Participation in 2014

[insurehound]

After yesterday's Exchange conference call with Anthem, I asked the Participation requirement question. They did not have a solid answer but thought it would be relaxed or it would go away in the Exchange for small business. At least in California.

 

[Sam]

Lots of good info here, I agree with ABC, when an employer offers a plan that meets the affordability standards as well as the coverage standards, then their employees will not receive a subsidy in the exchange. As such, they will mostly continue to meet participation.

A lot of the advice we are giving these days is for companies to shift premium dollars that they were using to pay a portion of dependent cost into upping their employee subsidy, so that they can meet the affordability tests.

 

[ABC]

I think with every group plan out there the employer is paying at least 50% of the employee portion. Most employees are not spending more than 10% on their portion of the cost. Its the dependent cost the employees can afford.

Thats why some groups will be doing the employees a favor by dropping the group plan.

Lots of good info here, I agree with ABC, when an employer offers a plan that meets the affordability standards as well as the coverage standards, then their employees will not receive a subsidy in the exchange. As such, they will mostly continue to meet participation.

A lot of the advice we are giving these days is for companies to shift premium dollars that they were using to pay a portion of dependent cost into upping their employee subsidy, so that they can meet the affordability tests.

 

[Sam]

I think with every group plan out there the employer is paying at least 50% of the employee portion. Most employees are not spending more than 10% on their portion of the cost. Its the dependent cost the employees can afford.

Thats why some groups will be doing the employees a favor by dropping the group plan.

This may be true for your demographics, but is certainly not for a lot of firms in industries such as retail, restaurant, some kinds of construction etc... Lots of groups pay 50% of the employee premium and the other 50% is more than $200 a month, which is quite a bit more than 9.55 for anyone getting paid anything near minimum wage.

 

[leevena]

I think with every group plan out there the employer is paying at least 50% of the employee portion. Most employees are not spending more than 10% on their portion of the cost. Its the dependent cost the employees can afford.

Thats why some groups will be doing the employees a favor by dropping the group plan.

I don't know if I agree with this. If we assume that the average single rate is $700 per month, people will need to have an income of $35,000 or more or they will fail the affordability test.

 

[Ann H]

This may be true for your demographics, but is certainly not for a lot of firms in industries such as retail, restaurant, some kinds of construction etc... Lots of groups pay 50% of the employee premium and the other 50% is more than $200 a month, which is quite a bit more than 9.55 for anyone getting paid anything near minimum wage.

Agreed. I think there is a wide difference in the "norm" from state to state and from industry to industry. In AZ, we are a "Mom and Pop Business" state, where the large majority of businesses employ 20 or fewer employees. The norm is for employers to pay 50% of the EE rate, and 0% for dependents. Some industries, such as engineers and teachers for instance, enjoy far higher ER contribution to the premium in our state. Conversely, in other states, I've heard that teachers often pay a large amount for their own benefits and/or for their dependents.
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I don't know if I agree with this. If we assume that the average single rate is $700 per month, people will need to have an income of $35,000 or more or they will fail the affordability test.

Again, it's interesting how things differ from state to state. I would say our average EE rate is $350 to $450 per month.

 

[CHUMPS FROM OXFORD]

I don't really deal with group stuff in Ohio, Indiana and Pa (I pass the leads on and get a %), but there is no question that many employers are not paying at least 50%.

 

[somarco]

Average EE rate here is $500+ and most employers, especially in semi-skilled industry, are paying in xs of 50% of the EE premium to get the participation required by the carrier. White collar professional firms (attorney, engineer, etc) have rich benefits and high ER contribution.

Medical offices, unless they are large group practices offer little or nothing. Some endorse professional organizations (such as the GA Dental Assoc) and pay nothing for their employees. I have looked at this before and am surprised the plan hasn't blown up already. High rates, low employer contribution, adverse selection . . . a recipe for a death spiral.

A similar association for homebuilders and another for municipal groups. Same deal.

But most of the smaller employers, under 50 lives and blue to gray collar do not have group insurance and if they do participation is sketchy. Every once in a while I run across an employer group where the health insurance is some cheesy mini-med.

There is a lot of junk out there.

 

[leevena]

Agreed. I think there is a wide difference in the "norm" from state to state and from industry to industry. In AZ, we are a "Mom and Pop Business" state, where the large majority of businesses employ 20 or fewer employees. The norm is for employers to pay 50% of the EE rate, and 0% for dependents. Some industries, such as engineers and teachers for instance, enjoy far higher ER contribution to the premium in our state. Conversely, in other states, I've heard that teachers often pay a large amount for their own benefits and/or for their dependents.
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Again, it's interesting how things differ from state to state. I would say our average EE rate is $350 to $450 per month.

True observation, but even at $400 (easy math in my head lol) the person on the payroll making under $24,000 a year fails the affordability test (at 50% contribution). My point is that was we start to look at groups more closely, it will not be as easy as some may think.

 

[Ann H]

True observation, but even at $400 (easy math in my head lol) the person on the payroll making under $24,000 a year fails the affordability test (at 50% contribution). My point is that was we start to look at groups more closely, it will not be as easy as some may think.

You're right. That math absolutely does mean that participation will be difficult for those employers who have not paid a high contribution in the past. I don't know about other states, but in AZ the small group market is bound to implode except for groups in certain industries that tend to pay higher ER contribution and/or have higher paid employees. If those groups drop off, I wonder if any market at all will be left for the remaining small groups.