Recent news reports have disclosed that insurance companies have requested premium increases of 15% to 20% for most 2016 individual health insurance plans in Nebraska.
Remember, this applies to individual / family policies. A visit to the Nebraska Department of Insurance website includes a link to healthcare.gov where proposed rate increases of 10% or greater for individual and small group major medical plans are to be listed. There are currently no small group rates included on the list for Nebraska. Do not conclude that all small group rates will be less than 10%. This is preliminary information and subject to change. However, there is an expectation that small group rate increases will be more moderate than individual plans.
www.doi.nebraska.gov | https://ratereview.healthcare.gov/
Small employers have responded to the requirements of the Affordable Care Act in several ways. Small employers are not required to provide health insurance benefits to their employees, but the ACA mandates that everyone have health insurance or pay a penalty. Many employers recognize a group health insurance plan as a critical component to provide for the welfare of their staff and to attract and retain employees.
• My employer has kept our pre-ACA health insurance plan. This option allowed employers to continue to offer the health insurance plan that was in place prior to 1/1/14. Under current guidelines, these plans can remain in-force until 9/30/17. Pre-ACA plans may not include all of the benefits, such as maternity or mental health. The rates are based on the group’s claim history and demographics. Rates will fluctuate from employer to employer. Historically, the premiums for the pre-ACA plans have been lower for those employers with younger and healthier employees when compared to an ACA compliant plan.
• My employer offers ACA compliant health insurance. The plan rates are determined by employee age, geography, and in some cases, tobacco use. The group’s claim history is not a factor in determining the premium. The rates for the same product will not change from employer to employer.
• My employer switched to a self-funded health plan. This plan design is continuing to evolve as a popular option for small employers that are looking for more cost effective employee benefits. The employer assumes more risk for paying claims in exchange for the potential of lower premiums. A typical benefit is that the employee has to meet the initial deductible and will pay a percentage (such as 20%) of the next $5000 in medical expenses; the employer assumes the balance of the financial responsibility (self-funds) for the first $25,000 in claims of each person; then an insurance company is responsible for claims in excess of $25,000. There is an underlying estimate of what the actual claims will be when the plan is designed. If the claims do not exceed the estimate, then the employer will realize the projected savings. If actual claims are more than expected, the employer is financially responsible.
• My employer discontinued our group plan. Some employers faced the decision of what to do when it appeared that their employees would actually be in a better financial situation if they could go to the Health Insurance Marketplace to purchase health insurance. Traditionally, individual health insurance premiums have been lower than group rates. Those employers that ended group plans should take another look at it for 2016. Now that there is 2 years of experience with the Marketplace, it’s time to evaluate whether a group plan should be reconsidered.
One thing is certain – the health insurance market will continue to evolve and change. You should be represented by a professional insurance agent that is well versed on the Affordable Care Act, participates in a trade association such as the National Association of Health Underwriters, and is certified by the Health Insurance Marketplace. These criteria will make a difference in their ability to advise you.
Have a great rest of the summer.