September 25, 2014
There has been a great deal of speculation over how businesses, based specifically on their size, will be affected by the Affordable Care Act. Among the most pressing issues, businesses want to know how their rates are being determined, their obligation to offer a group health plan, and how much freedom their new or renewed group health plans will allow.
In this article we'll look at how businesses over and under 50 employees are being affected by some of the new healthcare reform mandates.
Obligation to Offer Group Health Plan
Let's start with one of the most basic elements of healthcare reform for business: group size mandates. At the time of this writing, businesses with more than 50 full-time employees are required to offer a group health insurance plan. This, of course, is a conversation all in itself, but that's the baseline. Companies who staff fewer than 50 people are not legally obligated to provide their employees with healthcare plans.
Determination of Premiums
Companies with less than 50 employees who do, in fact offer health insurance, are regulated. By this, their premiums (as well as premium increases) are calculated using something called community ratings. Community ratings are used to calculate premiums by looking at a large numbers of insured individuals from specific geographic locations, to determine the average claim amount, age, health, risk factors and other criteria.
Premiums for groups over 50 are calculated in a different manner. Whereas community ratings look at large geographic regions to determine averages, the premiums for companies with 50+ employees are determined by the health of the group, as well as current health trends and other demographic information. If you're a company with over 50 employees and have just been hit with a large renewal rate, there's a good chance that your claims over their years have been higher than others - or are showing consistent signs of increase.
Plan Customization Options
When it comes to customizing group health plans, there are far more options for businesses with over 50 employees. Things like deductibles, copays, co-insurance and max out-of-pocket can be tailored more specifically to meet the group's needs. In contrast, smaller groups are left with fewer options. This is one of the key reasons to work with a health insurance broker who genuinely understands the new healthcare reform laws, and how to go about helping businesses select a plan that is affordable, generous in coverage, and becoming of their realistic needs.
Groups UNDER 50 Employees
- Not required to offer employees a health insurance plan
- Regulated (premiums are determined by community rating)
- Fewer coverage options compared to larger groups
Groups OVER 50 Employees
- Required to offer health benefits to employees
- Non-regulated (premiums determined by health of group)
- More extensive options for plan types, coverage, etc.
Alternatives to Traditional Group Health Plans
If you're a business owner or HR director in the Chicago area who has been dreading the process of renewing your 2014-2015 healthcare plan, Premier can help. We charge no fees for our services and specialize in working with groups of all sizes and from all industries. Whether you're concerned with getting the best rates or the best coverage, our agents will be happy to walk you through the entire enrollment or renewal process.
Contact our Lisle / Naperville IL health insurance agency today at 800-369-0287 or by e-mail to learn more, or to schedule a free consultation at your office.