group plans Archives

Small Business Owners: Should You Offer More than One Type of Health Insurance Plan?

Posted on October 24th, 2020 by Cassandra Love5 mins read

If you own a business that employs fewer than 50 people, then you are not required to offer your workforce group health insurance – but that doesn’t mean that you can’t, or that you shouldn’t. Many small business owners find that having healthier and happier employees is worth the cost and the administrative headaches of providing a healthcare plan, some go even further: they offer multiple plan options for their workers to choose from. Going this route may not be right for every small business, but if you’re looking to keep a diverse workforce satisfied, then it might be right for you.

health insurance in a blue border with a green check next to the word yes in green too — *Employees prefer health insurance over a raise in pay, and it is a huge deciding factor for job seekers.*

Offering Health Insurance: The Stats

If you’re not currently offering a healthcare plan to your employees, you may want to take a look at a few stats:

40%: The percentage of workers that say that healthcare is their number one priority when it comes to benefits.
88%: The percentage of job seekers who say that they would give health benefits “some consideration” or “heavy consideration” when choosing a job. 46% said it was a deciding factor.
56%: The percentage of people with employer-sponsored health benefits who say that whether or not they like their health coverage is a key factor in deciding to stay at their current job.
50-60% of a worker’s annual salary: The amount it can cost to find a direct replacement for them if they leave their position.
$4,000: The average amount it takes to hire an employee.

The numbers above should give you an idea of how important offering group insurance to your employees can be to recruiting, retention, and to your bottom line. Adding flexibility to your plan options can only increase those benefits.

green pie chart with the numbers 76%, 20%, and 4% divided into it — *Percentage of employees who offer one or more plans to their employees. 76% offer 1 plan type.*

If you are currently offering one type of insurance plan to your employees, then you’re not alone. According to the Kaiser Family Foundation 2019 Health Benefits Survey:

76% of small businesses offer one plan type

20% offer two plan types
4% offer three or more plan types

If you’re choosing between plan types, you might want to take a look at a breakdown of what other small employers are choosing:

Point of Service (POS) plans: almost half of small employers – 47% – chose this option, according to a recent survey. POS plans are a hybrid of PPOs and HMOs: they have the lower premiums and primary care physician requirement of HMOs, but are slightly more flexible.

HMOs: This type of plan, which requires that employees choose a primary care physician, get referrals to see specialists, and stay within a narrow network, accounted for 26% of small business plans
PPOs: 15% of plans were this more flexible type, which have larger networks and fewer requirements than an HMO, but also have higher premiums.

Offering Plan Options: The Factors

Now that you know all the relevant facts and figures, and we’ve established that offering at least one plan is a good idea, let’s take a look at the factors that should go into determining whether you decide to offer more than one plan type.

The ages and health needs of your employees: If you’ve got a workforce completely populated by Millennials or X-ennials who are single, childless, and healthy, then offering a one-size-fits-all high deductible health plan might be a great choice for you. You and your young, healthy employees could both save money on premiums, and they could contribute money tax-free to an HSA. But if you have some older employees, or employees who need to visit their doctor often, then they would probably prefer a plan with a higher premium and lower deductible. Adding a PPO into the mix would probably work for them, especially because they might not want to have to see their primary care physician every time they need to visit a specialist.

Location: If your employees all live and work in one small area, then they might not need to pay extra for a PPO with a wide network. However, if you have a lot of commuters who are spread out over a large area, they may prefer the flexibility of a plan with a larger network.
Budget: You need to think about what both you and your employees can afford when it comes to choosing a plan. If you really can’t find it in your budget to contribute to higher premiums plans, then stick with offering a cheaper option – it’s better to offer one plan than no plan! On the other hand, if most of your employees are older and/or have families and are willing to pay for a more full-coverage plan, but you have a few younger, more budget-conscious employees, consider offering them a second, cheaper option.

