Healthcare Reform School - Lesson #10, What will happen to small groups in 2014

Welcome back to school.  Today I will explain what will happen to most of the small group health insurance plans in 2014.  Small group plans will be a thing of the past, like dinosaurs.  There is no reason to start a new small group plan in 2014 or to keep a small group plan in force.  How can this be?  To understand how I can say this, lets take a look at why many small group plans exist.

1. Employers want to provide a benefit, and a small group has always been a popular option.  health benefits are expected by employees and are a good tool for recruiting and retention.
2. Some employees usually have pre-existing conditions that will exclude them from coverage on the private market, but within a group that person cannot be rejected by an insurance

   

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   company.

The problem with group plans is that they get very expensive over time.  The reason they get expensive is that the sick people start using medical services and filing claims.  Then the insurance have to raise premiums on that particular small group to reclaim their expenses.  This can lead to huge increases and very expensive premiums. That never go down.  Some people will leave the group and this will increase the premiums even more because the group is even smaller so insurance companies increase premiums even more to reclaim their costs.  This is a vicious cycle known as the DEATH SPIRAL.  This is a real term and a part of the insurance world.

Fast forward to 2014.

1. Insurance companies can no longer refuse coverage to anyone, so that reason for small group plans goes away. 
2. If an employee is eligible for a qualifying group plan, then they are not eligible for federal subsidies on the health insurance exchanges.  So a group plan can actually take money out of peoples pockets.
3. The employer can still offer benefits to employees through an alternative health benefit plan called a Health Reimbursement Arrangement (HRA).  This will fix the cost for the employer and more importantly allow the employee to use the benefits to buy insurance on the exchanges or private market.  They will still be eligible for subsidies.

Therefore the small group plans, for companies with less than 50 employees, will become dinosaurs.  They may become a disincentive for hiring and retention.

HRA's are the wave of the future.  I have partnered with Zane Benefits, who administer the HRA's and is the premier on-line benefit company in the nation.  They have it figured out and are geared up for 2014.  This is the wave of the future, for small employers.

This is lesson number 10 so we are in the double digits!Review the single digits lessons below.
Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance
Lesson #6 - Enforcement and Penalties in the Affordable Care Act
Lesson #7 - Preparing for the Affordable Care Act
Lesson #8 -  Options for Small Businesses
Lesson # 9 - Will my Insurance Premiums change in 2014?