Large Group Health Insurance & Employee Benefits

What is considered a large group and how is it rated? By William F. Schaake, CIC, CRM

By most carrier standards, a large group would be an account with 51 or more eligible employees. However this term can be very subjective. A company with 51 eligible employees, but only a handful participating would still be considered a large group by most state insurance departments. However the broker and the group administrator may not agree. This is primarily because large groups are generally subject to medical underwriting, experience rating or having the rates based on the demographics - i.e. basing the rates on the average age, dependent status, zip code and gender make-up. Many times this rating process includes the employees not even participating on the plan.

There are various thresholds and requirements that pertain to large groups. For instance, most carriers require a participation percentage of usually 75% of net eligible employees to enroll to be considered for the marketing and the renewal of the account. The term ‘net’ factors the number of employees available after deducting those covered by their spouses and sometimes by Medicare or Medicaid.

When is an account experience rated?

Typically accounts are experience rated when over 100 employees are enrolled, however negotiated discounts are often contemplated on accounts with less than 100 enrolled if they run well with respect to claims. That is maintain a low medical loss ratio (MLR). Conversely, if an account is running poorly, renewal premiums often increase above industry trending rates. All this is subject to change with health care reform.

Loss information is usually only available on groups with over 100 enrolled. So how does a broker/agent effectively market an account when loss data is unavailable if the group has less than 100 lives enrolled but is still considered a large? All we can say is that there are other tools available.

Our Office Assists with All Forms of Customer Service Including the Following:

Enrollment & Termination Processing

COBRA & FSA/HRA Administration

Aggressive Marketing on Renewal

Claims Disputes & Billing Reconciliations

Compliance and Regulatory Guidance

Direct Provider of Total HR Access

Electronic Document Sharing

Full Enrollment Services

How do we get compensated?

Usually we get paid by the carriers, however under certain circumstances we can charge a fee for the services rendered. This provides an impartial approach during situations of competitive bidding. Most of the time we work through independent insurance agents and brokers. Generally a commission split is negotiated prior to the commencement of the insurance sale.

Is your agent right for your company? Ask these questions before selecting an agency:

About the Agency

How long have they been in business?

Which carriers is the agency contracted with?

How is the office structured and is there a point person?

What ancillary services are provided?

How are documents saved and archived?

What other benefits does the agency provide?

Servicing Process

Who services the groups and responds to their needs?

How are COBRA eligibles and participants handled?

What online services are offered and at what charges?