Is a Group Health Insurance policy a better choice for your employees than having them enroll in the Health Insurance Exchange on their own. Most likely, yes.
5 Reasons a Group Health Insurance policy is better than Individual.
- Physician and Hospital networks … Most group health plans provide the “old” networks before the ACA started. These networks are typically much greater in size and scope than their counterpart, the “Individual / Family” plan. The difference can be drastic depending on your area in which you live.
- Formulary List … A formulary list is a list of the acceptable prescriptions which the company offers. Or the “Tier” level which the company offers per prescription. Group plans will usually have a larger formulary list and the prescriptions may be place on a more favorable tier level, meaning the cost of some prescriptions may be lower.
- Retaining Talent … As an employer this really does work! Talented employees have options. Health Insurance / Health Care is expensive, and if it’s between two jobs, one offers health insurance and the other doesn’t, all things being equal, well you know the answer.
- Portfolio … The group plan portfolio has many more plan options for the employer/employee to choose from, instead of the one or two Bronze, Silver or Gold plans that come with “Individual plans.”
- Out-of-Network benefits … The Out of Network access to doctors along with (OON) coverage will be much stronger with “group plans.” Today many companies are offering EPO’s instead of PPO’s with their Individual plan, with limits the access to doctors if they are out of the network. Most Group plans offer traditional PPO (Preferred Provider Network) networks which allows you to see outside doctors and hospitals without any penalty. Also, Out of network coverage is available when seeking a specialist or outside medical facility. The new ACA PPO Plans can at times be very tricky when seeking and outside care.
Beginning January 1, 2016 companies with 50 or more full-time employees must provide Group Health insurance to 95% of full-time employees and dependents to age 26.
The employer mandate and employer penalties … Employers subject to the employer mandate are required to offer coverage that provides “minimum value” and is “affordable” to be subject to penalties.
How is “affordable” coverage determined? … A Coverage is considered “affordable” if employee contributions for employee only coverage do not exceed 9.5% of an employee’s household income. there are three safe harbor methods for determining affordability: 9.5% of an employees W-2 wages (reduced for any salary reductions under a 401 (k) plan or cafeteria plan). 9.5% of an employee’s monthly wages (hour rate x 130 hours per month). 9.5% of the Federal Poverty level for a single individual in applying wellness incentives to the employee contributions used to determine affordability, assume that each employee earns all wellness incentives related to tobacco use but no other wellness incentives.
How will the Federal government know if an employer is complying with the employer mandate? IRS Code 6056 requires all applicable large employers to file an annual report that ensures compliance with the employer mandate. The reporting will include information on all employees who were offered and accepted coverage, and the cost of the coverage on a month-by-month basis.
When deciding on a new group plan or to continue with your current group policy, please consider the five points above.
Call anytime with questions.