall right now with no other options then to keep the carrier they have, possibly tweak the plan they have (HSA/HRA option) or lose coverage altogether which isnt gonna happen. I just didnt know if with such low participation I was missing something. Some guys I work with say "oh try to get them into a partially self funded plan." Well, that sounds great but as you have all said in the end it comes down to participation. Unless the owner of the co is willing to buck up more, offer a real benefit to the employees and get his skin in the game with the rest of the carriers there isnt any wiggle room. You guys have helped me out a lot. I thank you.

 

[dgoldenz]

NJ is a guaranteed-issue state on the individual market. They could do an HRA and tell the employees to buy their own policies, but obviously that wouldn't do anything for your comp...group DI/dental/vision/life could make for some decent comp on a group that size though.

 

[skibum1]

Cant get individual HSA/HRA's in NJ. Only Individual plans would be a "bare bones" HMO that is age rated. Also, commission is litertally $6.00 month per person which is a joke. Other issue is even though the compan is based in NJ they have a lot of out of State ee's Their hosed.