Group Health Insurance


Obama Care
-Small Group Plans/<50 Employees
-Self Fund/TPA
-Dental & Vision


Did you know the average cost of a 3-day hospital stay is $30,000? Or that fixing a broken leg can cost up to $7500? Having health coverage can help protect you from high, unexpected costs like these.

How health insurance coverage works

When you have insurance, you pay some costs and your insurance plan pays some:

Premium- A premium is a fixed amount you pay to your insurance plan, usually every month. You pay this even if you don't use medical care that month.

Deductible- If you need medical care, a deductible is the amount you pay for care before the insurance company starts to pay its share. Once you meet your deductible, your insurance company begins to cover some costs of your care. Some plans have lower deductibles, like $750. Some have higher deductibles, like $5000. All plans provide preventive care services, and sometimes other care, before you've met your deductible.

Copayment- A copayment is a fixed amount you'll pay for a medical service after you've met your deductible. For example, after meeting your deductible you may pay $25 for a visit to the doctor's office that would cost $150 if you didn't have coverage. The health plan pays the rest.

Coinsurance- Coinsurance is similar to copayment, except it's a percentage of costs you pay once you have met your deductible. For instance, you may pay 20% of the cost of a $100 medical bill. So you would pay $20 and the health plan would pay the rest.

How insurance protects you

Insurance coverage protects you from high medical costs 2 ways:

Out-of-pocket maximum- This is the total amount you'll have to pay if you get sick. For example, if your plan has a $6000 out-of-pocket maximum, once you pay $6000 in deductibles, coinsurance, and copayments the plan will pay for any covered care above that amount for the rest of the year.

No yearly or lifetime limits- Health plans in the Marketplace can't put dollar limits on how much they will spend each year or over your lifetime to cover essential health benefits. After you've reached your out-of-pocket maximum, your insurance company must pay for all of your covered medical care with no limit.
People without health coverage are exposed to these costs. This can sometimes lead people without coverage into deep debt or even into bankruptcy.

ACA Health Plans (Obama Care)


-Small Group(SHOP)

- Federally-facilitated small Business Health Option Program

The Patient Protection and Affordable Care Act (PPACA),commonly called the Affordable Care Act (ACA) or "Obamacare", is a United States federal statute signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, it represents the most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965.

The ACA was enacted with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government. It introduced a number of mechanisms-including mandates, subsidies, and insurance exchanges-meant to increase coverage and affordability. The law also requires insurance companies to cover all applicants within new minimum standards and offer the same rates regardless of pre-existing conditions or sex. Additional reforms aimed to reduce costs and improve healthcare outcomes by shifting the system towards quality over quantity through increased competition, regulation, and incentives to streamline the delivery of healthcare.

SHOP Overview

In 2014, small businesses that offer coverage through a FF-SHOP will be able to offer their employees a single qualified health plan (QHP) option. The FF-SHOPs will provide the flexibility in the amount that members of the small group contribute towards the total premium.

To qualify for a SHOP, a business must:
-Be located in a SHOPs service area (generally a state)
-Offer coverage to all full-time employees (those working an average of 30 or more hours per week)
-Have at least one eligible employee on payroll
-Have 50 or fewer full-time equivalent (FTE) employees on payroll in 2014
   -This methodology includes part-time employees, but not seasonal employees
   (those working fewer than 120 days per year)
   -While the FF-SHOP must determine eligibility using the definitions above, State-based SHOP
   Marketplaces have flexibility in their counting approaches in 2014

Building Premiums in the SHOPs

Under the Affordable Care Act, premiums will be built differently than they have been in the past in many states. Under the Affordable Care Act:

-Individual premiums reflect age, geographic location, and tobacco use.
-The family premium is the sum of premiums attributable to each family member (with a limit on the number of rated children under age 21).
-Group premiums are built up from members of the group, and each group's rates will be based on the individual rates of its members.

Composite rates, based on an average characteristic of the group, such as the average age of the employees, will no longer be quoted by the health insurance issuer, unless required by a state. Employers may choose to use a "calculated composite premium" method to minimize the effect of the employee's age on the employee's contribution toward coverage.

Premium rates will not vary based on health status, gender, or claims experience. Rates for new and renewal coverage in the SHOPs may be adjusted quarterly. However, for a given employer, the same rates will be in effect throughout the employer's plan year (12 months).

Premium rates may vary by:
-Age: the ratio of the premium for someone age 64 or older to the premium for someone who is 21 cannot be more than 3:1
-Family composition, although there is a limit on the number of rated children under age 21
-Geographic area: primary location of employer
-Tobacco use: a surcharge may be applied to individual enrollees, but cannot equal more that 1.5 times the non-tobacco user's rate and must be offered with a wellness program that enrollees can participate in to remove the surcharge

Qualified Health Plans and Employer Contributions: How Will Employee Contributions be Calculated?