There’s always a lot to consider when choosing whether – and how – to offer health insurance to your small business’s employees. If you need more input, turn to your employees themselves – you can always offer an anonymous employee healthcare survey so that they can tell you exactly what they want. And if you need still more help, turn to EZ! We can answer all of your questions about offering multiple plans (or anything else!), find you the best plan options, and get you super fast, accurate quotes, and we’ll do it all for free. To get started with us today, simply enter your zip code in the bar above, or to speak with an agent directly, call 888-350-1890.

What Will Employer Healthcare Costs Look Like in 2021?

Posted on October 12th, 2020 by Cassandra Love8 mins read

If there’s one thing that we can all agree on, it’s that 2020 has been an unusual year, especially when it comes to healthcare. We’ve seen a once-in-a-lifetime pandemic, and we still don’t know what all the effects of it will be. Take, for example, costs for employer-based healthcare. If you’re an employer, you’re right to be wondering where your health costs are headed in 2021 – will they skyrocket? Level off? Maybe even go down? Unfortunately, the answers to these questions are not as clear-cut this year as they have been in previous years, but we can take a look at what some experts are projecting, as well as what you can do to help keep costs down.

This Year’s Cost of Care

piles of hundred dollar bills strapped together by a band laying on top of each other — *Healthcare costs have surprisingly been down this year; spending anywhere from $75 billion to $575 billion less than expected.*

To get a better idea of why predicting healthcare costs for 2021 has been so difficult, we need to take a look at what healthcare costs have been like this year. As you might expect, dealing with the coronavirus is expensive: California’s state ACA Marketplace, Covered California, estimated that the costs to test, treat, and care for coronavirus patients this year will be between $34 billion and $251 billion; America’s Health Insurance Plans predicts the cost will total $56 billion to $556 billion over a two-year period.

Even with those astronomical numbers, we can’t simply jump to the conclusion that insurance costs are going to skyrocket next year. It looks like the total costs of healthcare in the U.S. are actually down this year; in fact, one estimate is projecting that we will have spent anywhere from $75 billion to $575 billion less than expected on healthcare by year’s end. One actuarial firm is even saying that some self-insured employers could see a 4% drop in healthcare costs in 2021. How can that be? While the coronavirus has been an unexpected expense, in some cases, it has been balanced out – or even cancelled out – by the fact that many people are postponing or cancelling regular clinical care and elective treatments due to coronavirus.

But before we get too excited about a possible drop in healthcare costs, we need to look at what the experts are predicting. And, like everything else this year, it’s unusual: there are multiple possible scenarios for how much employer healthcare costs will rise.

Multiple Scenarios

3 arrows pointing in different directions — *So far, there are 3 possible scenarios as to how much healthcare costs will be next year.*

Medical costs are one of the most vital bits of information for insurance companies as they figure out plan costs for the coming year. With this year being so much in flux, it is unclear what insurers are going to do; in fact, business advisory giant PricewaterhouseCoopers (PwC) has taken the unusual step of offering multiple scenarios for what could happen to employer healthcare costs in 2021. “This is an unprecedented report for us,” said Ben Isgur, leader of PwC’s Health Research Institute. “In the 13 years we have been doing this, we made a projection of the coming year and never felt the need to do scenarios.” Their 3 scenarios for 2021 are as follows:

Medical spending continues to stay low, with people opting out of non-coronavirus related care. In this scenario, costs would only rise by about 4%, which would be one-third lower than the average growth over the last five years.
Medical spending could be “medium,” and costs would rise at the same rate as they did from 2014 – 2020: around 6%.
Spending could be very high and result in a 10% increase in costs.

These numbers might not be across the board for all businesses in all areas: it might depend on where they are located and how much the coronavirus has affected their area. For example, businesses in an area that has been relatively unaffected by coronavirus will most likely see the usual increase of about 6%, while those with a surge in the virus, but a drop in people seeking care for other things, could see a rise closer to 4%. But if all of this other medical care gets pushed into next year? Then we could see a rise in healthcare costs of around 10%, which would mean the highest rate of medical-cost inflation since 2007.

