Have you recently received your annual group health insurance renewal? Are you dreading gathering all of the necessary information for this year’s group health quote? Do you know what factors the health insurance company will look at when determining your premium amount?
My name is Aaron Ochs, and I’ve been working in Employee Benefits for over 20 years. I’ve worked with small businesses and large businesses, and for a time, I even worked for one of the nation’s largest group health insurance providers.
With November and December being busy months for group health insurance renewals, I want to answer some questions you might have about the group health insurance process for large businesses.
Here are the top 6 questions I get about large group health insurance:
- What constitutes a large group health program?
- When can my employees enroll in my group health plan?
- What factors affect large group health premiums?
- What information will my Employee Benefits Consultant need to prepare my group health proposal?
- Are there other options large businesses can consider other than traditional insurance plans?
- What should I look for in an Employee Benefits Consultant?
1. Is my business a large group health plan or a small group health plan?
If your business has more than 50 employees, you will need a large group health plan. If, however, your business is located in California, Colorado, New York, or Vermont, you must employ over 100 employees to be considered a large group.
Companies that have between 2 and 50 employees are categorized as a small group health program. Again, though, if your business is in California, Colorado, New York, or Vermont, a small group health program can have up to 100 employees.
Some companies can be considered a large group one year and a small group the next. These companies are “on the bubble” and need guidance from a benefits consultant to ensure that their company is categorized correctly.
Because of government regulations and group health insurance company policies, being incorrectly categorized can negatively impact your business. If you are miscategorized, you may face fines and even the termination of your group health policy.
2. When can employees enroll in my large group health plan?
The enrollment guidelines are the same for both small and large groups. Employees can enroll themselves and their loved ones during open enrollment or a special enrollment period.
When your policy renews, your employees have the opportunity to enroll in your group health plan or to waive this option. This is the open enrollment period.
There are occasions when your employees may need to enroll in your group health plan throughout the year. This usually occurs when you hire a new employee or when a current employee has a qualifying life event.
Qualifying life events include:
- Spouse with a change in their health plan – If an employee’s spouse loses their employment and their health insurance, they have the opportunity to be added to your employee’s group health insurance at that time.
- Birth of a child – An employee has 30 days to enroll their newborn child on their plan.
- Marriage – You may need to add a new spouse or step-children to an employee’s group health plan.
- Court-ordered health care – Courts can order that a parent has to include a child on their health plan. This would need to take effect immediately.
3. What will the insurance company base your premium on?
Large group health plans are medically underwritten. Medical underwriting is the process by which a health insurance company uses your employees’ medical histories to determine if they can offer your company a policy.
Insurance companies also use this information to determine your premium. Depending on what they discover in your employees’ medical histories, the insurance company can deny coverage to you or they can inflate your premium rates.
Mostly, insurance companies are looking at your employees’ pre-existing conditions. Your premium amount can change depending on the type and severity of pre-existing conditions.
Examples of Pre-existing Conditions
So, what are pre-existing conditions?
A pre-existing condition is a medical condition for which you have received treatment or diagnosis before enrolling in a health insurance program. Lupus, epilepsy, depression, heart disease, and diabetes are all examples of pre-existing conditions. Also, if your employee is pregnant before enrolling in your group health plan, their pregnancy is considered a pre-existing condition.
This might leave you asking, “Don’t most people have at least some kind of pre-existing condition?”
Many people have chronic conditions that insurance companies do not consider as pre-existing conditions. Acne, high blood pressure, and asthma are examples of chronic conditions that are not labeled as pre-existing conditions.
Are all group health premium rates affected by pre-existing conditions?
Prior to 2010, all group health premium rates could be rated higher depending on pre-existing conditions. However, because of the Affordable Care Act, insurance companies can not consider pre-existing conditions when writing small group health plans, but this ONLY APPLIES to small group health plans.
If you are a large group health plan, your insurance company can still consider pre-existing conditions when rating your policy.
4. What information do I need to gather for my company’s group health insurance proposal?
For your group health proposal, you will need to provide the following information.
Total Number of Employees
You will need to provide an accurate count of all the employees working at your business. This includes employees that are not eligible for your group health plan.
Total Number of Employees Eligible to Enroll in Health Coverage
In addition, you will need to provide a count of employees who are eligible for your plan. Some employees may not be eligible for your plan because they are seasonal or part-time. Only include those who are eligible to enroll.
Total Number of Employees Enrolling
Lastly, you will need a count of the employees who will opt to enroll in your group health coverage plan.
Employee Census and Waivers
For your employee census, you need to supply the following information for each of your employees:
- First and last name of all your employees
- Home address for each employee (You must also provide this for employees who part-time or waiving their insurance enrollment.)
If your business has between 50 and 100 employees, your insurance company may or may not require spousal and dependent information on your census. If you have more than 100 employees, oftentimes the insurance company will only want information on the employees.
