Small Groups Health Insurance

If you are an employer with less than fifty employees you are considered a small employer in the State of Idaho. On July 1, 1993, the State of Idaho adopted the NAIC (National Association of Insurance Commissioners) Model Act, which changed significantly the way insurance carriers could do business in Idaho. Of those changes, the most significant related to how an insurance carrier can establish premium rates for individual small groups. Prior to 1993, Health Insurers could simply pick and choose who they wanted to do business with by the premium rates they offered. Small Group reform change several issues the most significant of which are:

-They must provide desired coverage to any Employer Group that submits a request.
-They are restricted as to the premiums they can charge a particular group.
-On renewals, carriers are limited on how much they can increase your rates.

How does an insurer set my group rates?

For every particular plan design that a company sells, that company has to establish a base rate for that particular Plan. When offering rates to new and existing groups, the Insurer cannot offer rates less than 50% of the Plans base rates. In contrast, the Insurer cannot offer premium rates higher than 150% of their established base rates for that Plan. As such, they are given a rate corridor that they are required to work within.

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Effectively, this creates an environment where a carrier has to balance it’s offerings. On one hand they want to offer the lowest premiums possible for healthy groups, but they also want to be able to charge the highest premiums possible on unhealthy groups. The affect of this requirement on the Idaho Health Insurance environment is that it provides a leveling effect on a large scale basis, but still allows an individual carrier to adjust their rates and compete for new business.

One other control that bring some increased premium stability to an individual Employer Group is a restriction on how much an insurer can change a groups rates. Once an existing group has been placed at a certain point in the rate corridor, at renewal the insurer can only increase the groups risk assessment by 15%. This does not mean that renewal increases are limited to 15%, it means that the insurer can increase the group rates by their normal trend increase plus an additional maximum of 15%.

How do I know from year to year if I should shop around for better Insurance?