Part 1

 

Placing a Group Health Policy is like renovating an old bathroom.   The initial quote to replace the vanity, toilet and bath tub is well below the budget allocated.  The contractor comes in and removes the items but discovers that the pipes behind the wall are leaking and all of the dry wall needs to be replaced.  Now that the wall is open, you have to repair the leak and replace the drywall which brings the cost up to the maximum for your budget.  The truck delivers the new vanity, toilet and tub but the vanity is the wrong size.  You have to decide if you want to send the vanity back and wait for the correct one or try to make the delivered vanity fit by moving the toilet and pipes.  Looking into your bathroom with its exposed pipes, unpainted walls and damaged floor tiles, you have to make some decision or go without a bathroom.  Yikes!  If you only knew beforehand what was going to happen.

Understanding the process of quoting and enrolling a group and learning some simple underwriting rules can help the health insurance agent manage their client’s expectations and reduce the frustration that can occur when unexpected issues arise.

When writing this article, I asked for suggestions from the MIBS customer service representatives who enthusiastically reviewed the article and made so many useful recommendations that I realized this article needed to be split into two parts.  This first part will be about the quoting and presentation of a new group.   I will discuss quoting for BCBS IL first.

The Group Quoting Process for BCBS IL

Because the quote is an agent’s main sales tool, providing the most accurate quote is vital.  Many variables influence the rates so spending a little time collecting the correct information may reduce some of those unexpected issues during the enrollment process.

  1. Determine if the group is eligible for small group coverage (1-50 employees)
    • Owners and their spouses are not considered employees when determining eligibility
    • BCBS IL requires that the group employed an average of at least one non-owner employee (full time or part time) during the business days of the preceding calendar year and employ at least one employee on the first day of the plan year.  A husband wife group could be eligible if they have a true partnership agreement in place.  In IL, a partnership is a business arrangement that is required to file Form IL-1065 with the IL Department of Revenue.
    • BCBS IL requires that the business is headquartered in IL and the signing authorized officer is also a resident of IL
  2. If the group has 51-100 total employees, this group falls in the non-regulated small group market
    • Subject to medical underwriting
    • If not currently covered by group health, this group is considered a previously uninsured group (PUG) and would be subject to additional rating.
    • Non ACA plans
  3. Verify the group market size by determining the total number of employees listed on the wage and tax (UI 3/40), including part time employees.
    • 1-50 employees is considered the small group market which offers Affordable Care Act metallic plans.
    • 51+ is the middle market or non-regulated small group market.  This market is subject to medical underwriting.
    • If the group’s total number of employees is close to 50, use the average total employee count for the four quarters of the preceding calendar year to determine market. Using the 4 UI 3/40s filed in the preceding year, add up the average number of employees listed in each month on each UI 3/40 and divide by 12.
    • These two markets are quoted in totally different quote engines and for different types of plans. As an example, restaurants can have over 50 employees but only 5-10 full time employees.  Don’t be that agent who collects the small group enrollment paperwork for a group whose UI 3/40 clearly shows over 50 total employees.  We would need to rerun the quote and collect all new paperwork.  This would definitely be an unexpected issue for the group.
  4. The quote should only include the employees and dependents intending to enroll in the plan. Any change between the demographics in the quote and demographics of enrolling employees, could change the rates from the quote.  A sample issue would be a restaurant that quotes 10 employees.  Owners and management are in their 50s.  When the group enrolls, there are two twenty something employees still on their parent’s plan who waive coverage.  When those two young employees do not enroll, the premium rates will increase.
  5. BCBS only allows 1099 employees group coverage if the number of 1099 employees does not exceed 10% of the total enrolled employees. This means that to enroll one 1099 employee, there must be 9 other employees enrolled.
  6. BCBS IL changes their small group rates every quarter and the 51+ group (Non-Regulated Small Group NRSG) every month. Be aware when you are quoting a group in the last month of a quarter and let the group know that if they change their effective date to the next month or quarter, the quote needs to be rerun.
  7. Provide the correct county for the location of the group as some zip codes are in multiple counties. Premium rates vary by county.
  8. For the small group market, date of births and genders for all employees and dependents are required. For 51+ groups, NRSG, the first and last name, date of birth, gender and home zip code of each employee and dependent are required.
  9. For an employee to be eligible for group coverage, they must work a minimum of 30 hours. Seasonal and part time employees are not eligible.
  10. BCBS requires employers to contribute at least 25% toward the employee only premium. There is no requirement to contribute toward dependent’s premiums.
  11. BCBS also requires 70% of all eligible employees to enroll in the health plan after valid waivers. Valid waivers include individual coverage, spousal coverage, Medicare, Medicaid, etc.  Therefore, when calculating if a group will meet employee participation requirements, remove any applications that have valid waivers.  Then take the total number of enrolling employees and divide that number by all eligible employees minus the waivers.