While not common, some insurance companies will also want to know which of your employees use tobacco. Because this information is hard to verify, most insurance companies will not ask for this information.
Also, you will need to provide waivers from those employees who do not wish to enroll in your group health program.
Employer Contribution to the Employee Premiums
If you make contributions to your employees’ health insurance premiums, your insurance company will need to know this information. The insurance company will need to know if you do any of the following:
- Do you contribute with a flat dollar amount or a percentage of the costs?
- Does the amount you contribute or the percentage you contribute differ depending on whose premium you are contributing to, i.e. employee, spouse, children, or family?
- Do your contributions to employee premiums depend on some other reference point like salary? For instance, you contribute less to higher-salaried employees and more to lower-salaried employees.
- Do your contributions to employee premiums depend on the class of employee? For example, management gets one amount and union employees get another amount.
- Do you make contributions to your employees’ HRAs or HSAs? If so, how much do you contribute?
Claims and Membership Information
If your company has over 100 employees, you will be required to produce other claims and membership information.
24 months of monthly claims
You will need to provide the amount that you paid in claims each month as well as the amount of claims incurred each month.
24 months of monthly membership counts
With larger companies, employee turnover can cause the number of group health enrollees to change fairly often. Because of this, you will need a monthly count of the number of enrollees each month from the past two years.
24 months of high-cost claims
A high-cost claim is defined as a claim that exceeds $25,000 per 12 months. If you have claims that satisfy that definition, you will need to provide that information to your insurance company.
Employers with between 50 and 100 employees will not have access to these types of data and are not required to provide this information.
Copy of Previous Two Health Insurance Renewals
If you do not have your past two group health renewals readily available, you can acquire this information from your current Employee Benefits Consultant.
Federal Tax I.D. Number, SIC Code, and Company address
The insurance company will need your Federal Tax I.D. to verify information you submit. They will also need your SIC Code and company address.
A SIC code (Standard Industrial Code) is a four-digit code assigned by the federal government to identify a company’s industry. Group health insurers use this information to determine your premium amount. Insurance companies charge different premium amounts by industry.
Your company address can also impact your group health premium. Insurance companies charge a higher premium for companies located in more populated areas. This is due to the greater number of providers and expert services located in those areas.
In some instances, an insurance company may request the following additional information.
Workers’ Compensation Carrier
Your group health insurance company may want information about your workers’ compensation insurance.
Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs)
HRAs and HSAs can have an effect on the health choices your employees make. Group health insurance companies sometimes give better premium rates to companies that utilize these options.
Stop-Loss Insurance Renewals
If you have been self-funded, your group health insurance company will want the last two renewals from your stop-loss insurance policy.
5. Are there other group health options for a large group health plan?
Other than traditional group health insurance, the only other option available to large businesses is self-insurance or self-funding.
Many large businesses opt to self-insure their group health program. Self-insurance can be an excellent way to control your group health costs and to save money.
For the most part, the information to get a proposal on self-funding is the same as applying for a fully-funded group health program.
Stop-loss insurance policy
A self-funded group health program will require a stop-loss insurance policy. This policy will provide additional coverage you may need in the case of a catastrophic claim that your business could not afford to pay.
Stop-loss insurance, like a traditional group health plan, is medically underwritten. Because of this, you need to provide medical histories of your employees to the stop-loss insurance company.
6. What should I look for in an Employee Benefits Specialist?
Having a knowledgeable and hard-working Employee Benefits Specialist is crucial to creating a group health program that meets your expectations and desires, accounts for your employees’ needs, and is cost-effective.
A knowledgeable Employee Benefits Specialist should not only negotiate on your behalf with group health insurance companies, but also present you with other products and possibilities that may better suit your group health goals.
Your Employee Benefits Specialist should make sure you are in compliance with government policies.
When you meet with your Employee Benefits Specialist, they should discuss the following with you.
- How are your benefits included in your strategic plan?
- What is your 3 to 5-year expectation related to benefits and their costs?
- What is your annual budget for benefits?
The expertise of your Employee Benefits Specialist will determine the quality of your group health program.
Looking For Ways to Reduce Your Group Health Costs?
One of my favorite aspects of being an Employee Benefits Consultant is helping businesses of all sizes explore a variety of options that will provide excellent health coverage for their employees while reducing costs for the employer.
We direct our clients to the best group health provider for their specific situation, help them set up HRAs or HSAs, investigate if self-funding is a good option for their business, along with providing a myriad of other services.
With over 25 years of combined experience on our Employee Benefits team, we have the expertise to help you find the most effective solutions for your group health program.
At Baily Insurance Agency, we believe in building great relationships with our clients. We don’t merely sell our clients a product; we partner with them. Together, we explore ways to help your company reduce its group health costs.
We tailor your business’s group health plan to meet the needs of your unique business!
Get in touch with us today so we can partner together to find the best group health solutions for your business!