For now, it does look as if some insurers are raising rates, and these increases seem to vary by plan type. For example, recent filings with the District of Columbia’s Department of Insurance, Securities and Banking related to small groups for 2021 show that Aetna filed for an average increase of 7.4% for health maintenance organization (HMO) plans and 38% for preferred provider organization (PPO) plans, while UnitedHealth proposed an average increase of 17.4% for its two HMOs and 11.4% for its PPO plans. They may be anticipating a surge in claims as 2021 gets underway.

A Surge Next Year?

graph of money bars going up with a red line moving upwards across the top of each bar — *Insurance costs could skyrocket next year due to people not getting treatment.*

What many employers are concerned about now is that final, high-spending scenario. With so many people putting off necessary treatments, insurance claims could skyrocket in 2021 as people get sicker. Skipping out on preventive care could also present a large problem, as people may miss out on being diagnosed with underlying issues. “[Employers are] worried that some of these elective procedures will simply be bunched up next year and some people will be sicker next year … because certain things weren’t detected earlier,” said James Klein, American Benefits Council president.

Other things that could drive up costs? Increased coronavirus testing as employees return to work, prescription drug cost increases as pharmaceutical companies work on coronavirus treatments, and higher operating costs for hospitals and physicians as they try to keep up with the need for protective gear. Finally, let’s not forget that, as people struggle with isolation and anxiety, mental health costs will probably continue to rise – and now is certainly not the time to skimp on mental health care benefits for your employees.

What You Can Do

If costs do end up rising significantly, it might seem like the best thing to do would be to choose plans with higher deductibles or contribute less to employees’ premiums, which would pass some of the costs onto them. This may help to reduce your spending in the short-term, but it’s probably not the best long-term strategy. Studies show that putting more of the cost of healthcare onto your employees actually discourages them from seeking preventive care: for example, families with a higher deductible are less likely to take their children to see the doctor, even if the visit is free. In the long run, this could mean that your employees and their families will be less healthy, which could mean higher healthcare costs.

So what should you be doing to help manage healthcare costs and keep your employees healthy? Here are a few strategies:

Probably the best thing that you can do right now – and continue to do in the future – is to offer telemedicine as an option to your employees. Virtual healthcare exploded in popularity during the pandemic, and many patients love its convenience, while many employers love how cost-effective it is. Speak with your insurance company and make sure that they will continue to cover it – and encourage your employees to take full advantage of it.
Healthcare technology doesn’t have to end with telemedicine. You can offer “virtual chronic care solutions,” which can reduce the need for regular doctor visits. This could include things like Bluetooth-enabled glucose monitors that link with smartphone apps.
Instead of raising costs for your employees, try narrowing the network included in your plan. If your employees are already happy with their covered doctors, it may not be necessary to include a wider range of providers.
Speak to your insurance company, or one of our knowledgeable agents, and have them help you examine your employees’ healthcare costs. For example, are their providers jumping right to expensive tests and surgeries, or are they more likely to start with effective preventive measures?

The only thing we know right now about 2021 healthcare costs for employers is that we don’t know a whole lot. Right now all you can do is move forward on the assumption that costs will go up, as they do every year, and try to find ways to keep costs down. The best way to do that? Contact EZ, and speak with one of our agents. They can give you cost-saving tips, and can also find you a great plan at a great price – and they’ll do it all for free. To get started, enter your zip code in the bar above, or to speak with an agent directly, call 888-350-1890.

Group Health Newbies: Don’t Be Caught Off-Guard When Shopping for Your Business’ Plan

Updated on August 6th, 2023 by Cassandra Love6 mins read

If you’re a newbie shopping for group health insurance for your small business, how are you feeling about the whole process? Confident? Nervous? Confused? We get it, there’s a lot of feelings to feel when it comes to picking a plan. But we’re here to guide you, and steer you past some of the common surprises and pitfalls that may come your way.

