Self Insured Program California for small businesses
by Hubie Laugharn
Solana Insurance Services
This is what we know as of 5-13-13
Partial-Self Funding- Self insured program california– Do you want to pay for a whole loaf of bread when you know you will only eat half of it?
How do you value your Company Healthcare?
A percent of compensation or a percent of profitability?
Large Group (LG); 51 employees or more:
Equivalent employees: It is important to understand that hours of part-time employees will count towards the total amount of credited full-time employees a company has for Obama Care. Understand the formula. For example, a company my think they 35 full-time employees and 20 part-time employees keeping them in the 50 or less category, but adding the total number of hours the part-time employees work and using the “formula”, the same company might have to count their full-time employees with an additional 16 employees for a total of 51 full-time equivalent employees thus putting then in the 51 + category rules!
You can plan on 2 classes of employees:
Class 1—Full time employees 30+ hrs per week
Class 2—Part time employees 29 hrs max per week
Employer’s Mandate in Obama Care will require coverage at the required “Minimum Essential Value” (MEV) for all full time employees. In addition, the “Mandate” requires the Single / Employee Only Contribution to be NO MORE than 9.5% of their W-2 wages. This means most employers will have to move their contribution for an employee to 100%.
Pay— do not purchase insurance and pay the tax/penalty/fine.
Pay/PENALTIES: Minimum Essential Value and Minimum Value Contributions (MEV or MVC) – if the employer fails in executing these Mandates, the employer will be taxed/fined for all Full Time Employees. This could be $2,000 per employee, less the first 30 employees. There will be Calculators available by HHS and/or Solana, with its strategic partners, in the coming months to calculate the pain/tax for Employers thinking of not Playing. Invariably the Employer losses by Paying. Penalties are not tax deductible! A self insured program california is a great strategy for small and medium sized businesses.
For those Employers who wish to Pay, that employer could move some of their employees to 29 hours or below (part-time) to evade the “Mandate”. This practice brings another set of issues on staffing and the use of the employers Worker’s Compensation policy by employees as their health care plan.
Medical Loss Ratio ( MLR) – (Not a good thing) In a fully insured environment employers are pooled within the PPACA (Obamacare) world and therefore the “Risk of Pool” is everyone’s in that Pool – Under this provision, Loss Ratios are regulated and the employer may not be able to participate in their own “good claim” years. As it is, One for All and All for the Pool.
Modified Community Rating (MCR)–(A good thing) Insurance carriers are prohibited from using MCR within the risk of pool. Insurers cannot vary rates based on health status or claims history. It also prohibits insurance rate variations based on demographic characteristics such as age and gender, whereas adjusted or modified community rating in partial-self insured programs allows insurance rate variations and many other components.
This results in a mandate of 3 to 1 ratio for the maximum difference in premium for oldest to youngest age category. Currently the market ratio is about 7 to 1. Accordingly, anticipate premiums increasing for younger employees could go up to 47%, estimated, and falling for older employees, about 13% due to these MLR requirements.
Reinsurance Carriers are not bound by Medical Loss Ratios, or unhealthy employee populations, and can use Modified Community Rating.
Employers will be able to offer plan designs to their employees that will have better protection and better value than the new traditional marketplace mandated plans.
Employer Contributions can now be associated with the employee and their dependents that DO NOT maintain or participate in a Company Wellness program. If you or your family does not participate, the contribution and plan design could suffer.
Premiums are due to increase because: (1) Pre-existing medical conditions, guaranteed coverage; (2) Medical Ratios are capped at 3:1, meaning a sick, elderly person’s premiums can only be 3 times the amount of young, healthy people, which means that young, healthier people will have significantly increased premiums (Up estimated to 47%); (3) Maternity coverage on all policies; (4) $65 fee on all policies paid to Obamacare research.
The bottom line by partial-leval-self insuring:
The overall cost of healthcare can be managed closer because the employer has more control with plan designs that are not forced by the mandate and the fact that 50% to 70% of employees do not use their health plans or use it very little!
Hubie Laugharn PS: Have you done a “calculator assessment “yet? Pay or Play. This will tell you if it is more cost effective to pay the penalty or buy insurance for your employees. Call me at 949-675-1920
Please visit our website at: http://employerdrivenhealthplans.com
Solana Insurance Services, Inc.
3700 Newport Blvd, # 309
http://www.wikipedia.org/wiki/Self-funded health carehealth care is a self insurance arrangement … an employer provides health or disability … different from fully insured plans where the …