A big part of the Affordable Care Act is being implemented next year, and planning should begin soon for MN small businesses.
Starting January 1, 2016, businesses with more than 50 full-time employees but less than 100 full-time employees are transitioning from the large group platform to the small group platform per Affordable Care Act requirements. What does this mean for those MN businesses offering group health insurance benefits?
Dramatic Swings in Premiums
Current businesses with over 50 full-time employees are all charged based on their own group's health risk. If the group is relatively healthy, they pay less in premiums than what the same unhealthy group next door would pay. When large groups under 100 employees switch to the small group platform in 2016, that all changes.
MN Small group health insurance plans are community rated, meaning they are rated based on a pool of small businesses in their area. Regardless of whether they are healthy or unhealthy, they pay the same premiums as the small business next door. Sometimes this will possibly mean a lower premium for unhealthy large groups that are switching to the small group platform, but it will also mean a much higher premium for healthy large groups who are switching to the small group platform.
Change in Plan Design
Many large groups are used to being able to customize their plan design with the carriers. Because of the community rating of small group health insurance, however, customization is unavailable for small groups.
Large groups switching to the small group platform will almost always have to change their plan design, and sometimes the change will be dramatic. This requires a broker who is willing to educate the employees on the new plan design to ensure they get the most out of their new benefits.
Quoting Other Carriers is Vital
As businesses transition from the large group market to the small group market, it is absolutely vital to work with a broker that will quote all the available health insurance carriers. Not only do the carriers' rates vary dramatically in the small group market, but different carriers have different interpretations on what constitutes a small group and large group. So depending on the makeup of your employee population, you may fall into the small group platform with one carrier and the large group platform with another. The difference could mean thousands of dollars in premiums costs.
Working with a broker who can help your company navigate the changes to make it easy for you, easy for your employees and ultimately the most cost effective is especially important. We at MNHI are dedicated to providing that service to current and prospective clients.
If you are a benefit administrator, HR Director or owner of a business that may be moving from the large group platform to small group, please call MNHI and talk a qualified licensed broker!
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