Example:  10 total eligible employees,   3 valid waivers, 5 enrolling applications and 2 waivers that are not valid.

5 (enrolling employees) divided by 7 (10 total employees – 3 valid waivers) = 71.4%.   This group meets employee participation. 

Humana Quote

 

  1. Humana requires that a business is either wholly-owned by one person and has at least one employee who is not an owner or the spouse of the owner enrolling in the medical or the business is a partnership with at least one employee enrolling in the medical.
  2. Humana allows unlimited 1099 employees as long as there is one employee on the wage and tax enrolled as well.
  3. Humana changes their rates every month.
  4. Humana requires an employer contribute at least 50% of the total employee only premium. There is no requirement to contribute toward dependent’s premium.
  5. Humana requires 50% of all eligible employees to enroll in the health plan after valid waivers. Valid waivers include individual policy, spousal coverage, Medicare, Medicaid, etc.  Therefore, when calculating if a group will meet employee participation requirements, remove any applications that have valid waivers.  Then take the total number of enrolling employees and divide that number by all eligible employees minus the waivers.

Example:  10 total eligible employees,   3 valid waivers, 5 enrolling applications and 2 waivers that are not valid.

5 (enrolling employees) divided by 7 (10 total employees – 3 valid waivers) = 71.4%.   This group meets employee participation.

  1. For an employee to be eligible for group coverage, they must work a minimum of 30 hours per week. Seasonal and part time employees are not eligible.

The BCBS Quote

 

This quote will include all available plans and networks for the group and normally has 50 or more pages so it is not advised to present using this quote.  Instead, present only a few plans that would fit the employer’s requirements that you discussed in the initial meeting.

The quote includes:

  1. Composite rates which list one rate for each tier (employee, employee + spouse, employee + child and family)
  2. Age rating which list rates based on age of covered member
  3. The plans are grouped based on network

The Humana Quote

The Humana quote comes in two formats, a pdf version and an excel version but both have the same information.  The excel version offers links to open up the Summary of Benefits and rate chart for each plan.

Sales Presentation

It is very common to create a spreadsheet comparing those selected plans side by side for presentation to the employer.  Agents with MIBS can request a comparison spreadsheet using our website:

https://www.mibsga.com/quote/request-a-plan-comparison-spreadsheet/

If you need assistance with selecting plans to spreadsheet, feel free to contact me, Patty Kretschmar or your customer service representative here at MIBS.

Key Points to Cover in Presentation

  1. Rates are based on the demographics initially provided by the group. Any change in demographics from the quote and the enrollment may result in a change in the rates
  2. Network selection and how to use the Provider Finder, especially if offering a smaller network or HMO
  3. Effective date and relationship to rates – rates may go up if enrollment paperwork is not submitted before the next rate change.
  4. BCBS has the best negotiated rates for procedures so the member benefits from the reduced charges using in-network providers
  5. Group insurance is now less expensive than comparative individual plans and has access to the large PPO network
  6. Great BCBS Employer website available
  7. If Group wants to proceed to enrollment, discuss enrollment process.

This blog includes situations that MIBS has seen with group submissions, however, this is not an inclusive list of all possible issues that could arise.  Understanding these rules when obtaining the information for a quote displays an agent’s expertise and provides a sense of security for the employer that you, the agent, indeed know what you are doing.  Employers rely on the the agent to evaluate their group’s characteristics for eligibility and product.  Asking the correct questions will increase the accuracy of the quote and make enrollment less problemsome.

 

Part 2 will cover the enrollment process which will be posted in the next few weeks.