You Might Need More Info Than You Thought

caucasian hand holding a pen filling out a survey — *Conduct an anonymous employee health survey prior to shopping, so that you know what your employees want in a plan.*

We’ll start you off with an easy one. When it comes to getting accurate quotes, you used to be able to simply provide the age ranges of employees. Now you need to have their exact date of birth, as well as the dates of birth of any spouses or dependents they want to cover. Don’t be caught fumbling around for info, make sure you’ve collected all of your data before even looking for a plan. We would suggest conducting an anonymous employee health survey prior to shopping, so that you have all of the facts at your fingertips, as well as a good idea of what your employees are looking for in a plan.

A Provider You Thought Was Covered Isn’t

A lot of people are attached to a certain doctor or healthcare provider. When choosing a plan, you need to pay close attention to the network that is offered, especially since many plans are reducing the size of their networks to cut insurance costs. You could end up with unhappy employees who are unwilling to enroll in your plan if the network is too small or if their doctor isn’t included. And if this is your second time offering insurance, pay extra close attention to any changes made to the network; plans can change from year to year, so the providers that you were sure were covered, may not be.

Your Employee Isn’t Eligible

time sheet — *Employees are usually required to work at least 30 hours to be eligible for certain plans.*

This one might really come as a surprise. You’ve decided to offer healthcare to all of your employees, but that doesn’t mean that all of your employees are eligible. The state your business is in, your insurance company’s rules, or even the policy you choose can dictate the number of hours an employee must work to be eligible for your plan. Employees are usually required to work at least 30 hours to be eligible for certain plans; they must also satisfy a waiting period before they are covered. It could be disastrous to extend coverage to an employee who signs up, only to find out later that they were ineligible for the plan. They could end up saddled with a giant medical bill even though they thought that they had insurance.

You Need to Communicate with Your Employees – A LOT

Keeping your employees informed about their health coverage is not a courtesy, it’s an absolute must. You need to provide a Summary of Benefits Coverage (SBC) to participants and beneficiaries prior to enrollment in the plan, at renewal of the plan, within 90 days of a special enrollment period, and within 7 business days of a written request.

You also need to give each employee covered under the plan a Summary of Material Modification (SMM) when there are changes made to their health benefits. We know, that sounds like a lot of paperwork, but it’s important that you familiarize yourself with all of these notices. Remember, EZ’s agents can help you manage all of the crazy insurance admin that you have to deal with!

Prescription Drug Pricing Is Complicated!

If your employees are counting on prescription drug coverage in their group health plan, then you’re going to want to take a closer look at how your chosen plan covers medications. All drugs are priced differently, and generics cost less than brand name medications, but what you might not know is that the same drug may be priced differently by different insurance companies. The same drug might even have a different copay on different plans with the same company. Familiarizing yourself with different plans’ drug formularies can help to cut down on prescription price surprises.

One more thing that you might not have realized in regards to prescription drug coverage is that some plans now actually have a separate drug deductible. Just as with a general deductible, your employees would have to meet a set amount of drug expenses out-of-pocket before their plan would begin covering the cost of prescription medications. Again, this is where an employee health survey would help to give you an idea of what your employees need, and what you need to avoid when looking at healthcare plans.

A High Deductible Isn’t Always a Bad Thing

Yes, a high deductible can sometimes be a burden to employees, especially those with lower incomes, and you might think that if you’re providing healthcare you should avoid any plans that might pile high out-of-pocket costs onto your employees. But you might be surprised to find that some employees actually prefer these lower premium plans, especially if they rarely use medical services and are just looking for a safety net in case of emergency. This is especially true if you pay a higher percentage of their (low) premiums (meaning you’ll still be saving money), choose a plan that is HSA-eligible, and then contribute to those health savings accounts. HSAs have tax advantages for both you and your employees, and having that money put aside means that employees will be able to cover a surprise medical expense.

