Friday, March 24, 2006

Got Health Insurance?

One of the biggest challenges, at least for me, was finding affordable health care. It's tough but you have to do it to protect yourself and your family.

Here are the comments of Dean Rowe, an independent broker, on how to find insurance. I hope to persuade Dean to share more during a bonus interview that's part ADR Practice Builder (it's launching in the near future!)

Bruce says,

I think I can give you some pretty good overall guidance on this point. I'm an employee benefit consultant and broker. Obviously, the largest component of a benefits plan is health insurance and therefore, that's what I spend a majority of my time with.

First, there is very little difference between the products (plans) available for larger companies and those available for small businesses, even down to a sole proprietor with no employees. It may surprise a lot people to know that the cost for small company health insurance is not much different from the cost at a large company. The difference is that a company bears most of the cost for its employees, while a self-employed sole proprietor must bear the entire cost himself.

Regardless of company size, the major players are Blue Cross, Harvard Pilgrim and Tufts. In certain geographic areas, there are a couple of other smaller players (Health New England in western MA and Fallon in central MA, for example). Big national names like United Healthcare, Aetna and CIGNA are around but not competitive unless a company has hundreds of employees and multiple locations.

What IS different for a small business is access. In other words, how does a small company GET its health insurance? The primary distribution channel for companies with about 10 employees or more is health insurance brokers like me. Sure, a business can get their quotes directly from the health plans and by-pass brokers if they want but they will pay the same price whether a broker is used or not and so, most companies tend to take advantage of the value added service of a broker. The primary distribution channel for small companies, however, is through intermediaries that administer those same plans. Those intermediaries include Small Business Service Bureau, Northeast Business Trust, Massachusetts Business Association as well as most regional chambers of commerce (such as Metro West C O C as you pointed out). The exception to this is Blue Cross. They have their own small business unit and will give quotes directly.

Now, here's the part where I answer your question. Because of the regulated nature of the Massachusetts health insurance market (for groups of 1 to 50 ees), the prices and plans available through those intermediaries are all virtually identical. By that I mean that if you were to price out a given plan, let's say the Harvard Pilgrim Value Plan for example, each of those intermediaries would have virtually the same price. You can get a quote from MBA, NBT, SBSB and some chamber of commerce and they'd be within 1% of each other. What differentiates them are the added services that your membership in that organization may give you.

As a broker, I must use the same channel to obtain quotes for my clients. I happen to use SBSB. Their membership fee of $85 annually for small companies is, I believe, the lowest. Through SBSB you can obtain quotes for Harvard, Tufts, Fallon, Neighborhood Health Plan and Delta Dental. In order to get competitive pricing from Blue Cross, you should contact their small business line.

The other options that can work for small businesses are Mega Life, Mid-West National and John Alden. These are national companies that specialize in small business. They offer plans with more flexibility and can be substantially lower in price. However, as always, you get what you pay for.
My concern with these plans is that they often leave the employee paying considerable out of pocket expenses. If you are young and healthy and never use the plan, they can be great. They can also be good if you are able to accept the risk of high out of pocket cost when you get sick.

Here are the steps a small business/self-employed person should follow to get the best and most competitive pricing:

1) Forward the required information (usually the name of your
business, location, nature of your business and age/family status/home zip code for yourself and any employees) to one of the aforementioned intermediaries and request quotes for ALL vendors and ALL plans. If you don't request this, they will pick a couple of the most popular plans to send you. Just pick ONE intermediary. you gain very little by shopping them against each other.

2) Send the same information to the Blue Cross small business unit and
request the same thing.

3) If interested in a plan with lower cost but higher out of pocket
expenses, look for a local Mid-West National rep (I know of one if you're interested).

Give consideration to some of the high deductible programs offered by the HMOs because I think they are a good value.

Want more help? Either wait for ADR Practice Builder to launch or email Dean directly.

Try. Fail. Grow. Learn.



At 8:09 PM, Blogger Joshua said...

Hey, you have a great blog here! I'm definitely going to bookmark you!

I have a Insurance Health Guide site. It pretty much covers health insurance and related topics.

Come and check it out if you get time :-)


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