Large Group Health Insurance is defined by Employers that have 50 Full Time Equivalents or more. When an Employer becomes a Large Group Health Insurance Provider or an ALE, the process of providing health insurance is completely different than Small Group Health Insurance.
Health Insurance is the number one benefit that Employees are looking at when evaluating whether or not to accept an offer from a potential Employer. It is extremely important to understand what the average Employer benefit amount is and how to create a competitive health plan.
Who is Considered Large Group?
Large group health insurance is defined by an Employer Group with more than 50 Full Time Equivalents(FTE). A FTE is defined by the total amount of hours worked in a week by all employees divided by 30.
A practical way to look at this rule is two part time employees that work a total of 30 hours per week = 1 FTE, where as an Employee that works 30 hours also = 1 FTE. Using this example if you have 3 employees who work a total of 60 hours this equals 2 FTEs.
“Large Group Health Insurance is for any Companies with 50 or more FTEs.”
The ACA and You
Since the passage of the Affordable Healthcare Act (ACA / Obamacare), Employers who are defined as an Applicable Large Employer (ALE) now have new requirements to abide by both administratively, plan types offered and how much they have to contribute. The ACA has a lot of requirements that Large Group Employers must abide by. Learn more about the ACA here.
How Quoting Large Group Health Insurance Works
Large Group Employers start the process of obtaining health insurance through getting a quote. This process is a bit more tedious since Large Group Employers must fill out screeners in addition to the normal Employee Census. The screener will ask questions about the health of a group as well as any known health issues. The time it takes to get a quote is also longer since the quotes are generated directly by the Health insurance Carrier. Once the Health Insurance Carrier receives the screener and census, their underwriting team will begin the process of quoting. Quotes are based off of
- Average Age of the Group
- Demographical Location
- Health Issues that will potentially have a recurring claim (example: cancer)
- Current Rx usage (used to identify health issues not documented on the screener)
- How long the Employer has been with other Carriers
- Large Group Health Insurance is quoted based on coverage type. Unlike Small Group Health Insurance, Large Group Health Insurance will receive a flat rate for:
- Employee Only
- Employee + 1
- Employee + Child(ren)
Let us help you get a quote or check your current plan. Click here now.
“Large Group Health Insurance’s pricing is based on the demographics and claim history of the group”
Plan Designs and Strategy
Large Group Health Insurance plans are very similar to Small Group Health Insurance with the exception that Large Group Health Insurance has many more plans to choose from in addition to plans with lower deductibles. Due to the wide options available, Large Group Health Insurance provides a range of flexibility for Large Employers to customize their benefit offerings.
A common method of selecting plans is to put in place 2-3 different plan types with the same health insurance carrier. These plans will be chosen on a “scale” type method providing a high plan, a mid plan, and a low plan. Each health insurance plan selected should meet a purpose within the Large Employer’s employee base.
For example, the top plan should be selected with the intent of executive staff recruitment and retainment. The mid level plan, should attract the bulk of the Employer’s current staff and provide an attractive benefits package to attract new staff. The low plan should be designed to be in compliance of ACA requirements as well as be a plan of last resort for those looking for the cheapest option.
A “high plan” would be a plan with a $500 deductible or less
A “mid plan” would be a plan with a $2,000 deductible or less
A “low plan” would be a plan with a $2,500 deductible or more but typically $4,000
There are many more strategies to utilize when designing a health insurance plan as well as looking into Self Insured Plans.
Click here to see more in depth strategies under our Small Group Health Insurance Page
“Large Group Health Insurance has more flexibility than Small Group Health Insurance.”
“Self insured Health Insurance allows Large Groups a chance to save on premium.”
Self Insured Plans
A Self Insured Health Plan, is a health plan where the Employer partially or fully funds the Health Insurance Claims and is typically utilized by Employers with more than 200 Employees. Unlike Fully Insured Plans, which are purchased from a Health Insurance Carrier, the Employer designs the plan themselves. Employers may choose to elect a Self insured Health plan due to the ability to create the plan as well as the cost savings that may present itself to the group.
“For Small Group Health Insurance, determining how much a Company should pay for each Employee is complicated and needs to be planned out.”
Cost – Two Buckets Are Better Than One
Self Insured Plans will consist of two types of cost- fixed and variable. These cost should be looked at as “buckets”. In the first bucket, it consist of fixed cost that would be incurred regardless of what plan the Employer selected. These cost are fixed and the Employer will incur these regardless of how many medical claims occur throughout the year.
