Small Group: BASIC PRIMER for Medical

California’s Small Group Primer (as of Winter, 2014)

An open letter to my potential small group clients by Greg Spellerberg

Many small business owners (with from 2 to 50 employees) are unfamiliar with the California medical insurance market. This note summarizes some key points. As I learn more about you, I can help better pinpoint a good plan for your company,

but there are certain policies I refuse to sell but quote anyway specifically so I can provide a warning.

I have access to, and always provide, every plan from every carrier that offers coverage for your sized group in your location. Review, but please do NOT print because it’s incredibly long. For example, a four person group quote runs over 175 closely-printed pages, especially since rates now depend upon each enrollee’s exact date of birth and home zip code.) Since most owners want to know monthly budget even before they see benefits, I often pull the premium-ranking pages out and send them as separate files. They are listed as “HMO by Premium” and “PPO by Premium” because mixing the two types of plans together and just ranking from lowest-to-highest cost would be like mixing apartment rental and hotel room costs: each have common factors but they are too different to mix together. See the ENDNOTE for more detail.

Each quote will cover the following details:

  1. Carrier name.
  2. “Benefit Level” which will be Platinum, Gold, Silver, or Bronze.
  3. Calendar Year Deductible and out-of-pocket maximum.
  4. Doctor Visit Copay and whether any visits can be charged before the deductible
  5. Hospitalization benefit copays (Dollar amount) and coinsurance (percentages)
  6. Prescription Drug coverage.

Before I can recommend baseline plans for a new company, I’d need to know if the owner or employees had any particular health issues. A typical assessment would include personal interviews with employees (because the owner SHOULD NOT ask about health issues; HIPAA privacy is there for a reason). Owners need me to be a “firewall” so that employees can explain their needs without fear of jeopardizing a job because of, say, an impending pregnancy not yet announced, or a chronic diagnosis not yet revealed.

Final Thoughts for Owners to consider when beginning the search for a new plan:

Premium rates for the small group market are set and regulated by the State of California, so if I was quoting at the same time as some other broker/agent, you would see the exact same costs; the only differences we agents can offer are our suggestions and services, but never “discounts”.

ENDNOTE:   The reason HMO and PPO are listed separately is because they truly are not comparable plan designs, and it’s not a good idea to look at them all listed together in one large rate ranking. HMOs are Health Maintenance Organizations, which are literally supposed to be an organization to “manage” your health. In theory, an HMO should focus on preventative care and have everything you need to stay healthy. Kaiser is the most prominent example, where you walk into a Kaiser building and have one “Primary Care Provider” or PCP as your doctor who can then refer you out to specialists as needed. The important points of an HMO is that the primary doctor acts as a gate keeper (you cannot see a specialist without a referral) and should therefore always be abreast of your health, and you will receive no reimbursement from your insurance carrier if you choose to get care outside of the HMO network without approval (except for urgent care, locally or while traveling). A PPO is a Preferred Provider Organization, which means you do not select a Primary Care Physician gatekeeper, but rather can utilize the broad network of doctors without referral requirements. The PPO plan design has two levels of benefits: In Network and Out-of-network. You pay a great deal more money when you choose to go Out-of-network, but at least you do get some coverage from the carrier. Many people still use their family doctor and ask for referrals, but as a PPO member you can simply go directly to specialists as you felt you needed them. As long as they are within the “preferred provider” network, you’ll be reimbursed by the carrier. The plan designs have a different approach to health care: a HMO is designed to help you maintain your health from the very beginning; the PPO is designed to give you as many options as possible. The 2014 hybrid plan, the Exclusive Provider Organization (EPO) does require a Primary Care Physician but allows very limited use of the broader network for greater expense.

In terms of doctor availability or network size, in the Bay Area there is no real advantage or disadvantage to either type: you can find a PPO doctor and have access to a large network, and with some greater level of difficulty (except for Kaiser), you will likewise find doctors within an HMO network. An exception is finding open practices of (non-Kaiser) HMO doctors in Marin and Santa Clara counties. Both of those counties are impacted by more patients wanting HMOs than there are independent doctors willing to practice within an HMO.