Participation in 2014

[somarco]

Looking forward to 2014 how will carriers view participation requirements?

An employer has 40 employees and establishes an HRA. 5 employees want to stay on the group plan, the other 35 go somewhere else, including the exchange.

Will the carrier cancel the group plan?

Same scenario except with 100 employees and 20 want the group plan, the rest do something else.

I am under the impression that participation requirements are a carrier thing addressed at the state level, but I guess all that goes out the window with HHS calling the shots.

I remember when HMO's made their move eastward and were granted special dispensation to invade existing groups without regard to participation. They could make an offer to a 40 (or 100) life group, write 10% of that group, and it was OK.

As HMO's became more pervasive (and invasive) and their penetration went from 10% to 30 - 40% the traditional carriers had to rethink and decide if they wanted to keep 60 - 70% of the group or walk away from the entire deal.

So I am thinking a similar scenario with individual GI policies making an impact on groups. This is similar, but not the same as folks like Darden cutting FT employees to 25 hours so they won't have to provide benefits. This is employers, large and small, making a conscious decision to limit their costs under Obamacare.

I am rethinking the group market and trying to decide if I want to get back in for 2014 at later. Folks like ABC and Ann that derive a good part of their revenue from group clients might have a better perspective than most of us that just dabble.

Your thoughts?

 

[somarco]

Bump . . . . . . . .

 

[ABC]

I think the group participation requirements will stay the same.
Some recent renewal packets are asking if the group is meeting participation. I have never had that come up without an audit.

Community rating in the group market is going to have a huge impact on all fully insured business. This will ultimately decide what the individual market becomes.

Industries with low compensated employees will drop group health benefits. The employees and families will benefit from the subsidies in the exchange.

 

[somarco]

Agree on the impact of CR and GI on IFP rates. Both will drive costs WAY up.

The bigger question is how it impacts the group participation. If employees flock to the exchanges (as some are predicting) it will be a game changer.

 

[leevena]

This is an interesting question, and I have not yet thought it all the way through, so I would be interested to hear others comments.

I don't know if govt will require the carrier to take any group regardless of the participation or if the carrier will be allowed to enforce the 75%. My guess is that the govt will require the qualified carrier to accept the risk, otherwise there will be many groups failing the participation %.

To add another twist, what about the impact of non-qualifed health plans in the market? It would be very easy for a group to design a non-qualifed plan that force the higher risk population to the exchange plans. Or, if the govt requires the qualifed carriers to take any/all groups without regard to participation, we could cherry pick the good risk all day long with a non-qualified plan.

Interesting times to come.

 

[somarco]

Some folks, primarily HRA administrators, are suggesting doing a carve out group the way we did in the "old" days. Discriminate by class, but not within a class.

In doing so you basically "encourage" the rank and file to buy from the exchange leaving management alone in the group plan.

Right now all this is simply what if, but I have had two different employers (50 - 100 lives) ask me to look at their group for 2014. Of course everything will change then (assuming the exchanges are established and funded for subsidies) so it started me thinking about how this will come together.

It triggered a memory of a group, maybe 40 lives or so, that asked me to work something out for them. KP had come in with low rates and rich benefits, effectively decimating the group and dropping the participation for Blue (traditional group plan) to less than 50%. Blue said they would not renew unless participation increased. KP said rates would have to increase significantly if they were to take on the old, sick folks.

As I recall, Blue reneged and agreed to renew for one more year. What happened after that I have no idea.

 

[ABC]

If an employee has access to a group health plan that will disqualify them from subsidies in the exchange.

Now if the group plan is not QHP or the employee is paying more than 9.5% of household income for that group policy, then they could qualify for subsidies in the exchange. The employer then would have a $3,000 penalty per employee taking subsides.

Some groups will help their employees more by not offering a group health plan. So the low income people can qualify for subsidies.The metal plans could have a much lower out of pocket than a QHP group plan.

Most group brokers that are not willing to adapt to new strategies will be gone. Even in the 50-200 market, I think we will see a huge change in group plans being offered.

If you go to any group that has about 80 employees, their biggest vendor is the group health insurance provider.

