Using IFP for Small Groups

Jun 6, 2008

  1. arnguy
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    arnguy Guru

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    I am wondering what experience you guys have had replacing group insurance with IFP for small groups? Several years ago I did write for Pioneer and we were required to get a signed statement from each employee that stated that they understood that this was not group coverage. I believe it also stated that Federal mandates did not apply. I am considering offering GR to a small group inasmuch as their group plan has gone through the roof in premiums. This situation is in PA, so some requirements maybe didfferent than from other states.
     
    arnguy, Jun 6, 2008
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  2. Bob_The_Insurance_Guy
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    Bob_The_Insurance_Guy Guru

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    IFP is only good for small groups if:

    1. Everyone is healthy
    2. Everyone is aware that these are individual plans - they don't keep asking you to compare it with their group plan through United Health Care
    3. Everyone knows that it is portable - they can take it with them, should they leave the company, and
    4. Everyone knows that each individual would qualify for a different deductible, OOP Max, optional benefits, etc.
    What you do lose is your persistency rating. Since they know it's individual, the second they get a mailer from Mega Life, their gone, and you'll never know it.

    or

    If a PEO comes along, your sunk.

    That being said, with new small businesses, you can suggest that they, the business owner, offer a bit of a financial incentive for the individual to work for the company, and use that to pay for health care, that is portable.
     
  3. djs
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    djs Super Moderator Moderator

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    When you say 'Everyone is healthy', make sure you understand this goes beyond just the employees, and includes the dependants as well.

    I move a lot of IFP's after someone else moves them to IFP, simply because of a dependent issue that wasn't taken care of.

    You can't walk into a small group of 20 and replace it with IFP, somewhere there is a lurking health problem. You can do this in a small group of 5, but they are probably a very tight knit group, and if someone suddenly can't get their son insured, they will be back on group in a heartbeat. It isn't so much about the premium $$$ at that point.

    PA may be different. CA, small group is guaranteed issue, with a raf of not more than 1.1. It's usually not a bad deal compared to IFP, though definitely more expensive.

    Dan
     
    djs, Jun 7, 2008
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  4. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    Yes, my experience is there will be 10% w/health problems, but I haven't found this to be a problem.

    For those who can't qualify medically for ifp:

    1) state risk pool (if available)
    2) guaranteed coversion to ifp when group is cancelled (this is what we have here if FL)
    3) when group is cancelled they are instantly HIPAA-eligible, which in many states qualifies for GI
     
  5. djs
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    djs Super Moderator Moderator

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    But the costs of these alternatives usually defeat the purpose of switching to IFP.

    Of course, in CA, we don't have guaranteed conversion, which would, depending on the rates, make a difference.

    Dan
     
    djs, Jun 7, 2008
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  6. somarco
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    somarco GA Medicare Expert

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    Maybe, maybe not.

    The cost of coverage for one individual may increase significantly but drop even more for the rest of the group that is subsidizing the unhealthy risk.
     
    somarco, Jun 7, 2008
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  7. Crabcake Johnny
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    Crabcake Johnny Guru

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    Maybe one day:

    All states will handle uninsurables with an afforable risk pool, then allow small biz owners to contribute towards indie policy premiums.
     
  8. Guest
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    Not a bad idea but it is bad politics. You (folks) don't understand that out there in the real world everyone and their dog hates the carriers. The only business sector that people do business with on a day to day basis (as opposed to lawyers) which less popular than the oil companies is the health insurance companies... and they have brought it upon themselves by their mismanagement (and dare I say greed?)

    Given a choice between continuing with a private sector solution and government financing, there is no way the private sector is going to win. Talk to voters of both the Dems and the Reps and you will quickly learn that people are ready to dump the carriers for a government solution.

    I'm not saying this is better system, but just go talk to people. Ask them "Would you rather keep your insurance policy or be on Medicare?" and see what answer you get.

    I know how hard it is for guys like John and others who are so committed to the private sector to see how unpopular it is... but if they actually got out and talked with real people... not other agents... that they would understand that no one loves their health insurance carrier and no one thinks that what they pay for premiums is a fair or honest price (even though the prices ARE fair.)

    People (in CA) think all insurance companies are out to screw them... and they are especially antipathetic to the health sector. And I'd say they have good reason.

    The carriers have dug their own graves. It is just a matter of time before their death occurs (by regulation) and the dirt is thrown in over them.

    There will be no tears at that funeral... of that you can be sure.

    Al
     
    Guest, Jun 7, 2008
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  9. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    This must be a function of who you talk to, because I don't find this to be the case at all.

    I don't find that folks trust the government any more (and maybe a good deal less!) than they do the insurance companies.
     
  10. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    Affordable. What does that mean?

    Sick people consume more product, which makes them more expensive to insure. How is it unfair that they have to pay more?

    Why should healthy people pay more to subsidize unhealthy people?
     
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