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Landscape of Small Group Plans is Changing – What are Your Options?

As we progress further into 2016, we have observed significant changes to medical products offered by the carriers who insure small groups.  Complicating matters is the fact that, not only are products changing, but the previous products are no longer available.  This has put small businesses in a bind and has left them to juggle conflicting goals of keeping costs in line with their budget while still providing employees with what will be perceived as a strong benefits package.

With the advancement of the Affordable Care Act, carriers have been held to strict guidelines within which their products must adhere to.  Most recognizable are the metal levels (i.e., Platinum, Gold, Silver, and Bronze) and actuarial values that each plan must fall into in order to be an approved product offering in the small group market.  For carriers to continue to adhere to these rules and to try to keep rising costs to a minimum, they are increasing member copays and imposing higher fees depending on where members seek services.  In days past, a member would be instructed by their physician to have an MRI and that member could simply choose any in-network provider, whether it be a freestanding facility or a hospital facility, with a minimal copay, such as $30.  Now members not only need to be concerned with whether or not their chosen provider is participating with the network, they need be conscious of what type of facility they are going to as well because there could be different fees based on where they go.  For example, a freestanding facility could be a $100 copay for an MRI but if that member goes to a hospital facility for that service they will be charged a $250 copay.  That is alarming to members and employers for two reasons:  Many members don’t know how their plans work to that level of detail and many members simply cannot afford that out of pocket expense.  We are seeing copays for emergency room visits soar to as high as $300 per visit and inpatient hospital admissions as high as $500 per day to a maximum of $2,500 per admission.  That is an expense many people in this region simply cannot afford and has resulted in people not seeking the care they need.

As a result of these changes, employers are faced with a dilemma.  Do they continue down this path to keep costs in line with their budget or do they search for richer benefit plans that don’t put so much of a financial burden on their employees?  This is a common question we are faced with as brokers.  There is no right or wrong answer to this.  Employers have to decide if they can absorb the costs associated with a richer benefit plan or if their employees can tolerate the increased out of pocket expenses.  One solution we would recommend as a way to meet in the middle would be to implement or change the structure of a Health Reimbursement Account or Flexible Spending Account.  A Health Reimbursement Account (HRA) is an account funded with employer dollars to provide employees with assistance in paying for their deductibles, copays, and/or coinsurance on an as needed basis when claims are incurred.  The employer sets the maximum amount of funding available to employees and sets the parameters within which the plan will operate.  If claims are not incurred, the money stays with the employer.  The second method, a Flexible Spending Account (FSA), works similarly to a Health Reimbursement Account but it can be funded with employer dollars or employee dollars or both.  Both plans provide tax advantages and a means for keeping premiums down for employers while alleviating what could be a significant financial burden for employees.  Contact one of Insurance Associates’ consultants for more information on how these programs can help bridge the gap between what is best for employers and employees.

Information about the Author:  Katie Ball has been in the Employee Benefits industry for fifteen years.  Prior to joining Insurance Associates Katie was with a third party administrator where she served as an Account Manager and Supervisor of the Group Administration Department.  At Insurance Associates, Katie works closely with clients, insurance carriers, and vendors to ensure that all employee benefit needs are met and are done so in the most efficient and cost-effective manner.  In the spare time, Katie enjoys playing with her two children and watching game shows.

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