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Small business health insurance rate changes

1,420 Views | 10 Replies | Last: 4 yr ago by flown-the-coop
AgPT06
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AG
We are finally going to add group coverage with a PPO to be more competitive with hiring. Will just have 3 FT employees on the plan (rest are staying on spouse plans) but expect to open a second location and another 3 to 5 employees soon. My question is for other small business owners is concerning rate swings. My understanding is that they change month to month based on usage etc. So say two of the 3 employees have a huge hospital bill. How much of a swing would be seen? Just looking for any first hand info on how much rates change month to month.
Stive
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AG
They change year-to-year, not month to month.
AgPT06
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AG
Ok. My understanding from the broker for the plan of our small size a month to month change could occur on the rates. Maybe I misunderstood. Will be calling tomorrow.
Stive
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AG
Ill be the first to admit that I'm not an expert when it comes to group health plans but I've seen quite a few of all size groups and I've never seen one that changes month to month.

AgPT06
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AG
Likely a misunderstanding on my part. Between looking at all the plans, HSAs, dental, vision, etc etc it was info overliad. He may have said it can change each time we add an employee. I'll get it clarified. Thanks for taking the time to respond.
texagvet95
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OP, unfortunately what you will find is that group health plans were not designed for small business. As with most benefit programs they were designed with corporate America in mind. Small business gets hammered. What else you will learn is most "health insurance brokers" know just enough to confuse you and rarely give you a straight answer to simple questions. My favorite question to the broker is " what would you do if you were me". Watch them squirm. The sales pitch is offer group health plan to attract and maintain talent. I disagree. A healthy, challenging, competitive pay and well run environment is what attracts and maintains talent. All that being said I do offer group health cause I care about by team. Financially it is a financial burden that inflates every year without explanation. Cheers!
AgPT06
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AG
Thanks for the reply. I did call broker. They did clarify my misunderstanding. It is an annual underwriting thing, which is what I expected. I agree and understand that group insurance isnt really for small businesses and is why we have put it off 3 years. But like you said, I value the employees we have and the ones we hope to employ so we will eat it. My broker was actually pretty straight forward. He said that financially it doesnt make sense and Im better off staying with Medishare that Im currently on, but we are going to move forward. Ive got kids and this year we had a broken arm and some other urgent care issues. It was a good reminder that the protection of a decent plan may be worth it if we can afford it.
dallasiteinsa02
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I haven't done it in a while, but our employees were individually rated. The 60 year old female becomes a massive liability while I could go out an hire a massive number of 30 year old and below males. Just prepare yourself. You will look at each employee as a number. Luckily I was already doing just that in our industry.
Comeby!
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AG
We started out with 3 people at one time then ballooned to over a dozen quickly. Our broker was very good and helping navigate this process. Let me know if you'd like his info.
LOYAL AG
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AG
Small businesses are allowed to offer stipends in lieu of insurance if you want to do that. The rules are similar in that you have to offer it to all FTE rather than just the one off person you don't want to lose. Still it's an option. You could offer like $200/month stipend for someone to buy their own or be on their spouses plan.

We've actually seen some price stability in recent years after rates skyrocketed in the wake of Obamacare. I'm part of a group that actually had no rate increases in 2019 despite all of us getting a year older. Rates for 2020 haven't come out yet but my broker actually thinks we may not see much again. Fingers crossed since my rates have almost quadrupled for less coverage since that law went into effect just five years ago.
iluvpoker
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dallasiteinsa02 said:

I haven't done it in a while, but our employees were individually rated. The 60 year old female becomes a massive liability while I could go out an hire a massive number of 30 year old and below males. Just prepare yourself. You will look at each employee as a number. Luckily I was already doing just that in our industry.


Your last two sentences struck me wrong. I always looked at everyone who worked with me as family. Our success as a company is due to all the people who work there, both present and past. I encourage owners to not look at workers as numbers, rather look at them as people with families just like you.
flown-the-coop
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AG
We started 10 years ago with offering a plan the covered about 8-10 employees initially. As mentioned, they will rate individual members (and their family members) at this level (or used to, we've grown and I am not involved in the process anymore). I got a nice little report during the quote process that showed by age and sex what was driving the costs. Then in year 2 I got same report that also included claims. You could sort out who was driving the costs shared by the entire group. You have to have the mental fortitude to ignore this if you want to keep family and numbers separate.

Its a fact of underwriting, but young single males will drive your costs lower as they rarely go to doctor, do not get pregnant, and generally have less health concerns. We are in construction, so our demographic trended this way naturally. That being said, you can influence participation rates on your plan. This is done by offering the right plan options that may get those folks that drive your costs down to sign up and also by adjusting your employer contribution. When we began, we paid like 75% if employee only, then 50% on spouse and family. We also offered a lower premium, high deductible option. Made it a no-brainer for those young males to sign up, which drove the costs down for the group.
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