Groups
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 David Short, M.D., David Civalier, M.D., Doug McMullin, M.D., Jack Kimple, M.D., of Redding Family Medical Group pictured with Margaret Beck
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FAQ

AB 1672 was passed in 1993 and changed small group health plan marketing.  It created the “guaranteed issue” environment for qualifying small groups of 2-50 employees.  This means an insurer may not decline coverage to a group if they meet the rules.  Further, they may not charge more than 10% over or under the “standard” rate to any group, regardless of health of the group.  The law also states that any employer-sponsored plan must be covered by these rules.   This effectively prohibited small employers from using individually underwritten policies for their small group participants.

 

Effective 1/1/2014 the Small Group Business changes again.  All groups will be given the same rate structure based on geography and census.  There are no Risk Adjustment Factors.   




Tax Benefits

Premiums paid by the employer for employee and dependent premiums are fully tax deductible by the employer.  The benefits are tax free to the employees.  Further, if the employer uses a Section 125 Premium Only Plan (often called POP) the employee is allowed to pay his/her share of the premium with a pre-tax dollar.  This also saves the employer payroll taxes on all the deferred premiums.

 



Today’s Market

The costs of health care are spiraling up again, as they did in the 1980’s.  Small employers continue to provide benefits to employees for the same reasons: employee security, retention, and competition with other firms. They are not required to do so, even under the ACA.  However, the costs are a continual challenge.

Insurers require that the employer participate in the premium to some level.  It’s usually a minimum of 50% of the employee only premium.  However, the new “employee choice” plans will allow the employer to pay as little as $100 monthly of the employees’ premium.  To help employee’s afford their share of the premium a Section 125 Plan is often used.

Many players are leaving the health insurance field.  Rural northern California has even fewer competitive choices.  Anthem Blue Cross of CA and Blue Shield of CA are by far the most competitive vendors in this area.  They have the best rates and networks in the far northern counties.  Often the value of the discounts or “negotiated rate” is worth the premium paid. These are dramatic discounts off the retail charge.  The plans are similar, but there are very distinct differences.



Anthem Blue Cross vs. Blue Shield

Anthem Blue Cross is a "for profit" corporation while Blue Shield is a "not for profit".  This means that Anthem Blue Cross will look to pay dividends to the stockholders. 




Partial Self-funding Approaches
There are many different ways a small employer may approach a partial self-funding of the health care costs. All provide some tax benefit to the employees and employer. There are several different ways to cost-shift the burden of the expense to those that actually use the plan. Conversely, they reward those that are healthy and use the plan very little. Our firm can prepare proposals showing you how this may benefit your firm.




   Qualified Waivers

Should an employee have other group coverage or MediCal, these are qualified waivers for a group plan and that person need not enroll.  However, it is very important to note that if an employer offers "affordable" coverage to the employee, the employee and/or family are not eligible for subsidies under the Exchange.  "Affordable Coverage" is defined as coverage in which the employee's share of premium for employee only coverage does not exceed 9.5% of the W2 income with that employer.  


Broker Service

The premiums quoted for our plans include all broker commissions.  If you purchase directly from the company, you pay the same premium but do not have a local broker.  As your broker, we will help you maintain your small group benefits package in good working order.  We assist in employee communications, act as a liaison between you and the insurer as well as your employees and the insurer.  We will “shop” all coverages including retirement plans and ancillary benefits (dental, vision, disability, Section 125) for you and help you get the most from your benefit dollar.

 

Downloads:

Seminar Small Group102813.pdf