Health insurance renewal season is finally upon us, and businesses all over the country are scrambling to find the right strategy to combat rising costs. Group health insurance premiums continue to outpace inflation, and while most employers are feeling the pressure of rising health care costs, smaller employers may face a heavier burden. Health insurance is about to change in a big way for your business; both large and small.
In 2015, companies with two to 49 full-time employees are considered “small groups.” If you’re in this category, your rates are determined by county, and there is no fluctuation for demographics of the employee base, such as average age or the industry in which an employer operates. Companies of this size in the same county all pay the same rates.
The market for employers with 50 to 99 workers is different. In order to offer coverage, employers need to submit a census to each carrier with their demographic information. Company industry is also taken into account, and there is much more flexibility with regard to the plan designs available. The option of self-funding the health plan also exists.
If your business crosses over that 50-employee threshold, you’ll typically be able to build a flexible benefits program better suited to your workforce.
In 2016, the small-group market will be extended up to 100 employees. This will cause a significant amount of change in the 50 to 99-employee space:
- They will no longer have plan design flexibility; their plans will need to fall into the Affordable Care Act’s tiers of platinum, gold, silver and bronze, as the under-50 employee market does today.
- Demographics will no longer matter. A younger company with healthy 20-somethings will likely see a large increase in premium at renewal this year because that “discount” will disappear. Conversely, an employer with an older population in a higher risk industry will very possibly see its rates go down.
- The option to self-fund a health plan will be lost in 2016.
The carrier market may also change. Today, insurers treat the two-to-49 and 50-to-99 categories as two distinct markets, and how they’ll handle the merger of them remains unclear. Smaller employers have a tougher challenge to bring premiums down, because they have fewer health plan members and therefore less leverage than a larger self-insured employer.
WHAT DO YOU DO?
We have a feeling that your current broker has been more or less “transactional” in your health insurance renewals to date. NARFA brings strength, strategy, large group buying power, and full administrative services to support your business goals. If you haven’t yet requested a community rating analysis, you should do so immediately. This will show what the potential renewal increase will be if you’re moving into community-rated, fully insured plans, or out of them.
The right strategy moving forward should involve exploring trade associations such as NARFA, with a group purchasing collaborative buying products like health insurance with large group buying power. Businesses are rated using the experience of the group, not the methodologies assessed on the open small-group market. The result is lower rates and bigger discounts.
NARFA programs have been successful since 1929 in standing by our members during uncertain times. Please contact us to learn more about why member businesses in the automotive, roads, fuel, and related industries continue to stay ahead of the curve.