How to Determine What's Best for Your Clients
It's no secret that small group employers will be given strong incentive to renew their current group health policy this fall, rather than switching to an ACA community-rated platform. Carrier-initiated "grand mothering" programs, started last fall, will likely be continued for another 12 months this year. Some brokers are looking at this as a blessing because it means "no work." Others, however, are concerned because, without the work, how can they bring value? "I used to think that all I had to do was bring a great number," one broker told me, "but now I'm starting to wonder if the real value I can bring my clients is somewhere else." If groups are going to stay where they are this fall, as predicted, they still deserve an explanation of why they aren't moving. Some brokers are clearly more prepared to dive into this conversation than others. "My job isn't to look at two numbers and figure out which one is lower. A computer could do that," another broker told me, "It's to read the fine print and help my clients understand what their best choices are." For small-group brokers, the "value" that they can bring is a practical examination of choice. But, given the time crunch that brokers & account managers will experience this fall, being "practical" will mean understanding what kinds of products make the most sense. For small employers who have traditionally relied on fully insured products as their only viable option, one size no longer fits all. One factor that will be of the utmost significance is the size of the group itself.
Below is an examination of how the new mix of products available to small groups (i.e., community-rated products, self-funded products, public exchange products) could best be matched to small groups of different sizes:
Groups of 2-10: Given the reality that the smallest employer groups tend to pay less in salary than larger companies, groups under 10 are the most likely (across the board) to benefit from exchange-based products. They may also benefit from fully-insured products if their risk-rated renewals fall behind the general curve. In rare circumstances, these groups could benefit from self-funded products, but an understanding of the pros/cons involved should first be discussed with the group.
Groups of 10-35: As groups get larger, their potential to benefit from a self-funded or level premium offering increases. To determine if this path makes sense, however, a thorough risk analysis should be undertaken. Providing risk-analysis technology to groups in this market segment is itself a great value for brokers to bring. Additionally, fully-insured products may be a good fit for those groups whose claims history & PHI make self-funding less than ideal. As groups get larger, however, the likelihood of benefiting from subsidies on the public exchange goes down.
Groups of 35-50: For the largest small groups, self-funding should be a part of the conversation. Here again, risk-analysis technology can be a great value for brokers to provide to their clients. Fully-insured products remain a viable option for groups of this size also, but only in rare circumstances will the public exchange be the path that proves to be the best. Brokers shouldn't tell their groups to "leave it like it is" without first practically examining the group's choices. But--rather than throwing everything & the kitchen sink at them--brokers should seek to understand how the group's size will make some paths better than others.