You’ve survived another peak enrollment season for health insurance. Were you able to answer all of your prospects’ and clients’ questions about coverage? Or, did you have to turn elsewhere for help? At Word & Brown, we regularly receive a lot of health insurance questions from both new and veteran brokers on behalf of clients. Below are answers to five of the questions that come up frequently.
Some of these you may already have easy answers to, but some others may be new or may be questions for which you are not sure of the answers. Whenever in doubt, talk with your Word & Brown representative or our Account Management team.
As a small business, am I required to provide Health Insurance to my employees?
The Affordable Care Act (ACA) employer mandate requires employers with 50 or more full-time and full-time equivalent employees (FTEs) to offer insurance to employees and their children (up to age 26). Applicable Large Employers (ALEs) that do not offer coverage face penalties. Employers with fewer than 50 FTEs are not required to offer coverage; however, many choose to offer benefits, so they can compete more effectively in an increasingly competitive talent marketplace.
The Society for Human Resource Management (SHRM) reported in its 2019 Employee Benefits Survey that 70 percent of organizations maintained health care benefits at the same level in 2019 as compared to 2018. Regardless of employer size, one-fifth (20%) of employers increased medical benefits. For those employers offering health coverage, 85 percent had a Preferred Provider Organization (PPO) plan. One-third (33%) offered Health Maintenance Organization (HMO) coverage – the same percentage as in 2015, but down two percent from 2018.
What affects how much I might pay for my employees‘ Health Insurance?
Several factors go into the calculation of the cost of health insurance for a business. How many employees does the business have? What type of coverage do employees want (HMO, PPO, etc.)? What are the ages of those to be covered? Is coverage for employees only, employees and children, or employees and family (including spouses and dependent children)? Are there specific doctors and hospitals that need to be available in the coverage offered?
The Kaiser Family Foundation (KFF) reported last year that the annual cost for employer-sponsored health insurance in 2019 was $7,188 for single coverage and $20,576 for family coverage. The KFF analysis also found the average annual deductible for single coverage was $1,655. Workers, on average, paid $1,242 for single coverage and $6,015 for family coverage.
Can I offer a cash payment to employees in lieu of paying for their employee benefits?
“Cash in Lieu of Benefits” in an available option, so long as you stay in compliance with Internal Revenue Code Section 125, the Fair Labor Standards Act, and the Affordable Care Act. If your clients wants to consider it, there are compliance aspects you need to be aware of when guiding your client. In this type of arrangement, the employer can offer a taxable “opt out” amount to employees if they waive coverage under the employer’s group health plan because they have other group coverage (e.g., a spouse’s or parent’s plan).
When a “cash in lieu of benefits” plan is offered, the option will always be taxable. This option should also be offered to employees alongside a Premium Only Plan (POP), which allows employees to choose the taxable “cash in lieu of benefits” option, or choose to use pretax dollars to fund their share of health insurance premiums.
More information is available in the Word & Brown Newsroom post on this topic written by Word & Brown Compliance Manager Paul Roberts.
What is more important to employees – lower premiums, lower deductibles, or better benefits?
Unfortunately, there is no easy answer. Every employee is different, and his or her needs, preferences, and budget differ. Someone who rarely visits the doctor may prefer a Silver metal tier HMO, because it is more affordable and includes the hospitals he or she wants. Older employees may prefer a Gold PPO, available at a higher cost, because it includes the specialists they want for a chronic health condition.
Many employers find offering a health insurance exchange – public and/or private – is a valuable alternative. That is because an exchange gives employees more choice, while still helping employers control their costs using what is called Defined Contribution. In California, the state-run exchange is Covered California. The state’s multi-carrier private exchange is CaliforniaChoice, which has been serving the small business marketplace since 1996. The state-run exchange in Nevada is Nevada Health Link. Both Covered California and Nevada Health Link were developed as part of the ACA.
What different types of group Health Insurance plans are available to my business?
Word & Brown’s Small Group and Large Group carrier partners offer a variety of Health Insurance options, including:
- Preferred Provider Organization (PPO) plans;
- Health Maintenance Organization (HMO) plans;
- Point of Service (POS) plans;
- Exclusive Provider Organization (EPO) plans;
- Health Care Service Plans (HSPs);
- High Deductible Health Plans (HDHPs), which can include some of the plan types above and can be paired with a Health Savings Account (HSA).
Different health plans offer different pricing and advantages for members. For more information, refer to each carrier’s plan literature or talk with your Word & Brown rep. Not all carriers offer all of the plan types mentioned above in all markets.
Answers to Your Questions
If you have other questions that you need help answering, or if you just want to confirm that you’re providing the most accurate response to your prospects and clients, you can count on Word & Brown’s Account Management team. They can provide answers to health plan questions, compliance inquiries, and much more. If you are not already one of our broker partners, visit our new broker web page to sign up, or contact any of our six regional offices in California and Nevada.