Groups Less Than 50
The Problem With Groups Less Than 50:
1) The first insurance principal that insurance students learn is the law of large numbers. A group of 5,000 employees has a large number to avoid an adverse selection, which is to avoid an abnormal population of employees with health risks. Take a group of 10 employees. If one or two employees have a health risk such as obesity, diabetes, cancer or heart bypass surgery the premium will increase dramatically and the remaining healthy employees will bear the burden of increased costs because of the claims of the unhealthy employees.
2) When an employee is terminated, the employer is held accountable for the administration of the continued health care that the terminated employee is entitled to through HIPAA legislation. This is bad for both employer and the terminated employee. The employer must be in compliance with cobra or state continuation depending on the size of the company. The terminated employee must then pay the ex-employer from 100-102% of the premium. The new increased health premium due to cobra for the terminated employee becomes more burdensome because before termination the employee had the health premium subsidized by the employer in most cases, by at least 50% or more. The ex-employee is now without a job and finds their health coverage double in cost. In the search for new employment finding an employer that sponsors a group health plan is crucial and even more difficult to do these days. Many employers are dropping their employer sponsored health care altogether.
3) A common strategy for employers to save on costs is to have their broker shop the market for a new health insurance carrier that can compete with the rising costs of the current carrier. If a switch is made, the employer must explain to employees (and sometimes their dependents) why the female employees and dependents must find a new Gynecologist because the current doctor is not in the network. Other problems often occur by switching plans which can stir up grumbling and dissention between employees and the employer. The employer is paying a huge sum for employer sponsored health care and in addition is subsidizing the costs for the employees…and now they are grumbling because the employer is just trying to save on expenses by considering an alternative low cost plan/carrier. In the words of Dr. Phil, “how’s it working for you?”
4) Why do you want to be in the insurance business? The whole system of employer sponsored health care revolves around the employer. The employer went into business doing whatever it is that they do because they saw an open door of opportunity. They went into business because they enjoy manufacturing those widgets they love or servicing those thing-a-ma-gigs they lovingly made. Why then do you allow your employer sponsored health plan take up more and more of your time, energy and profits? If you still like your group health plan we can help you…yes, we still do them representing Blue Cross Blue Shield, Aetna, United HealthCare, Humana and others. But if you would like to “get out of the insurance business,” save on costs and still retain great benefits that your employees manage giving them more options and most importantly controlling their own health care…call us NOW!
5) Costs are astronomical! Health insurance is a crisis for employers, as well as individuals. Since 2005, General Motors has added $1,500.00 to the cost of every car it sells in order to cover the cost of health insurance for their employees. The cost of health benefits now exceeds profits for most Fortune 500 companies.
6) With more and more employees seeking coverage elsewhere, many employers are faced with participation requirements.