David Short, M.D., David Civalier, M.D., Doug McMullin, M.D., Jack Kimple, M.D., of Redding Family Medical Group pictured with Margaret Beck _Life Insurance _Health _Employee Choice _Dental _Vision _Disability _Long Term Care _Retirement _Cafeteria/125 Plans FAQ AB 1672 was passed in 1993 and changed small group health plan marketing.  It created the “guaranteed issue” environment for qualifying small groups of 2-50 employees.  This means an insurer may not decline coverage to a group if they meet the rules.  Further, they may not charge more than 10% over or under the “standard” rate to any group, regardless of health of the group.  The law also states that any employer-sponsored plan must be covered by these rules.   This effectively prohibited small employers from using individually underwritten policies for their small group participants. Tax Benefits Premiums paid by the employer for employee and dependent premiums are fully tax deductible by the employer.  The benefits are tax free to the employees.  Further, if the employer uses a Section 125 Premium Only Plan (often called POP) the employee is allowed to pay his/her share of the premium with a pre-tax dollar.  This also saves the employer payroll taxes on all the deferred premiums. Today’s Market The costs of health care are spiraling up again, as they did in the 1980’s.  Small employers continue to provide benefits to employees for the same reasons: employee security, retention, and competition with other firms.  However, the costs are a continual challenge. Insurers require that the employer participate in the premium to some level.  It’s usually a minimum of 50% of the employee only premium.  However, the new “employee choice” plans will allow the employer to pay as little as $100 monthly of the employees’ premium.  To help employee’s afford their share of the premium a Section 125 Plan is often used. Many players are leaving the health insurance field.  Rural northern California has even fewer competitive choices.  Blue Cross and Blue Shield are by far the most competitive vendors in this area.  They have the best rates and networks in the far northern counties.  Often the value of the discounts or “negotiated rate” is worth the premium paid. These are dramatic discounts off the retail charge.  The plans are similar, but there are very distinct differences. Blue Cross vs. Blue Shield Blue Cross offers the Employee Elect-Defined Contribution approach to its groups.  This means the employer may establish a plan offering all of the small group plans AND fix the employer premium at a flat dollar monthly contribution per employee.  This allows the employee the most flexibility.  Blue Shield’s strengths include the annual renewal process, routine physical, open enrollment and administrative service.  Groups are provided a one-year rate guarantee and a true open enrollment period 30 days prior to each anniversary.  The routine physical benefit directs you to your primary physician, rather than using screening exams from the mobile vendor.  The mail-order Rx benefit is 90 days supply vs. Blue Cross’ 60 day supply. Partial Self-funding Approaches brief summary of the different ways a small employer may approach a partial self-funding of the health care costs. All provide some tax benefit to the employees and employer. There are several different ways to cost-shift the burden of the expense to those that actually use the plan. Conversely, they reward those that are healthy and use the plan very little. Our firm can prepare proposals showing you how this may benefit your firm. Healthy Families (Children & Teens) The state of California subsidizes a program that provides coverage for dependent children of low-income families.   (Rates are $4-27 monthly.) If a family qualifies, this is a most cost-effective way to cover the children.  However, there are restrictions if the child is already covered by an employer sponsored health plan.  Essentially the child must be uninsured for three months to qualify.  However, if Healthy Families currently covers a child and the employer subsequently offers coverage, there is currently no requirement that the family drop Healthy Families in favor of the group coverage. Broker Service The premiums quoted include all broker commissions.  If you purchase directly from the company, you pay no different premium.  As your broker, we will help you maintain your small group benefits package in good working order.  We assist in employee communications, act as a liaison between you and the insurer as well as your employees and the insurer.  We will “shop” all coverages including retirement plans and ancillary benefits (dental, vision, disability, Section 125) for you and help you get the most from your benefit dollar.