As many religious orders grow smaller than 50 covered lives, especially for their under 65 members, they are seeing health insurance costs climb at an alarming rate.
To understand why, one needs to understand the factors that are working to impact the rates:
First, the average age for those religious members that are under 65 is still much higher than a carrier's general population. They are also the highest utilizers of paid benefits. A change in expected claims between a 19-year-old and a 24-year-old is very small. However, the difference in expected claims between a 59-year-old and 64-year-old is staggering. The premiums are going to reflect this increase in risk.
Part of the Obamacare Mandates to insurance companies is that they could no longer medically underwrite groups with less than 50 employees (considered small group) for fully insured cases. Instead, carriers must use a "community rating" system. This underwriting system is one where every person of a particular age and zip code, will pay the same rate for a plan regardless of the employer, based on that carrier's book of business. This is why rates cannot be negotiated with the carrier. The set rate is the set rate.
An order may have very healthy members and/or employees and still experience dramatic rate increases, with almost no recourse.
Young & Healthy Employees Leaving Community-Rated Pools
Insurance companies, attempting to gain an edge in a market, developed 'level-funded' plan designs. These plans allowed groups that normally would have been considered too small to absorb the risk of being self-funded, to do so. These plans are not considered "fully insured," even though no more risk associated with them.
The employer still pays only the premium and the claims are paid per the contract. There is no change for the employee. But, with these plans, claims reserves not spent during that plan year are shared with the employer, not kept as profit for the insurance company. That means if your group keeps costs down, your group can get a check back at the end of the year. For this reason, level-funded plans are also referred to as 'participating plans', because the employer participates in the savings.
Importantly, level-funded plans are not subject to state mandated 'benefits' such as abortion or contraception like fully insured plans are. This allows the insurance company to build a canonically-correct plan that mirrors your existing benefits, but does not force you to provide or pay for objectionable services in any way.
Insurance companies are also able to medically-underwrite these level-funded groups. Employers who are willing to be medically-underwritten often find their rates are significantly less than the community-rated pools. This leads to healthy groups leaving the community rated pools to go to these level-funded plans. As more and more of these groups leave the community-rated pools, the average age of the community pools continues to rise. This process is called adverse selection, and is one of the most significant factors in why rates have been increasing year-after-year.
1) The depreciating market for community-rated plans has carriers providing fewer options in benefit designs. For example in Florida, Aetna, which used to offer dozens of plan designs for fully insured plans, now only offers one. If you are fully insured, you have one set of options to select, and those only have one set of age-based rates per zip code.
2) Of the carriers that are offering a 'level funded' alternative, very few insurance companies offer these plans to non-profit organizations.
There is Hope
Burri Insurance is working with carriers that offer level-funded plans to Religious Orders.
Many of our clients have already successfully transitioned from expensive fully-insured plans to these level-funded plans with great success. We have many groups that have immediately lowered their monthly health insurance premium rates below fully-insured rates. Some of these groups have gotten participation checks at year-end for tens-of-thousands of dollars. We have been implementing these plans for many years now, and the results speak for themselves.
These are reliable and affordable plans that can provide relief from high health insurance rates for Catholic Religious Orders.
If you have received a shocking end-of-the-year health insurance renewal and would like a "second opinion" before renewing, please contact us today, there is still time before the January 1st, 2019 renewal date.
Or you may call Robert Smedley directly at: (727) 698-8141