Small Group Options

[Grouper]

It appears that the small group market is going to get poleaxed at renewal next year.
- new fees and taxes increase premiums by 10%+
- low cost generic only rx options are no longer allowed
- composite rating is discontinued
- unisex rating is implemented
- maximum $2000 ded and $6500 OOP
etc

Non-grandfatherted groups that offer a low plan for free and let employees buy up will now lose their most popular plan and all will have to buy up to a plan that costs a lot more than it did the year before. groups that could only meet participation because of the low plan will lose many enrollees. Many other scenarios exist, of course, but few of them result in a happy buyer.

But what are the options?

It looks to me like the SHOP small group exchange isn't going to be the real competition for the existing small group market, but that the individual insurance Marketplace is.

The top carriers dont want to even be in the SHOP, but are going to participate, in the most limited way they can, because they have to if they want to be in the individual exchange.

Employers only get the small business tax credit in SHOP, but the plans will cost more and be more restrictive. As always, the employers personal coverage decision is going to drive the decision and they don't want a local HMO with a small network, gatekeepers, etc. And they dont want to pay more for their own coverage than they could outside the exchange.

The individual exchange is the only place to get the low income premium subsidies, but will the employer/ decisionmaker find the coverage level they want there? Are the SHOP and individual exchange benefit options to be the same?
It looks like a 58 year old business owner with a 15 life group is going to bet a shock when he goes from composite rates on an HSA to age based rates on a lower deductible plan whose rates now include new fees and taxes.

What about PEOs with composite rates for small groups....will that be a huge beneficiary of this?

 

[Ann H]

You have some very good insight. I can tell from the way you write that you have experience in the health insurance business, especially the group market. We have been talking about these very issues, and are anxiously awaiting news from the carriers about plan designs, networks and premiums. Thank-you for posting, and please be sure to post again and join our discussions.

I agree with you on almost every point you made. Whether or not the small group market implodes depends on a lot of variables, and the specific situation of each employer group. As you mentioned, some business owners will not want the narrow networks, formularies and restrictive HMO/ACO practices found in the exchange. It will be interesting to see what transpires.

 

[insurehound]

Maybe I'm a little slow but wouldn't the composite/age banded rate issue be dependant of the age of the employees in the Group?

 

[Grouper]

Maybe I'm a little slow but wouldn't the composite/age banded rate issue be dependant of the age of the employees in the Group?

Not sure I understand what you are saying. Everything starts with age banded and then the carrier provides averaged or "composite" rates when the group is larger typically 10 plus.
It is hard to cross a group back and forth from step to composite because a third get better rates and a third get worse rates with one or the other.
Better to give all a 7% increase than some a 40% increase and some a 30% decrease.
Those getting the decrease are quietly happy but the ones with the increase are in hardship and howl/ drop coverage.
It's upsets the equilibrium to go, in next years case, from composite to step and its just one more disruptive factor in a market that only thrives on stability.
One more cost increase to add to my list- rx copays will now count towards the out of pocket limit on copay plans like they do on hsa plans now. This is a 7% or so rate increase.
When the impacts of Obama are become real next year- for those who support the market the wave of discontent will be hard to contain.
Like the step vs composite issue, those that get the subsidies and are happy will be silent and those that get their cost doubled will be LOUD and there will be many, many of them!

 

[Yagents]

Some calculators at the bottom of the page of this website help determine "pay or play" or "small biz tax credit" or "penalty vs. premium" calculations
https://benecomplink.com/services/

 

[Ann H]

Some calculators at the bottom of the page of this website help determine "pay or play" or "small biz tax credit" or "penalty vs. premium" calculations
https://benecomplink.com/services/

THANKS FOR THE LINK!

The penalty calculator for the individual mandate is really interesting. Put in a high income, and say that there was no qualifying health insurance for the prior year, and no reason to be exempt for the penalty. When the result is shown, it gives a clear explanation of how the individual mandate penalty was calculated, using the highest of the dollar amount of percent of income. For instance, I didn't know that the percent of income rule allowed you to deduct the tax filing threshold first.

 

[Yagents]

So, the more expensive small group plans have to comply with the 2k deductible max, but large groups don't. Picking winners and losers again.....small biz' are the losers.

Feds weigh in on PPACA cost-sharing limits | LifeHealthPro

 

[amy.skalicky]

It appears that the small group market is going to get poleaxed at renewal next year.
- new fees and taxes increase premiums by 10%+
- low cost generic only rx options are no longer allowed
- composite rating is discontinued
- unisex rating is implemented
- maximum $2000 ded and $6500 OOP
etc

Non-grandfatherted groups that offer a low plan for free and let employees buy up will now lose their most popular plan and all will have to buy up to a plan that costs a lot more than it did the year before. groups that could only meet participation because of the low plan will lose many enrollees. Many other scenarios exist, of course, but few of them result in a happy buyer.

But what are the options?

It looks to me like the SHOP small group exchange isn't going to be the real competition for the existing small group market, but that the individual insurance Marketplace is.

The top carriers dont want to even be in the SHOP, but are going to participate, in the most limited way they can, because they have to if they want to be in the individual exchange.

Employers only get the small business tax credit in SHOP, but the plans will cost more and be more restrictive. As always, the employers personal coverage decision is going to drive the decision and they don't want a local HMO with a small network, gatekeepers, etc. And they dont want to pay more for their own coverage than they could outside the exchange.

The individual exchange is the only place to get the low income premium subsidies, but will the employer/ decisionmaker find the coverage level they want there? Are the SHOP and individual exchange benefit options to be the same?
It looks like a 58 year old business owner with a 15 life group is going to bet a shock when he goes from composite rates on an HSA to age based rates on a lower deductible plan whose rates now include new fees and taxes.

What about PEOs with composite rates for small groups....will that be a huge beneficiary of this?

USHealth Group has some solid options for small businesses, and they are not subject to the exchange mandates, so they offer choices that are not found elsewhere. They are actually a partnership that was initiated by small business owners, self-employed and individuals looking for corporate-level buying power on a smaller budget.