How the ACA, Employer-Sponsored Health Insurance, and Group Underwriting Help Brokers and Employers


According to a published 2021 report, 59% of businesses offer health insurance benefits to at least some of their workers. The larger the employer group, the more likely it offers coverage. Fewer than half (49%) of employers with three to nine workers offer coverage, while virtually all firms with 1,000 or more workers offer coverage to at least some workers.

The Kaiser Family Foundation (KFF) says about half (49%) of American workers – more than 156 million – have health insurance through their workplace. California ranks among the top five states with the most people covered by employer-sponsored health insurance. With about 48% of Californians with work-provided insurance, that amounts to more than 18 million residents. In Nevada, the percentage is slightly higher. Nearly 50% (49.5%) of Nevadans have employer-based health insurance. Nationally, Nevada ranks 29th and California ranks 35th for residents with health insurance.

Insureds Up Due to ACA

Since the Affordable Care Act (ACA) became law, it has dramatically changed the way Americans get their health insurance coverage. Approximately 20 million more Americans have coverage today, as compared to before the ACA in 2010. Extending insurance through the state and federal marketplaces and Medicaid expansion (Medi-Cal in California) has allowed 31 million more people to have insurance.

What the ACA has also done is simplify health insurance for the small business marketplace and the individual marketplace, too. People now have guaranteed access to a roster of essential health benefits, including hospital and outpatient services, preventive and rehabilitative care, prescription drugs, wellness visits, pregnancy, maternity and newborn care, mental health and substance use disorder services, as well as other care and services.

Group Health Insurance Underwriting

From an underwriting perspective, small businesses (those with up to 100 full-time employees in California or up to 50 full-time employees in Nevada) can purchase health insurance coverage with age-based rates for employees and adult dependents. The ACA prevents insurers from charging unreasonable rates by limiting the rates for older employees to no more than three times the rates for younger employees. Rates for children are the same for those 0-14. Dependent children can be covered on a parent’s health policy until they turn 26.

There is no individual or small group underwriting required – and there are no rate negotiations. The location and age of each employee (and the age of enrolled dependents) determine the plan premium. Although tobacco user and non-user rates are permitted under the ACA, the Small Group health insurance carriers working with Word & Brown do not include tobacco use as a rating factor; these insurers provide only one set of rates (without tobacco rating) to us.

For Large Group Health plans, coverage is medically underwritten, with rates based on employee participation, type of industry, coverage selected, and a group’s prior medical claims costs, if known and available. Unlike with Small Group, Large Group premium rates are negotiable. Employees may be asked limited medical questions depending on the group size, although detailed health questionnaires are not generally required for a larger group to be quoted and enrolled.

At renewal, a Large Group’s claims experience will be reviewed to determine rates for the following year – with a potential of no rate change, an increase, or a decrease. Changes in group composition may also be considered, such as average employee age, or if an employee with a significant claims history is no longer a part of the group.

More Differentiators

Another Small Group vs. Large Group differentiator is Metal Tiers. Small Groups can choose a Bronze, Silver, Gold, or Platinum tier plan. Each tier offers a different percentage of shared health care costs for the employee, ranging from 10% to 40%. The health plan pays the other 90% to 60% of covered services. Large Groups don’t have a tier selection option.

In California, a DE 9C is typically part of the application process for Small Groups; currently, many of Word & Brown carrier partners are offering relaxed participation guidelines without a DE 9C requirement – although a DE 9C may be request at the carrier’s discretion. For Large Group, a DE 9C is typically discretionary. The Medical Loss Ratio also differs by group size. For Small Groups, 80% of premium dollars must be spent on health care-related expenses and no more than 20% can go toward administrative costs, marketing, and profits. In the Large Group market, the MLR is higher – 85%.


For employees, group health premiums are typically shared by the employee and employer. Most insurers require a 50% contribution by employers. Some businesses choose to contribute more. According to the KFF 2021 Employer Health Benefits Survey, the average annual worker contribution for all plans (HMOs, PPOs, HDHPs, and POS) was $1,299 for single coverage and $5,969 for family coverage. These employee contribution amounts represent nearly 17% of the total single coverage premium (of $7,739) and nearly 27% of the total family coverage premium (of $22,221).

According to KFF, 29% of covered workers at small firms are enrolled in a plan where the employers pay the entire premium for single coverage; in contrast, 31% of covered workers at small firms contribute more than half of the premium for family coverage.

No Discrimination

The ACA prohibits discrimination based on an individual’s health history and pre-existing health conditions. It also eliminated lifetime dollar limits on essential benefits, which were often a part of health policies issued before the ACA. The U.S. Department of Health & Human Services “Fact Sheet” released in 2022 says the ACA has protected more than 133 million people with pre-existing conditions like cancer, asthma, diabetes, and pregnancy from being denied health coverage in the past dozen years.

Fully Insured or Self-Insured

With a fully insured health plan, the employer pays a fixed premium to a plan carrier, and it agrees to pay all employees’ eligible medical claims – after applicable deductibles and copays. The risk is on the carrier. Conversely, with a self-funded or self-insured health plan, the employer assumes the financial risk, paying health claims for employees as they occur.

Although there is a potential for premium savings for self-insured employers, there is also risk – plus the added cost of stop-loss coverage for catastrophic claims and the expense of a third-party administrator to handle claims on behalf of the employer.

Traditionally, self-insured plans have been used primarily by larger groups; however, smaller groups have in recent years begun to consider self-funding with the introduction of level-funding. For more information, talk with your Word & Brown representative about options in California and Nevada from our carrier partners.

ACA Favored by Majority

After a dozen years of the ACA, there is still somewhat of a divide on health care reform. However, there is a clear majority of the public that views the ACA favorably. Efforts to replace the health reform law have ACA have been unsuccessful. Even when the GOP was in full control in 2017 during the Trump administration, efforts fell short. Multiple trips to the U.S. Supreme Court, led by Republican legal challenges, have failed to bring down the law, too.

It is difficult to know what might happen in the fall 2022 election. However, as reported by Politico, the GOP 11 Point Plan to Rescue America no longer even mentions health care policy. A KFF Health Tracking Poll in March 2022 found 55% of the public has a favorable view of the ACA. About four in ten (42%) hold a negative view. One of the most popular ACA provisions is its pre-existing condition protection favored by 72% of participants in a past Health Tracking Poll.

For workers, the ACA has positively changed the health care marketplace, increasing the number of insured Californians and Nevadans. It has encouraged employers who might not have considered employee benefits in the past to reach out to a broker to discuss the options available. It has brought about new built-in coverage benefits valuable to so many.

We’re Here for You

Whether your group is small or large, Word & Brown has the people, tools, and technology you need to find a plan that fits the needs of your clients’ employees, while staying within their budgets. If you’re already working with us, contact your Word & Brown representative today to get started on your upcoming renewals and new business quotes.

If we’re not already working together, contact our nearest office to learn more about how we can help you write more business and earn more during peak season and all year long.

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