If you are an employer or an employee, you already know what a chore it is to deal with employee benefits in New York and since ObamaCare, it has only gotten tougher. We spend a great deal of time working with small business owners trying to make sense of the healthcare arena and the costs associated with employee benefits. The majority of the small businesses we work with utilize our expertise to find a PEO that will handle amongst other things their employee benefits.
In other cases, we have clients who choose not to utilize a PEO and most of them are based in New York. Currently, in New York there are two classifications of companies, you are either Small Group, which is 2-49 employees or Large Group which are 50+ employees. Small Group has to choose between a few carriers, and the rates are Community Rated whereas Large Group has more choices, and the rates are based on the group’s actual claims experience.
Community Rated means that everyone in the Small Group market pays the same price for the same plans. Large Group rates are dictated by the group’s actual losses specific to their plan and the experience of the group. Community Rated Plans were thought to help with costs and offer choices without regard to your individual health, but premiums have increased, and the choices have become sparse for rich plans. Large Group plans while dependent on the health and claims of your employees, offer more plan choices and the health carriers would compete for business with lower premiums and more plans choices.
In January 2016, all of this changes because under New York law and the Patient Protection and Affordable Care Act (ACA), the definition of "small group" will be 1-100 employees. All non-grandfathered groups with 1-100 employees renewing on or after January 1, 2016, must be issued small group coverage. A Grandfathered plans are health plans that were in place before March 23, 2010, when the Affordable Care Act was signed into law. These plans are allowed to offer the coverage they did before the Affordable Care Act.
This change undoubtedly offers more choices for companies with 2-49 employees, but no one is certain what it will do to companies with 50+ employees. Certainly, the plans will be more benefit rich, offer Usual, Customary and Reasonable (UCR) out of network reimbursement versus the small group 140% of Medicare. Will the premiums be less, or more and will there be more choices or less?
No one yet has answers to the above-posed questions, but one thing does remain certain, the Small Group Insurance market in New York will change in 2016.
For more specific information here is a link to NYS Department of Financial Services.