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New Group Health Insurance Rating Option
Could Benefit “Working Uninsured,” Employers
A new way of setting rates for group health insurance plans could open the door for many more Texans to get coverage under their employer’s plan, according to the Texas Association of Health Underwriters.
Legislation allowing the new optional rating method was signed into law recently by Gov. Rick Perry.
“This is creative legislation that is based on healthy competition in the market place, and which can have the demonstrated effect of getting more Texans covered by comprehensive, private health insurance,” said TAHU president Ron Buffum of Round Rock, about Senate Bill 80.
The legislation provides an optional method for insurance companies to use when calculating rates for employers in the small group insurance market, defined as those groups with 2-50 eligible employees.
“Though Senate Bill 80 addresses some technical parts of the Insurance Code, the real bottom line is that we will be able to expand how many employees are actually enrolled in every employer plan – and our goal would be to have 100 per cent of those who are eligible actually covered,” said Mr. Buffum. TAHU was a major supporter of the legislation which was sponsored by Sen. Jane Nelson.
Buffum said the new rating method may be applied to group plans in the small employer market beginning Jan. 1, 2010.
“We hope carriers seize this good opportunity to offer this new rating structure for employers,” he added, “It can be a win-win-win arrangement for everyone: the employer, the employee and his dependents.”
“The employee benefits professionals of TAHU are ready to talk to employers and their workers about how this new idea can benefit them, too” Buffum said.
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TAHU Contacts
Lee Manross Misty Baker, Member
Registered Lobbyist Executive Committee, TAHU
Telephone (512) 322-9787 Telephone (512) 472-6733
Email:
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Email:
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How SB 80 Will Work (And How It Addresses the Problem of the Working Uninsured)
The goal of this legislation is to get everyone to participate in the group health plan if his employer sponsors a plan. It is widely accepted that having the broadest pool of people possible, like those with100% of the employees actually enrolled, has a very favorable effect on the individual, unit rate. SB 80 works towards the goal of 100% participation by permitting carriers to issue as an option plans that require employers to contribute 100% of the employee premium. It is important to know that this new option is just that – an option. The employer must agree with this alternative rating approach and if the employer does not, he can continue his current plan with its own rating structure.
Here’s why this new option is good:
· A 100 per cent contribution by the employer will encourage and often result in 100 per cent participation by employees. Employees no longer have any reason NOT to participate and this alone will greatly reduce the number of “working uninsured” in Texas.
· Competitive pressures will result in carriers and agents presenting this option to employers, along with other prospective changes in plans.
· A 100% contribution plan by definition will free up significant dollars by the employee to pay for dependent coverage, which will result in greater dependent participation. Again, the total numbers of employees and dependents actually covered goes up, with the resulting positive effect on rates.
· The group health insurance marketplace is not static. More groups WILL cover to 100 per cent; and more groups will consider lower cost options in order to get better 100 per cent pricing.
Universal health care through the market place, not through mandates.
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Legislative Budget Board, Texas State Government Effectiveness and Efficiency Report,
p 317-318, January 2007
ü Two-thirds of the uninsured in Texas are working adults who either do not have access to health insurance or cannot afford it
ü Forty-four per cent of all working uninsured in Texas work for companies with fewer than 25 employees
About TAHU --
The Texas Association of Health Underwriters (TAHU) is a nonpartisan, statewide Association of professional employee benefit specialists who play many important roles in providing health insurance and health plans for Texas employers, employees and individuals.
It is a state affiliate of the National Association of Health Underwriters (NAHU),
a professional organization of agents, employee benefit professionals and insurance company representatives who have have adopted the Mission Statement “to inform and protect the consumer by enhancing the professional growth of its members.”
TAHU and NAHU represent more than 20,000 professional health insurance agents and brokers nationally who serve the insurance needs of millions of Americans. Founded in 1930, there are now 200 state and local chapters in the United States.
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