From a producer standpoint, these strategies are based on comp in the exchange. If it looks like medicare supps comp, we are in business.

 

[Ann H]

Looking forward to 2014 how will carriers view participation requirements?

An employer has 40 employees and establishes an HRA. 5 employees want to stay on the group plan, the other 35 go somewhere else, including the exchange.

Will the carrier cancel the group plan?

... I am rethinking the group market and trying to decide if I want to get back in for 2014 at later. Folks like ABC and Ann that derive a good part of their revenue from group clients might have a better perspective than most of us that just dabble.

Your thoughts?

I just read this thread, Somarco, so I'm sorry for being late to respond. I don't see participation requirements ending. I think employer groups in the 2-49 market will make 1 of 2 decisions - drop the group plan and send everyone to buy their own coverage, or keep the group plan and contribute enough to make employees enroll.

A 3rd choice in the 50+ market, would be to hire part-time to avoid the $3,000 play or pay penalty.

I don't see groups in the half-way point, keeping a group plan but also offering an HRA for those who shop. One of the reasons is what ABC just mentioned - a person is disqualified from a subsidy if they are ELIGIBLE FOR group health insurance (through their own employer or the spouse or parent's employer's group plan). Another reason is the participation problem you just mentioned.

If the carrier eliminated participation requirements they are attracting the higher paid (also older) members because the younger set and those with children are more likely to get a subsidy in the exchange.

One of the potential detours, however, are group plans in the exchange. We haven't talked about the SHOP exchanges much, but it's possible that the exchange will allow a multi-choice shop-a-holic set a choices for employees of a group, thereby eliminating the problematic issues of participation, play or pay penalties, and adverse selection.

I have a few groups that will most likely keep their group plan. One is a civil engineering business with 32 employees who are quite highly paid, another is an Electrical District with 47 employees that has rich benefits to stave off the union, and another is a group of IT Techs that pay their employees quite well and are very interested in attracting and maintaining a competitive staff. I see some doctor and lawyer groups keeping group plans, too. The other 2-49 size groups will implode most likely.

I can't think of any reason why any of my groups would take the half-way point, though.

If you are thinking of entering the group market, a very good niche for you (since you have a wealth of experience and a database-mind of knowledge) would be to consult with businesses on strategies for the upcoming year. You could pick up business any which way - if they keep the private group plan, take a group plan in the exchange, use an HRA to fund individual choice, or send their employees to the exchange on their own. Seems like you could have a sale any way they slice it, if you use your expertise to guide them and develop trust. You have a far better chance than the IFP agent who knows nothing about the group options.

I will tell you however, that employees resent the fact that they have been stuck with their employer's choice of group plans for so many years. Like it or not, they reflect that resentment onto the employer's choice of agents too. I expect 50% of the employees of my groups to tell me where I can stick it. No matter how much I have talked with them personally over the years, there's just a resentment and a sense of personal independence when the bars are busted and they are allowed to go out on their own. The other 50% have developed a trust in me, or in their employer's choice of me as an agent, or else they are confused enough or nervous enough to desire my help.

Good luck to you as you make this decision. If you want to PM any questions, I'd be glad to help. Or call me - just PM me for my phone number.

 

[somarco]

I worked the large group (100 - 500 lives) market extensively for 20+ years and really have no desire to return on a full time basis. But I have had a few employers in the 50 - 100 market approach me about ideas on how to plan for 2014 and later. I am not sure I want to go there or not, but was reflecting on how participation requirements were relaxed when HMO's invaded the market.

 

[ABC]

If you have groups coming to you then there is opportunity you can't walk from.
Those size cases may benefit from a pooled market or could benefit for an HRA approach. You could be very successful with the HRA approach.

The larger agencies will not adopt this approach because there is not enough comp in it. For independent that is willing to work this could be the main tool in 2014.

All of the large agencies are starting to walk a way from the under 100 market.

I worked the large group (100 - 500 lives) market extensively for 20+ years and really have no desire to return on a full time basis. But I have had a few employers in the 50 - 100 market approach me about ideas on how to plan for 2014 and later. I am not sure I want to go there or not, but was reflecting on how participation requirements were relaxed when HMO's invaded the market.