Beginning in 2014, employers will decide on a QHP to offer their employees, what percentage of the cost of the QHP to contribute towards employee premiums, and how employees will pay a share of the premium.

Employers in most states will have a choice about how employees will contribute toward health insurance.

Employers can choose to vary each employee's premium by age (refered to as "list billing"). or use the traditional method of charging the same amount for all employees for the same coverage.

-One advantage of list billing is that younger employees are able to afford coverage because both the premium and the employee's percentage contribution toward that premium are lower than they would have been if all employees contribute the same amount for the reference plan. This inducement to encourage participation by younger employees will make it easier for employers to meet SHOP's minimum participation requirement. Of course, list billing also means that older employees will contribute a larger amount for their coverage.

-An employer can also decide that all employees will contribute the same amount toward the cost of a reference plan. This is a variation on composite premiums, referred to as "calculated composite premium". The FF-SHOP website will automatically calculate an average premium for employees. Each employee pays a uniform amount of those average premiums. Premiums for adult dependents and children will always reflect a per-member calculated rate and will not be averaged.

Wellness Programs

Participation in wellness programs can reduce premiums for individual enrollees.

For example, on of Tony's cooks is a smoker. Health insurance companies will be able to apply a surcharge to the cook's premium, but that surcharge may be eliminated if the cook participates in a wellness program.

Self Funded Health Care with TPA's
(Partial and Total)


Self-funded health care is a self insurance arrangement whereby an employer provides health or disability benefits to employees with its own funds.[1] This is different from fully insured plans where the employer contracts an insurance company to cover the employees and dependents.[1] In self-funded health care, the employer assumes the direct risk for payment of the claims for benefits. The terms of eligibility and covered benefits are set forth in a plan document which includes provisions similar to those found in a typical group health insurance policy. Unless exempted, such plans create rights and obligations under the Employee Retirement Income Security Act of 1974 ("ERISA").

Many employers seek to mitigate the financial risk of self funding claims under the plan by purchasing stop loss insurance from an insurance carrier. These policies typically provide for risk retention limitations both on a specific claim and aggregate claims basis. An important aspect of self funded group health plans lies in the requirement that the employer remain liable for funding of plan claims regardless of the purchase of stop loss insurance. What this means, in turn, is a fund or company's own bank account creates a pool of their employees and is managed & distributed to claim payouts. In other words, only the employer has a contractual relationship with plan participants and beneficiaries. The stop loss policy runs solely between the employer and the stop loss carrier and creates no direct liability to those individuals covered under the plan. This feature provides the critical distinction between fully insured plans (subject to State law insurance regulations) and self funded health plans which, under the provisions of Section 514 of ERISA, are exempt from State insurance regulations.

Stop-loss polices are instrumental in establishing a "worst case scenario," or aggregate for any given year. The aggregate stop-loss helps establish a finite number that can be compared to a plan's guaranteed fully insured cost. If the aggregate cost does not exceed the plans' fully insured guaranteed cost, self-funding may be a viable option. Another way to look at aggregate insurance is an umbrella policy that caps a company's liability within a specified time period.

*Historically self-funding has been most effective for large corporations and Fortune 500 companies with over 1,000 employees but with the rising cost of healthcare over the past ten years at a rate of close to 10%, self-funding has become an option for smaller employees. It is now estimated that the average self-funded plan covers 300-400 employees and that 59% of companies within the U.S. self-fund part of their healthcare plan.

While some large employers self-administer their self funded group health plan, most find it necessary to contract with a third party for assistance in claims adjudication and payment. Third Party Administrators provide these and other services, such as access to preferred provider networks, prescription drug card programs, utilization review and the stop loss insurance market. Insurance companies offer similar services under what is frequently described as "administrative services only" or "ASO" contracts. In these arrangements the insurance company provides the typical third party administration services but assume no risk for claims payment.

Perhaps the biggest advantage of self-funded plans is transparency of claims data. Self-funded employers who contract a TPA receive a monthly report detailing medical claims and pharmacy costs. Knowing this information becomes instrumental in controlling costs by shifting buying patterns.

As health care cost continue to rise more employers will look to alternative ways to finance their healthcare plans. Consumer driven plans have become popular recently as employers look to shift some of the accountability to employees. HSA (Health Savings Accounts) and HRA (Health Reimbursements Accounts)encourage employees to shop around for the best value when considering elective medical procedures or filling pharmacy prescriptions. Self-Funded plans take one step further in that they provide all claims data to employers allowing them to set up an EPO (Exclusive Provider Organization) basically a PPO hand selected by the organization to eliminate high cost providers.