Age-Based Rates: The Solution for Life Science Employers

Posted by Nicole Mehrara, Principal, Employee Benefits Division on May 13, 2015 at 10:00 AM

Beginning January 1, 2016, employers with 1-100 benefit eligible employees will be considered small group employers. If it hasn't already, this change has the potential to increase your rates by 20-30%, depending on your group.

Why the big jump in rates?

The change is tied to rules that apply to small groups. Small groups are charged 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 life science companies that typically employ within the 51-100 range, 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 know.

For renewal dates that occurred on or after January 1, 2016, employers with 51 to 100 benefit eligible employees will:

  1. Move from large group to small group
  2. Pay medical rates based on each family member’s age and not the employee’s age
  3. Have rates based on the ZIP code of the employer (instead of the employees’ residential zip codes)
  4. Lose online administration of benefit eligibility
  5. Cease to receive underwriting discounts for industry and favorable employee demographics

iStock_000003733209MediumSolution for Life Science Employers

Marsh & McLennan Agency, in partnership with Biocom, created the Beyond Benefits Trust to provide large group underwriting for small group life science companies impacted by this law.

Beyond Benefits 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.

By avoiding the transition to small group underwriting, Beyond Benefits saves its trust members $5.8 million in annual medical premium, despite only being four years in existence. Joining Beyond Benefits has been the solution for over 185 human resource teams, allowing them to continue offering reasonably priced and competitive benefits to their employees.

Some of the additional advantages of being a Beyond Benefits participating employer:

  1. Simplified plans. Online enrollment is easy for employers and their employees.
  2. Better benefits. Pooling together small businesses gives employers access to large group rates and benefit plans they wouldn’t have otherwise
  3. More effective plan administration. Premium billing and eligibility reporting is done electronically.

Navigating alone and against the tide can be exhausting. If you haven’t considered a DOL-qualified trust, consider Beyond Benefits 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.


Topics: Employee Benefits, Health Care Reform, Breaking News

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