Fixed Cost include administrative fees, stop – loss premiums, and any other per employee fees. Stop – loss premiums is a “re-insurance” that the Employer pays for which will cover any medical claims that exceed the planned “claim pool”.
The second bucket consist of variable cost. Variable cost are the medical claims made throughout the year. This is the bucket where the Employer has a chance of saving money. For example if the Employer estimated that Medical Claims would cost $2 Million this year but only incurs $1.5 million, the Employer saves $500,000. However, if the Employer incurs $3 Million in Medical Claims, the Stop-Loss Insurance would kick in and cover anything above $2 Million in claims.
Why 200 or More Employees?
Most Employers that choose to utilize a Self Insured Plan have over 200 Employees. This is because of the law of large numbers. The law of large numbers states that the greater the number insured, the greater the probability that the actual loss experience will equal the expected loss. Simply put: the more the merrier.
Additionally, to create a Self Insured plan takes a great deal of work to ensure that everything works well. If in the first year the Employer blows through the expected Medical Claims the Self Insured plan may become obsolete upon renewal and the Employer may be forced to switch back to Fully Insured. This is why most groups that choose Self Insured are Large Employers.
There are new plans that have similar traits to Self insured called “level funded” plans. These new plan designs are being pushed by TPAs (third party administrators) and allow healthy small groups an option to dip their toes in the Self Insured market.
“Large group Health Insurance contributions to the employee largely are based on ACA rules.”
How Much Should You Contribute to the Employee’s Share?
According to the Bureau of Labor and Statistics, Employers with 50 to 100 Employees commonly contribute approximately 10% of an employee’s salary toward health insurance. Groups with 100-499 13% and groups with 500 or more 15%
These numbers are much larger than Small Group Health insurance, due to the fact Large Groups have the opportunity to bring down medical cost, thus saving money.
For Large Health Insurance Groups the minimum to contribute will also be based on the “affordability” of the plan dictated by ACA rules. This number is different for each company and can drastically change the amount the Employer funds. Contact us for a bench-marking assessment.
“Large group Health Insurance renewals are largely based on medical claims. “
Renewal Based Heavily on Claims
Unlike Small Group Health Insurance, Large Group Health Insurance Plan renewals are largely based on the claims the group made throughout the year. For Employers with 100 or more Employees insured, the Health Insurance Carrier will provide an overall Medical Claim usage report which will show an overview of what was used. Since Large Group Health Insurance is largely based on claims, Large Groups should focus on Health & Wellness Plans to help reduce overall insurance cost. Want to get a second opinion or your renewal? Contact us.
“Implementing a Health & Wellness plan helps reduce medical cost.”
Health & Wellness Plans
Whether the Large Group Employer offers a Fully Insured Plan or Self insured Plan, Employers should focus on Health and Wellness plans to help reduce medical claims. When medical claims are reduced, so are health insurance cost. Below are 5 Health and Wellness ideas that can help jump start your path to lower medical claims.
1) Become a no smoking zone and offer quit smoking programs
Many Employers are banning smoking altogether from their workplaces. Aetna, one of the largest health insurance providers, does not allow smoking on their campus. Employees that want to smoke must drive off site to smoke. This reduces the amount of smokers thus helping reduce cost. Additionally many Health Insurance Carriers provide free “quit smoking” programs included in their plans.
2) Switch to Healthy Company Snacks
Many Employers have “donut day” or “Friday Happy Hours”. These normally consist of foods that taste wonderful, but normally not healthy. Switch to snacks that are healthy.
3) Get Fit
Employers across the nation, as well as Health Insurance Carriers, are starting “Get FIt” programs which encourage employees to stay active. In many cases the Health insurance Carrier or Employer provide free wearable activity trackers and then reward Employees for activity goals. Whether it’s a free trip, reduced deductibles or lower premiums, getting your Employees active equates to a more healthy workplace.
4) Gym Memberships
Almost every Employer has a gym nearby. Contact your local gym for discounted memberships that you can purchase for your Employees. This can be an easy way of encouraging staff to stay healthy as well as providing added Company Benefits.
5) Weight Loss Competition
Want to help jumpstart the health program? Kick off a weight loss competition in tandem with a Get Fit program.