The list of things you need to know about healthcare plans as an employer can seem endless, and it may feel like you are constantly being surprised by some new rule or protocol. But we promise, you’ve got this! And we’re here to support you, simply contact one of EZ’s knowledgeable agents and you’ll have all the answers to your insurance questions at your fingertips. We can also sort through all of the plans on offer and get you instant, accurate quotes so you can find the best plan for your business and your employees – and we’ll do it all for free! No hassle, no obligation, and no surprises! To get started with us, enter your zip code in the bar above, or to speak to an agent, call 888-350-1890.

Self-Funded Health Plans Could Mean Money Back in Your Pocket

Posted on June 8th, 2020 by Cassandra Love6 mins read

Providing healthcare for employees is expensive, and, as an employer, you take on most of the cost. In fact, employers pay an average of 82% of the cost of employees’ premiums, which can add up fast. It’s the price that you pay to ensure a happy, healthy workforce. But if your employees remain relatively healthy all year, all of those premium dollars you’re contributing might never get used. If you’re wondering if there’s a way to provide healthcare to your employees and possibly get money back at the end of the year, then you should look into self-funded (or self-insured) health plans.

50 dollar bill inside of a pocket — *Self-funded plans allow you to give employees health insurance with money back in your pocket.*

How Self-Funded Plans Work

Offering a self-funded, or self-insured, healthcare plan to your employees means that you are basically taking on the responsibility of paying for any healthcare claims that come up throughout the year. Instead of your employees (and you) paying a fixed monthly premium that goes directly to an insurance company, your employees pay into a pool of money that you set aside to pay for any medical expenses, like doctor or hospital visits or prescription drugs. It sounds pretty straightforward, right? Let’s take a closer look at how they differ from traditional, fully-insured plans.

Self-Funded vs Fully-Insured

There is a big difference between the way self-funded and fully-insured plans work. There are advantages to self-funded plans: they can offer more flexibility, and are often not subject to the same regulations and taxes that fully-insured plans are. Having one of these plans may also mean getting money back at the end of the year. But to help you look more closely at whether one of these plans might work for you, here’s how the two types of plans compare:

Monthly costs – The monthly costs of a fully-insured plan are fixed. You pay a set premium price to your chosen insurance company, and this price is based on how many employees enroll. It will only change if that number changes. The insurance company uses this money to pay claims across a large number of employers.

With self-funded plans, however, you have both fixed costs and variable costs. You will still work with an insurance company to gain access to their network of doctors and hospitals and so you will pay some fixed administrative fees. However, you won’t have to pay for the profit margin that the insurance company adds to its premium prices, so you’ll be saving money on fixed costs. The variable costs will be the healthcare claims themselves. This amount varies per month based on how many claims your employees make. You will basically estimate how much you think your employees will need for healthcare costs per month and put that amount aside. This money is purely for your employees, unlike in a traditional plan, in which an insurance company uses premium dollars to pay for healthcare for employees of multiple businesses.

Claims payment – With traditional plans, employees seek care within the insurance company’s network, and the insurance company processes the claims and pays the bill according to the agreement you have with them. Employees are responsible for any deductibles and copays in their plan.

With a self-funded plan, employees still seek care with a network of doctors and hospitals, but they submit their claims directly to their employer. The claim is paid out of the money that you have set aside for that purpose.

Unused healthcare dollars – One of the frustrating things about traditional fully-insured plans is the inflexibility of the fixed costs. You pay a fixed monthly premium which doesn’t change no matter how few healthcare dollars employees actually spend, and you have no possibility of getting any money back at the end of the year.

But with a self-funded plan, each year you review the total month amount you set aside versus how much you actually paid out in claims. Any amount left over is split between you and the insurance company you’re working with, according to your agreement. For example, if you put aside a total of $150,000 for the year, but only had claims totaling $100,000, your year end balance would be $50,000. In this situation, you might pay $15,000 to the insurance company for administrative costs, leaving you with an extra $35,000.

