Health care used to be one of the more scrutinized types of insurance, but that’s no longer part of the landscape.
Under the Affordable Care Act (ACA), the only criteria that determines price for small group health insurance is date of birth, zip code and whether you smoke or not — making it one of the few insurances where risk isn’t really considered, says Pete Seminaroti, vice president of the Healthcare Division at SeibertKeck Insurance Agency.
But even in the ACA era most business owners need a competitive health plan.
“Why do employers provide benefits? Not only to retain the employees they have, but also to entice a strong candidate as a new employee. Employees look beyond wages to health benefits,” Seminaroti says. “Benefits are important to retain and hire good people, and that still overshadows the other issues.”
Smart Business spoke with Seminaroti about trends in Ohio health insurance.
Who needs to buy health insurance?
Practically everyone needs to purchase insurance, either as an individual or group. If your employer doesn’t provide coverage, you need to enroll for an individual plan.
As business owners, the ACA has changed the rules for providing coverage. If you employ two to 49 full-time equivalent employees, you aren’t required to provide insurance as a small business. If you have 50 to 99 employees, you are considered a large group and need to provide insurance by 2016. Those with 100 or more employees must provide insurance by 2015. Failure to comply will result in government penalties.
What are the biggest factors to consider when purchasing health coverage?
Obviously, pricing drives most things, when we make a purchase privately or corporately.
Another large factor is the benefits structure. More than ever business owners want to ensure their network of providers, doctors, hospitals and medical facilities is strong. The insurance options have narrowed in the small group market; before, you might have had 50 to 70 choices, and now, it’s been simplified to about a dozen.
An owner also wants to go with a quality company that processes claims efficiently, with few errors. Typically the industry has done a good job of that. When you consider how many claims are processed daily, the number that go awry is minimal.
Finding the right insurance is easier when business owners can draw from their health care adviser’s knowledge. This ensures the owner has their choice of plans with the proper coverage and good network at a price within their budget.
With limited underwriting, are prices rising more than usual? Wasn’t Ohio projected to face large increases?
Over the past couple of years, there was a lot of that going around — Ohio was projected to increase anywhere from 40 to 80 percent.
In truth, some rates have gone up significantly, while other small groups have benefited from the ACA. An increase or decrease can highly depend on your small group’s makeup. In the past, if you had a group with high utilization, you were forced to stay with the same carrier for multiple years and your rates would increase. Now, that same group cannot be penalized because risk is no longer a factor.
What other tools are available to help?
In Ohio, we have a co-op that’s starting to bid out to small groups. It’s supposed to cost 10 to 15 percent less because it has eliminated the top layers of an insurance company. The co-op is run by a board of trustees comprised of the companies that have plans with that co-op. It will be interesting to see how the first year goes. If it’s successful, more co-ops may start.
There has been more interest in certain levels of self-funding. The self-funding industry came out with new structures that don’t expose employers to as much risk. It’s also a way to avoid some of the ACA taxes.
The health care insurance environment will continue to change over the next five years, and having a knowledgeable agent will be crucial in navigating the best course of action. Currently, most businesses still need to offer health insurance, and many employees, given the choice, would prefer for their employer to pick the health plan. Working with your trusted health care adviser, you can create a plan that will work for both the company and offer solutions for the employees. ●
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