Small Group

 2 - 50 employees  In California, AB1672 defines small group as employers with 2 to 50 eligible employees. There are many advantages to being a small employer group and if you are not sure if you qualify, please contact us and we can advise you.

Guaranteed Issue

The greatest benefit of being small group is that it is “guaranteed issue.” . This means that no group can be turned down for coverage as long as they meet requirements under California State Bill AB1672.  All rates and benefits are registered with the DMHC &/or DOI to assure that the benefits are consistently administered without prejudice or fraudulence.  Carriers are able to vary the rates by only + or – 10% from the filed rates based on health risk and group size.  This also means that your premium will be the same regardless of which broker you choose to work with or even if you go direct.  

Don’t be fooled by brokers who bait their clients by automatically quoting them a 10% discount, more times than not the carrier will come back with higher rates.

Examples:

1. Most carriers give all groups with 2 to 5 employees an automatic +10% due to the high risk of being a very small group. 

2. A 10-employee group applies and has one employee who is pregnant.  Underwriting assesses the risk and loads the rates +5%.

3. A 7-employee group applies with no health conditions and receives a 0% load, also known as standard rates.

4. A 25-employee group may apply without having to fill out a health questionnaire and still receives a –10% load based on past experience.  Many carriers offer promotional discounts to attract the larger small groups.

A good agent will know the carrier and product that your small group should be in to best take advantage underwriting requirements and promotions (Not all carriers are the same!).

Flexibility

The next best thing that a group product can offer is flexibility.  The more people you have in a group, the greater the variant of needs that exist.  Many group programs offer a variety of benefit plans for your employees to choose from.  HMO lovers can stick with what they like while PPO lovers can have their cake and eat it too.  By defining their contribution, the employer can contribute the same amount of money towards any plan.  It is up to the employee to determine if they want to spend the additional money for the more expensive plan.  Flexibility, it keeps a smile on all the employees’ faces.

H.S.A. -  Health Spending Account

H.S.A. is all the new buzz.   Not for everyone, but for those who appreciate and understand the value of a pre-tax / tax-deferred investment. 

The concept of the HSA was brought about to help out the future of Medicare.  Just like Social Security, Medicare is also at risk of failing and running out of money.  As a result the government has approved and promoted the HSA approach to healthcare.

How It Works:

Imagine you health benefits being in two parts:

1) a high deductible health plan administered by the carrier of your choice.

2) a self-insured investment vehicle to offset the high deductible. 

The HSA. compatible plan is a special type of high deductible PPO plan that meets specified government requirements.   Typically little to no benefits exists before the deductible is met.  Therefore the premiums for these plans are very affordable and can be a fraction of the cost of more traditional plans.

If you are familiar with how an IRA works you are half way to understanding the HSA.  In fact, the HSA is often referred to as a medical IRA.  The account is funded with pre-tax money and will continue to grow in the account tax deferred.  Medical claims paid for out of this account are not subject to taxation either.  The only time the money is taxed is if the money is used for something other than a qualified medical procedure.  For example: If a 45 year old used $5000 for a down payment on a car, that money would be subject to income taxes plus a 10% penalty.  If the person was over the age of 65, it would work just like a normal IRA and the person would only be subject to income taxes.

For a more in-depth understanding of how an HSA works and the additional benefits built within the plan, please contact us at 949-215-0196.