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If you’re a small business in Kentucky with group health insurance through Anthem, you were probably shocked at how high your renewal was for January 1, 2018.  Fortunately, there are more health insurance options available for small businesses in 2018 than at any point in the last 10 years.

 

Why are the Anthem increases so high this year?

 

Our small business clients with pre-ACA “grandmothered” plans have seen anywhere from 20% to 60% increases this year from Anthem.  Additionally, we’ve seen dozens of groups in Anthem Association plans experience the same 20%+ increases.

 

From what we can gather, it appears the large increases are a result of Anthem using Federal reimbursement money intended (but not legally required) to buy down premiums for ACA / Obamacare plans.

 

Apparently, Anthem has been using these funds to artificially reduce the rates for their pre-ACA groups.  After President Trump signed an executive order ending these payments, Anthem had to raise the premiums on all non-ACA business (“grandmothered”, grandfathered, and association plan).

 

What can small businesses do to avoid these large increases?

 

In 2018 there are more health insurance options for small businesses than any other time over the last 10 years.  We are advising our clients who are seeing these large increases from Anthem to consider every option out there.  Here are a few ideas that may help your business:

Move to an Association plan at another carrier

 

This year, we’ve seen Humana and United Healthcare add association plans to their offerings.  With recent executive orders from President Trump specifically related to Association health plans, we expect to see more of these in 2018.

 

The key difference between these plans and Anthem association plans is the diversity of the participants.  Typically, with an Anthem association, you must be of a common SIC code, like CPA’s, Manufacturers, Architects, etc.

 

Conversely, Humana has a plan through Greater Louisville Inc. (GLI) and Commerce Lexington that offer a wide variety of industry SIC Code qualifiers.

 

The benefit being that a single industry may not be very healthy or diverse in age.  With a wide-ranging SIC Code qualification, there are more opportunities to put young, healthy members in from a variety of industries and thus bring the costs down.

 

So far, we’ve had several groups in Obamacare plans save over 20% by moving to these programs.  These programs have also been competitive with several of our pre-ACA “grandmothered” Anthem groups and Anthem Association plans.

 

Who should consider an association plan?

 

Any small business that:

• Currently has a pre-ACA plan (grandmothered or grandfathered)
• Is currently part of an Anthem Association plan
• Was forced into an ACA plan and saw a dramatic increase in premiums
• Does not currently offer benefits to their employees but would like to explore the possibility

Click Here to learn more about how Association plans work and how they can benefit your small business.

 

Consider a Level Funded Premium Plan

 

Large groups with more than 100 employees have been using self-funded plans for years to reduce their health insurance costs.  Small businesses with less than 100 employees typically don’t have the kind of cash flow necessary to take on the risk associated with paying out their own claims up to the specific stop-loss amount.

 

However, since the passing of the Affordable Care Act, every carrier has offered plans with benefits of self-funding to small businesses without the risk of a typical self-funded plan.

 

How they work:

 

With a fully-insured health plan, you pay the carrier your monthly premiums for the year and that’s your maximum exposure.  If your claims exceed the amount underwritten by the carrier, the insurance carrier picks up the tab.  The downside to fully insured plans is that if your claims are less than what was underwritten, the carrier keeps the surplus.  So, you would in effect pay for another company’s employees health care, not your own.

 

With a self-funded plan for a large group, you would keep the surplus in the company but the downside is that you would also be paying 100% of the claims amount up to a certain dollar amount per claim.  So, in a bad year, you could pay significantly more than you would have if you had a fully insured plan.  These are only available to large employers because only a large employer can handle the large fluctuations in cash flow.

 

With a Level Funded Premium plan or Alternatively Funded plan, you get the benefit of paying a fixed dollar amount in monthly premiums which is your maximum risk for the year, just like a fully insured plan.  However, at the end of the year, if your actual claims are less than the amount underwritten, you either get a check for the difference or a credit toward the following year’s premiums.

 

Any “self-funded for small group” program Freeman Insurance Services recommends comes with comprehensive wellness benefits to help keep your claims low.  With Humana, you even get the typical 360 Wellness benefits where employees can complete health-related tasks and qualify for 7% to 15% reductions in premiums.  This results in the equivalent of getting those refund checks or credits paid out during the plan year, rather than waiting until the end of the plan year or the following plan year.

 

Additional Benefits

 

Personally, my biggest complaint with small group insurance has always been that you have no idea what your claims are because carriers hide behind HIPAA to keep claims data from employers.

 

With Level Funded Premium plans, employers receive regular claims data so they know exactly how they are doing.  Well before renewal, you’ll know how the plan is performing, if you should expect a refund and most importantly, we can predict what your renewal increase is before receiving your actual renewal.

 

For a more in-depth explanation of how Level Funding works, click here.

 

Who should consider this type of program

 

Any small business that:

• Has a pre-ACA “grandmothered plan”
• Has an Association plan
• Put in a health plan after 12/31/2013 and only had an Obamacare Plan as an option
• Lost their pre-ACA plan and experienced an increase in premiums after moving to the ACA plan

 

 

Stay where you are

 

Anthem has consistently averaged less than 10% premium increases in the small group market.  This gives us strong reason to believe that this massive premium hike will be a one-time event.

 

Many of our clients will be taking the large increase this year and hoping for the best next year.  However, they have only chosen to do so after evaluating all of the programs outlined above, seeing the premium difference, and determining that they are better off staying with their current plan.

 

Final Thoughts

 

The renewals we’ve seen this year have been terrible.  With so many programs available, every small business should explore every options available and make an informed decision going into next year.

 

If your current broker has not discussed these programs with you, please email me or call my direct line.  I’d be happy to discuss these programs with you.

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