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Small groups in Connecticut have access to a method which can lower their overall insurance premiums by up to 25% and can also provide them with a reimbursement of premium at the end of the year.  They can achieve these savings without reducing benefits.

The method is called small group alternate funding.  Most brokers and employers do not even realize such a mechanism is available to groups under 50 eligible employees in CT but it is.  To read more about this topic, click on our previous blog entry which gets into much greater detail.   CLICK HERE FOR BLOG ARTICLE

Small Group health insurance is an ever increasing cost for employer groups.  Most employers and brokers use similar strategies when it comes to managing rate increases.  They lower benefits and add cost share to employees which could include higher copays,  having employees pay some or all of the rate increase or utilizing a high deductible option.  At the end of the day, there is not a great way to manage rate increases but there are alternatives.  Small group alternate funding can create substantial savings for a group without any risk.

Small group alternative funding method.   Small group (1-50 eligible employees) are community rated which reduces options for saving money.  There is no question that the best way to lower a small groups cost is to use a small group fully insured experience rated strategy.  Most brokers and group are not aware that you can even do this but it is perfectly legal and there are carriers that do it.

With this funding arrangement, group rates are determined by the groups demographics.  The renewals are determined by loss ratio.  This arrangement is something that groups over 50 are familiar with but it is relatively new in the small group circle.  The best part about this set up is the savings it can generate.  A good candidate group for this set up can expect to lower rates by 20% to 25% with eqivalent benefits.   Groups are also eligible for premium reimbursements if they run well for the year.   If  a group does not run well, there is no obligation to renew and they are not on the hook for any of the additional claims.  They simply pay the scheduled monthly premium and if the renewal comes in high, they can move on to a different carrier.

Groups often experience much lower annual renewals with this funding method.  Since the renewal is based on the groups experience, it is not uncommon to have a low single digit renewal.

This strategy is vastly underutilized due to a the fact that many do not know about it and those that are aware of it often do not understand it fully.  Feel free to call or email our office to discuss further.

New Tax Credit May Help Small Businesses

Small businesses may be able to claim a new credit on their 2010 tax returns if they pay employee insurance premiums in 2010.

The credit, available through the Patient Protection and Affordable Care Act, is intended to:

1.Give small employers a tax break if they pay at least half the cost of single coverage for their employees on the group health plan.
2.Encourage small employers to offer health insurance for the first time or maintain the coverage they currently have.
These frequently asked questions may be helpful. More information about the credit, including tax tips, guides and FAQs is available on the IRS website at www.irs.gov.

This link will take you to the general overview on the IRS web page IRS LINK

Use this link to determine eligibility Eligibility chart

Employer Reporting Requirements

Notice of Coverage Options. Not later than March 1, 2013, employers must provide a written notice to newly-hired and current employees informing employees: 1) that healthcare exchanges are available, the services provided by the exchange, and how to contact the exchange; 2) if the employer pays less than 60% of the costs of benefits, that the employee may be eligible for a premium tax credit and a cost-sharing reduction if the employee purchases health insurance from an exchange.

Reporting Cost of Employer-Sponsored Health Coverage on W-2. Effective January 1, 2011, an employer will be required to report the aggregate value of medical benefits, dental, vision, and supplemental insurance coverage on the Form W-2 that is provided to each employee annually.

Uniform Explanation of Coverage. By March 23, 2012, group health plans and sponsors of self-insured health plans must provide participants a uniform summary of benefits and coverage. The uniform summary cannot be longer than four pages and must describe the health benefits offered under the plan, limitations on coverage, cost-sharing provisions, and any restrictions on continuation of coverage. Failure to provide this summary will result in a $1,000 fine per failure. Read more

Small Group Employers In Connecticut May Want To Consider Alternatives

Group health insurance rates are becoming a greater burden on small employers with every renewal.  Double digit rate increases have become the norm.  So what can a small employer do to help off-set rate hikes?

Most employers have simply been going by the standard formula of increasing the employees contribution toward the plan premium and raising medical and Rx copays to keep things at a manageable level.  More proactive groups use either HSA or HRA designs in order to offer a plan with a more substantial deductible in order to lower premiums.  Such strategies are becoming more and more popular every year.

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