Small groups – defined as having from 2 to 50 employees – are renewed based on the claims experience of the insurers’ market segment ‘pool’; i.e., hundreds/thousands of employers and tens of thousands of employees. (It’s a little more complicated than that but hey, I’ve only got 30 Seconds.) 

Large groups stand on their own. That works well in most cases; particularly if you have 1,000 or more employees to spread the risk.

But then there’s this.

ABC Widget has 65 employees; just 39 are enrolled in the health Plan; that’s a ‘large’ group!!

Their annualized premium is $465,642. Just two employees have incurred claims north of $200K; as a whole, claims are projected to hit $452,000, a 97% loss ratio. 

Before any negotiating or modifications in design, they’re getting a 39% increase. (I’ve seen worse!)

Premiums are split 65/35. That means each employee will be looking at about a $68/month increase; arguably, manageable. Widget’s increase however will be $115,745.

That’s a huge hit to an employer on a really tight budget.

We’ll see how this turns out in a few weeks.

I’ll earn my commission on this one. (Which BTW, I’m cutting by 25%.)

Stay tuned.