Small Group Health & Reform

[ABC]

Once we see the establishment of the exchanges then we will have an idea if small group brokers will survive.

If the exchanges are broker friendly then there is a chance. If the exchanges are not broker friendly then the game is over.

Look at any small group and 1/2-3/4 of the employees would qualify for a decent subsidy under the exchange if not group plan is in place. The micro groups under 10 lives will with out doubt drop for the exchange.

It will be interesting to see what happens to the groups 20-49 lives. If they drop plans. They very well could if the norm is not to have a employer plan in their industry.

There has been a lot of BS about partial & fully self funded in plans in small group. I do not think this approach will work in small group.

 

[leevena]

I agree with most of what you say, except the self-funded part. Successful self-funding in the small to medium size market has been going on for years. To characterize it as BS is not fair or accurate.

 

[gussle285]

Small Group 2-49 lives is dead to any independent broker. It makes sense for employers to just pay the fine to the IRS for not providing coverage to their employees. I have spoken to quite a few small business owners and that is exactly what they are going to do. Then those employees will be in sticker shock when they see how much the individual policies will cost them. Shame on you Justice Roberts.

 

[stuy119]

It's going to be state-by-state for whether brokers will be accepted or not. In IL, I'm out, and am glad I've been planning another strategy for the past couple of years - I think I'm well ahead of most other agents on this.

 

[gussle285]

I started to shift gears into other lines of insurance after Obamacare was passed in 2010. It sounds like you are ahead of the game. Best of luck to you.

It's going to be state-by-state for whether brokers will be accepted or not. In IL, I'm out, and am glad I've been planning another strategy for the past couple of years - I think I'm well ahead of most other agents on this.

 

[Dave020]

Small Group 2-49 lives is dead to any independent broker. It makes sense for employers to just pay the fine to the IRS for not providing coverage to their employees. I have spoken to quite a few small business owners and that is exactly what they are going to do. Then those employees will be in sticker shock when they see how much the individual policies will cost them. Shame on you Justice Roberts.

2-29 are exempt from the fine completely. 30 or more employees are subject. I would expect huge attrition in the 2-29 market.

Remember, family members of an employee who choose to enroll in the exchange versus the employer plan as dependents (often with no employer contribution) lose their eligibility for the subsidy if they are in the subsidy income range for the individual exchange. They are penalized for not enrolling in the employer's plan as dependents.

 

[ABC]

The subsidies will be the real issue for small groups dropping plans.

If the employees can get a better deal through the exchange with the Fed. paying most of the premium, the employer is going to have a hard time justifying a group plan.

Lee, self funding the small group market is not worth the risk.
Even at spec rates of $15,000 its not worth it.

If I have a fully insured group with $100,000 in premium with 20 on the plan. The numbers don't work with self funding. Is your TPA going to come in and write the case with a fixed cost $50,000? Will you come in with an aggregate of $50,000?



Tell me how I am wrong?

 

[leevena]

The subsidies will be the real issue for small groups dropping plans.

If the employees can get a better deal through the exchange with the Fed. paying most of the premium, the employer is going to have a hard time justifying a group plan.

Lee, self funding the small group market is not worth the risk.
Even at spec rates of $15,000 its not worth it.

If I have a fully insured group with $100,000 in premium with 20 on the plan. The numbers don't work with self funding. Is your TPA going to come in and write the case with a fixed cost $50,000? Will you come in with an aggregate of $50,000?


Tell me how I am wrong?

A few things.

Successful small group self-funding has been around for decades. Just because you have never seen it, or seen it work successfully may be the issue.

There are many ways a small group can self-fund; a high deductible with a 105 underneath, a spaggraget or agg only product, or within a captive insurance company.

A 20 life group is a perfect prospect for this type of program. Now this is not to say that all small groups should self fund, just the ones that qualify. To begin with small group SF requires that the employer pay the "fully insured equivelant rate". If the group performs well, they get a refund, similar to the old retro plans. What you do is compare the fully-insured rate from the carrier to the "fully insured equivelant rate" to see if it's worthwhile. If the group finds the quote worthwhile they are limited to the "fully-insured equivelant rate" for the year. If something goes wrong and they get a large rate change, they can simple go back into the GI market.

 

[ABC]

Lee,
I have heard of this approach before but every time I quote the numbers they are higher than what the fully insured premium is.

Can you post a group comparison on a fully insured plan vs your self funded option? Small group

 

[leevena]

Lee,
I have heard of this approach before but every time I quote the numbers they are higher than what the fully insured premium is.

Can you post a group comparison on a fully insured plan vs your self funded option? Small group

We had this discussion back in May within the the posting of "How To Get into Groups".