Small Group and Individual Insurance Policies In and Out of the Exchange

There is good news and bad news for small businesses now that the ACA small group and individual exchanges are up and running.  The good news is that there are more options for you to offer health insurance to your employees.  These added benefits options can help you attract and retain the most talented employees now that the economy is picking up steam and competition for top talent is increasing in many industries and all across the State.  The bad news is that with more options comes more information to digest and compare, and not all of the essential facts are readily accessible nor clear and concisely presented.

Essentially, there are three options for small businesses that want to offer health insurance to their employees:  small group out of the exchange; small group in the exchange (“SHOP”); and individual policies in the exchange.  In terms of moving from your current offering to one of the above, we recommend that small employers take a “wait-and-see” approach, since there are many opinions and rumors, while hard facts are hard to come by at this early stage.  Here’s why.

If you offer insurance through a small group policy, should you move to the SHOP small group exchange?  Should you cancel your policy and move you and your employees to the individual exchange?  Or, if you don’t offer insurance, should you buy a SHOP small group policy via the exchange?  Our recommendation is “not yet”. 

The reasons for this are that some major carriers are not in SHOP (or not in certain regions of the State) and you may have to change carriers.  Furthermore, the breadth of plans (deductibles, PPO vs. HMO, etc) will be very limited within the exchange.  Finally, we have been told  that some carriers will  be reducing their networks of providers within the exchange so you and your employees may have to change doctors, even if you stay with the same carrier.  In fact, we are hearing that provider networks are estimated to have only 30-50% of the physicians on the exchange networks compared to non-exchange.   One reason  is that  carriers are reducing their reimbursements by up to 30%.  And, it seems that carriers are enrolling providers by a “you’re in unless you tell us otherwise” approach and burying the reduction in the paperwork, so we fear that as physicians find that, they will drop participation in the exchange plans and further reduce the network available to you and your employees.

The devil is in the details and the details have yet to be fully fleshed out.  Here at YPP, we feel that it is important that any company evaluating exchange plans check the physician networks very carefully to be sure their providers will be participating.  And, since the reimbursements appear to be less, it may take a year for the networks to stabilize. 

For companies considering dropping group insurance (those with under 50 employees who don’t have to comply with mandated coverage in 2015) and having employees enroll in the individual exchanges, we recommend they have brokers who have had staff certified to assist with the exchange meet with employees and help with that process.  Employees need to be sure they understand all the differences, particularly their out of pockets, costs between the various plans and not just make a decision based on the premium.   YPP’s broker has ensured their staff have this certification and we will be coordinate employee and client meetings as necessary.

Your total compensation package, including the fine details of your health insurance offering to your employees, is critical to attracting and retaining top talent to make your business grow and thrive.  And, this needs to include your HR policies that are aligned with the goals of your company.    

If you need help keeping up with this and all of the other ever changing aspects of California human resources, pick up the phone and give us a call to see if we are able to help you and your company.

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