Are you frustrated and bewildered with your increased health insurance premium?
You must be an individual or, like most Americans, own or work for a business with 2–50 employees.
Healthcare reform has transformed the entire US healthcare market. Everyone must reassess his or her options or lose out due to the increased premiums.
The Small Business Field Is Wide Open: Know Your Options
What is available for you today?
For starters, there are your traditional options from popular insurers such as Oxford, Horizon, Ameri-Health, Aetna and Health Republic, each of which offers unique small business plans.
One major benefit that the group insurance market has over the individual insurance market is that enrollees are not bound to their plan choice for the year. You are permitted to make plan changes throughout the year in the event that a particular need arises. A professional broker can guide you through the process.
Additionally, in an attempt to compensate for the increase in premium pricing by the ACA, the federal government began funding certain carriers that offer appealing new options for small businesses. One exciting insurer is Health Republic, which features very competitive rates. Health Republic has grown to be extremely popular in New Jersey. It features the highly regarded QualCare physician network, which is the largest physician network in New Jersey, and also includes a large network of physicians nationwide.
What’s their secret?
One major aspect of Health Republic’s structure is that it is not a traditional for-profit insurer. Instead, it is a consumer operated and oriented plans insurer (“CO-OP”). A CO-OP is operated as a nonprofit. The co-op is run by highly experienced healthcare professionals but is priced lower because it doesn’t need to turn a profit for shareholders. Any additional revenues must be returned to the insured, either by lowering insurance costs or by improving healthcare quality and benefits.
Another intriguing part of Health Republic’s co-op business model is that it is one of 23 insurers across the country that received a loan from the federal government to get off the ground. The low-interest loan, contrasted with traditional bank or investor loans, allots Heath Republic yet another price advantage.
It is important to stress that despite the government’s assistance in helping Health Republic set up shop, it is a private company, just like other conventional private insurers. The government is not at all a partner in the company, and no more involved in its operations than it is in the operations of other private insurers. This is a common concern that I hear from consumers, but it’s based on a misconception.
There are over 1,000 individuals who are insured by Health Republic through our agency, and we’ve found that the satisfaction rate amongst them is even higher than the norm for other plans.
Self-Funding
Another great option for New Jersey businesses is to purchase a self-funding insurance plan. For small businesses, self-funding plans are administered by the insurer, as with conventional plans, with similar copays, billings, reimbursements etc. The only real difference is that the rates and terms are often superior.
Self-funding is a very unique form of insurance, which is particularly popular amongst small businesses employing a young, healthy employee body. The self-funded plans prevent your premium from skyrocketing due to the pool of older and unhealthy insureds in the US, who must be covered despite pre-existing conditions due to ACA provisions.
Self-funding essentially isolates your group of employees from the general market and creates an insurance plan customized for them. These plans work well for business groups with six or more employees.
An added benefit of self-funding is that the premium rate is determined by averaging out the entire group. Everyone in the group, therefore, pays the same amount, regardless of age. Conventional insurers, even under ACA, use “age banded” premium ratings; the older you are, the more you pay.
There’s more.
Based on my experience, the most “oohs” and “ahhs” I hear when discussing self-funding revolve around their refunded premiums. People are skeptical that an insurer would actually return money that they paid out to them (other than in the form of medical benefits). Self-funded plans actually do just that!
Allow me to explain how this works. The premiums for these plans are split into three unequal parts. One portion goes to pay the administrative costs. Another portion goes into a claim fund, in order to cover the amount that the insurer expects to spend to cover claims for your group over the year. The remaining portion goes for stop-loss, in other words, to help the insurer cover claims that go beyond what it expects to spend on its enrollees.
At year’s end, the insurer assesses the amount it spent on the total claims for each group over the year. If the total spent is less than the total that the group contributed to the claims fund, the insurer returns the difference to the group. The claims fund represents the largest portion of where premiums typically go to. So, generally speaking, the amount that is potentially refundable is well over one-third of the total premium. Statistically, over 50 percent of enrollees in these plans get some of their premiums refunded each year.
What Plan Is Best for Me?
As a New Jersey–based professional insurance agent, I spent an inestimable amount of time studying every nook and cranny of the options discussed amongst many other available plans. I have also learned a lot during all the time I spent discussing options with owners of New Jersey businesses of all sizes and industries over the past years.
I can tell you that there is no one-size-fits-all answer. Every business, and every group of employees, needs their own unique plan. You need to know the fine print of every plan to understand the differences, advantages and disadvantages of each one. Only then can you efficiently choose a plan that’s best for you and your business.
It is very satisfying for me to utilize my knowledge and experience to help businesses and individuals make a smart and educated choice for their health insurance—one that they’ll ultimately be happy with for the long term. I’m always on the front lines looking at the new options on the market, studying them, and then offering them to suitable clients.
The more knowledge, the more choices, the better.
I look forward to discussing your options with you.
Mark Herschlag is the founder and CEO of Cosmo Insurance Agency, which is based in Ocean County. Cosmo Insurance Agency offers personalized solutions for individuals and businesses looking to obtain health, life, dental, long term care or disability insurance.
For more information or for a free, no-obligation quote, please call 201-817-1388 or email [email protected].
By Mark Herschlag