The Risks

There are benefits to self-funded plans, but also risks. There is a reason self-funded health plans are usually associated with bigger businesses: larger companies have a bigger pool of employees paying into the healthcare fund, and so there is less of a chance of one large claim devastating the employers’ finances.

scale with a question mark on each side with one weighing down more than the other. — *There are benefits and risks to self-funded plans, so you have to outweigh the two.*

If you have a younger, healthier workforce, and your business doesn’t have a high risk of physical injury, then a self-funded plan could work. But if you have an aging workforce or employees with health issues, self-funding could place too much of a strain on your finances. And remember, one unexpected large medical expense, like an organ transplant, could spell disaster for your business, especially since you don’t have a lot of employees to keep premium dollars coming in.

You do have one option, however, to lessen the risk. If you have decided that you want to take the leap and try a self-funded plan, then you can purchase stop-loss insurance to protect your business from a catastrophic loss.

Whatever type of plan you’re considering, EZ.Insure can help. We get it, it’s complicated and there’s a lot to consider – so come to us, speak directly to your own personal agent, get the best possible advice, and the fastest, most accurate quotes, all for free. We’re here anytime you need us so get started today by entering your zip code in the bar above. Or to speak with an agent directly, call 888-350-1890. No hassle, no obligation!

Offer Your Employees More Choices with a Cafeteria Plan

Posted on April 16th, 2020 by Cassandra Love4 mins read

What comes to mind when you hear the term “cafeteria plan”? Lunch! Well, these plans have nothing to do with what’s on the menu. “Cafeteria plan” is the informal name for Section 125 of the Internal Revenue Code, which allows employers to offer a la carte benefit options to employees. Employees can choose which of the offered benefits are right for them, and pay for them pre-tax.

What Are Cafeteria Plans?

a display of different foods in a buffet manner. — *Offer your employees more options of health insurance with a cafeteria plan.*

Just like walking through a cafeteria and choosing dishes, with a cafeteria plan, employees can decide which healthcare options they want. Examples include vision, dental, or HSAs/FSAs. It is important to note that cafeteria plans are not a type of health insurance. They are a way to let employees use pre-tax money to pay for the types of coverage they choose.

To qualify as a cafeteria plan, the plan must include:

At least one qualified pre-tax benefit – these can include things like HSAs and FSAs, which allow employees to put aside pre-tax money to pay for medical expenses throughout the year
At least one qualified taxable benefit – for example, an employer may allow employees who don’t want any of the offered benefits to choose a cash alternative as part of their salary. This is in contrast to traditional group plans, in which an employee isn’t compensated for opting out of coverage. This cash will, however, be taxed.

The Advantages of a Cafeteria Plan

Cafeteria plans are an attractive option for a diverse workforce that is used to having choices. For employees, not only do they get to choose only the benefits that are right for them, but they also get significant tax advantages. They can contribute pre-tax, thus saving money. Because they are taking pre-tax money out of their pay, their paychecks will be smaller, and they will end up paying less in taxes.

For employers, there are a few main advantages:

Employees with smaller paychecks mean paying less in payroll taxes.
Employers may be able to attract and keep staff with a personalized benefits plan.
Unused FSA funds remain with the employer.

The Disadvantages of Cafeteria Plan

For employees, there aren’t many big disadvantages to having a Section 125 cafeteria plan, but there are a few things for them to remember:

Employees are locked into the plan they choose for the entire year – with only a few exceptions,
One disadvantage of a cafeteria plan is that employees are locked in for a year.
employees must wait until the next enrollment season to make any changes

If employees choose a benefit like cash in place of coverage, they will incur a tax penalty.
Any funds put aside but not spent by the employee are forfeited – employees need to decide how much money to put aside at the beginning of the year, and they may not always get it right.

For employers, the main disadvantage of offering this type of plan to employees is the hassle. Because they are so individualized, they can take a lot of time and expense to manage.

Remember, whatever plan you’re considering offering to your employees, we can help sort through the mess. EZ.Insure is here to connect you to your own personal agent who can steer you in the right direction – for free! You will never be hounded by endless calls and you will always get the most accurate information. We promise everything will be quick, easy – and did we mention, free? To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure or calling 888-998-2027.