As of January 1, 2016, employers with 51-100 benefit eligible employees are now considered small group employers. As a newly labeled “small business,” you may see rate increases of 20-30%, depending on your group, if you haven’t already.
Why the big jump in rates?
The change is tied to rules that apply to small groups. Small groups are charged with what the insurance industry calls “age-banded” rates. Age-banded simply means age-based. In other words, cost is assessed for the age of each employee and spouse in the group. The shift impacts many employers, especially technology companies since many employ under 100 employees, and adds another obstacle in the quest to offer affordably priced health care coverage.
If you are one of these employers, the following is a quick summary of things to be aware of.
For renewal dates on and after January 1, 2016, employers with 51 to 100 benefit eligible employees will:
- Move from large group to small group
- Pay medical rates based on each family member’s age and not the employee’s age
- Have rates based on the ZIP code of the employer (instead of the employees’ residential zip codes)
- Potentially lose online administration of benefit eligibility
- Cease to receive underwriting discounts for industry and favorable employee demographics
Solution for Technology Employers
Marsh & McLennan Agency (MMA), in partnership with Tech San Diego, created the Benefits Tech Trust to provide large group underwriting for small group tech companies impacted by this law.
The Benefits Technology Trust leverages specific regulations established by The Department of Labor (DOL). These regulations allow for the formation of DOL-qualified small business trusts which pool small companies together. Under this structure, employers qualify for large group rates, regardless of their size.
Our Tech Trust is similar to a highly successful trust program we pioneered two years ago that enables life science and biotech companies to pool their purchasing power to buy employee benefits at more competitive prices.
Since the Beyond Benefits trust launched in January 2012, 188 biotech firms have saved more than $5.8 million in total medical premium. In total, Beyond Benefits now covers more than 5,500 employees.
Some of the additional advantages of being a Tech Trust participating employer:
- Compete with tech giants. Attracting and retaining top talent is easier with top notch benefits that go above and beyond what others are offering.
- Save money. Small businesses can pool their purchasing power to buy employee benefits at more competitive prices.
- Remain compliant. ACA laws for small group employers are complex, but Tech Trust members have access to in-house compliance attorneys, so they can rest assured they will be in compliance.
Navigating alone and against the tide can be exhausting. If you haven’t considered a DOL-qualified trust, consider Tech Trust and set your life science company on an easier course when it comes to offering employee benefits.
To see how your rates compare and to learn more about the Beyond Benefits Trust, click the button below.