Replacing Group with Individual Coverage

[jackflashdrive]

If you have a small office with 5 or less people, and they are on a group policy, and all qualify for a major medical, why would or would not you try to break up that group and put them all on individual health plans?

My thoughts:

- If someone in the group gets very sick premiums for the rest are going through the roof. And then the others cancel, the group falls apart, and the sick (uninsurable) person no longer has coverage.

- The employer and employees are going to pay less and get better coverage.

- You make a whole lot of money. A friend of mine just broke up and wrote up an office of 9 healthy people and made ~$6K.

- Yet, I've been told by some to never break up a group for liability reasons. I understand this when it comes to breaking up a group when it leaves someone uninsurable. But what if everybody is in a better spot than when you started?

 

[moonlightandmargaritas]

In Florida, the statutes state that you cannot do this unless the group coverage has been canceled for a minimum of six months.

 

[jackflashdrive]

In Florida, the statutes state that you cannot do this unless the group coverage has been canceled for a minimum of six months.

TY. God I wish I had real training.

 

[Norwayguy]

If you have a small office with 5 or less people, and they are on a group policy, and all qualify for a major medical, why would or would not you try to break up that group and put them all on individual health plans?

My thoughts:

- If someone in the group gets very sick premiums for the rest are going through the roof. And then the others cancel, the group falls apart, and the sick (uninsurable) person no longer has coverage.

- The employer and employees are going to pay less and get better coverage.

- You make a whole lot of money. A friend of mine just broke up and wrote up an office of 9 healthy people and made ~$6K.

- Yet, I've been told by some to never break up a group for liability reasons. I understand this when it comes to breaking up a group when it leaves someone uninsurable. But what if everybody is in a better spot than when you started?

This topic has been discussed numerous times. First depending on your states laws it could be illegal to convert group coverage to individual coverage. Second if the business uses the benefit of group health insurance to recruit new employees they would only be able to hire healthy people in the future. Your suggestion of a small group having someone get very sick would affect the entire groups rates would be something else that would be state specific. In Maine all groups of under 50 lives have a community rate so how unhealthy 1 person becomes in the group doesn't matter it would be factored in with every other group of 50 lives or less in Maine. Liability I'm not sure of your liability other than it might be against state law what you are doing but there is no way of being totally sure that everyone on the coverage would be able to qualify for individual coverage until they apply and this is compounded when you factor in dependents. So tread carefully here

 

[Crabcake Johnny]

DOI's simply frown on it. And you'd better make sure all of the employees qualify without any chance of post claims underwriting - which means bottom-line them that they have to be honest on their application.

I'd discuss with every employee how post-claims UW can be used.

Stats have proven that out of 5 people at least one of them is either a decline - or family members is a decline - or someone's gonna get rated/ridered for a condition.

If anything comes back at you and it gets legal, you'll be painted as a commission-greedy agency to "blew up" the group to get paid.

 

[jackflashdrive]

I think it's a real shame that those small groups appear to be in a very dangerous position, and state laws actually prohibit us from helping them.

Group coverage for those small groups is essentially a huge fraud, right? Inevitably, when one person in the group gets cancer, the others in the group are not going to pay the higher premiums associated with the cancer, and so the group falls apart and now the guy with cancer has no insurance.

 

[Crabcake Johnny]

I've moved very small groups onto indie - typically groups of 3 or less. It's always owner-initiated and in most cases the owner says they're dropping the group - period.

I just cover my a** in those cases - will drive out, sit with everyone and go over the differences between group and individual. If the owner's canceling then it is what it is.

I never pursue a case when the owner likes the group coverage but simply wants a lower rate. I do not recommend individual plans in that situation.

 

[moonlightandmargaritas]

I think it's a real shame that those small groups appear to be in a very dangerous position, and state laws actually prohibit us from helping them.

No, that's not it.

It's to protect small (2-50) group from adverse selection. The healthy flee for ifp leaving small group with all the bad risks. Can you imagine what would happen to small group rates then?

 

[Crabcake Johnny]

And although not always the case, group plans can be more benefit rich then indie.

And example: my brother (recent stroke victim) is on his wife's group plan. Currently he's been going to outpatient therapy sessions - three sessions per day (occupational, speech & physical) 4 days a week and he's into month 2.

Name me a single individual plan that would give him 3 therapy sessions per day, 4 days a week for 2 months outpatient and he has months more to go - already authorized.

 

[jackflashdrive]

And although not always the case, group plans can be more benefit rich then indie.

And example: my brother (recent stroke victim) is on his wife's group plan. Currently he's been going to outpatient therapy sessions - three sessions per day (occupational, speech & physical) 4 days a week and he's into month 2.

Name me a single individual plan that would give him 3 therapy sessions per day, 4 days a week for 2 months outpatient and he has months more to go - already authorized.

And if he were one of three people are the other 2 going to pay for these benefits? They're canceling at the first rate increase, and unless the stroke didn't severely incapacitate him, he's never going to have insurance again.

Moonlight: I understand your point, but I don't think that really addresses the fundamental issue that healthy people in very small groups would seem to be much better off on ind. policies, yet we are prohibited from helping them even if the employer came to us (since you say FL has a 6 month waiting period).