Challenges Ahead for Group Health Insurance for Midsize Employers
If you’re a mid-size employer, you’re probably already aware of the challenges ahead. This includes employers with 51 to 125 or so full-time employees, the most challenging group in the country’s health market today. Why? Because these employers are caught right in the middle from a regulatory, vendor and contractual perspective. They must steer carefully through most of the respective challenges of the small-and large-group markets while forfeiting many of the respective advantages.
Firms that have more than 49 full-time employee and full-time equivalents are subject to Affordable Care Act employer-shared responsibility and reporting. Smaller companies are not. Those companies that sponsor fully-insured plans have experience-based premiums, while smaller companies do not.
Vendor consolidation has left many markets with only a handful of fully insured vendor options. This lack of competition allows past disqualifying business practices to become an acceptable practice.
The so-called level-funding products are increasingly available in this market creating a stepping stone to traditional self-funding. While these products can be useful in eliminating the 4% or so ACA premium tax, also known as the health insurer fee, this fee is a moving target. Enacted for 2014-2016 and suspended for 2017, they’re scheduled to return for 2018. In an effort to dissuade midsize employers from moving to self-funded contracts, several states have passed laws to create or raise individual and aggregate stop-loss level floors.
From a federal regulatory standpoint, the demarcation line between large and small employer varies by topic and tends to change with little notice. This makes it difficult for midsize employers to develop long-term strategies. For example, Congress mandated the ACA in 2016 which expanded the small group fully insured market to all groups with less than 101 full-time employees + equivalents. Many midsize employers made proactive changes based on this deadline. Then Congress canceled the expansion at the eleventh hour. Welcome news for midsize employers but perhaps bittersweet for those that had made proactive changes.
How can midsize employers successfully navigate through these shifting headwinds? Perhaps the key is developing a strategic plan and being willing to toss it overboard once the winds shift.
Coast General Insurance Brokers offer a variety of coverage options catering to the needs of businesses across California. If you’d like to learn more about protecting your business from liability or offering employee health coverage, contact us! We’ve been helping businesses minimize risk for over 40 years!