The creation of the Health Insurance Marketplace provided employers with an excellent cost saving measure. Those employers offering health insurance to their employees faced skyrocketing premium prices month after month, and employers were hemorrhaging money to provide health benefits. The marketplace offered affordable health coverage to individuals and families. It was a no-brainer to drop employer group health insurance coverage coverage.
Employers are not always required to offer group health insurance in the first place. Employers with 50 full time employees must offer group health insurance; otherwise, the employer can decline to offer health insurance. Most small businesses have less than 50 full time employees, so as the premiums skyrocketed, the willingness for employers to offer group health insurance waned. Employers simply referred employees to the Health Insurance Marketplace.
Thus, employees from small businesses came out in droves to enroll in health coverage. Employers saved thousands of dollars in health premiums, and employees found affordable coverage elsewhere. It was a win-win prospect for small businesses everywhere. Now businesses might want to reconsider sponsoring group health coverage once again.
Blue Cross Blue Shield of Tennessee just proposed a rate hike of 62 percent for its members on the individual market.
This is not uncommon. The Kaiser Family Foundation recently authored a study showing the rate increases of particular Silver plans in 15 United States locations since last year. The premiums for the Second Lowest Cost Silver Plan rose by an average of 10 percent across the nation.
Blue Cross Blue Shield of Tennessee’s premium rate increases stemmed from high volumes of expensive claims from their Marketplace members. These facts are coupled with the belief that the insurer originally underpriced the market in 2014. While Marketplace plans represent only 7% of BCBST’s market share, it has been a source of significant losses since 2014.
The larger share of Blue Cross and Blue Shield of Tennessee’s health insurance business comes from employer sponsored health plans and publicly funded programs, such as Medicare and Medicaid. All of which are much more stable markets, for these particular markets include larger enrollment numbers which efficiently spread risk.
While many employers left the small group health insurance world because of volatility in the market and other factors, this might be the time to compare rates. As Blue Cross generally profits from small group plans, the company has a large appetite for group plan acquisition. As the market is more stable, employer group coverage may be competitively priced.
Another problem that faces Region 3 (the greater Chattanooga area) Marketplace members, is the lack of competition with BCBST. United Healthcare, who entered the entire State of Tennessee in 2016, has stated that they will not be offering plans on exchange in 2017. This leaves Region 3 with only one health insurance option–Blue Cross and Blue Shield of Tennessee.
At this point no other carriers have confirmed that they will come into the Chattanooga area. While Humana and CIGNA offer plans in Nashville, Knoxville, and Memphis, there is no concrete evidence stating they plan to expand within the State. Other possible new entrants into the Tennessee exchange include Aetna and Molina.
A few rules to keep in mind if you are a small business owner:
- The Employer must contribute at least 50% of the Employee Only premium amount – The employer does not have to contribute any for the cost of Spouse or Dependent Child(ren) coverage.
- There are participation requirements–one of the following conditions must be satisfied:
- 50 percent of employees must enroll in health coverage through your business.
- 75 percent of the remaining employees without an eligible coverage waiver (i.e. spousal coverage) must elect to sign up for health insurance through the group plan.
- Your company must be incorporated in the State of Tennessee to get rates from BCBST – If your employees live in other States, then they can be covered by BCBST.
- Employers with less than 50 Full Time Employees will not face a penalty for not offering coverage. Employers with 50+ FTEs are required to offer coverage under the Affordable Care Act.
We understand group health insurance at American Exchange. Whether you are a small business or a large employer, we can help you to find a plan to fit your needs and save you money! Give us a call at 1-888-995-1674*. We’re here from Monday to Friday from 8am to 6pm.
Andrew Hetzler is the Chief Operating Officer of American Exchange. He previously worked in the employee benefits division of J. Smith Lanier–one of the oldest insurance brokerage firms in the U.S. He enjoys writing about current health insurance issues facing employers.