Group To Individual
I had a call this week. 'Max' had just
received his health insurance renewal. Another increase; this time, "just" +26%!
His agent suggested now might be the time to drop his small group coverage. The idea: give each employee the cash to buy their own insurance. Presumably, a "defined contribution" is easier to budget than group insurance premiums.
In my "second opinion", I asked Max to consider these other factors:
- dropping group coverage - let's say on August 31st - creates a Special Election Period (SEP), which allows Max's employees (and dependents) to buy individual coverage effective 9/1 without regard to pre-existing conditions.
- I quoted premiums for similar individual plans; the rates were about 14% lower (quotes vary by case).
- off-setting that savings, any money Max and his employees pay for individual coverage is NOT tax deductible.
- rates for individual plans purchased 9/1 will reset January 1. The new rates for 2015 aren't public yet. What if they're up 26%?
- Deductibles satisfied under the group contract DO NOT get credited to the new individual policies.
What is it they say about
the devil and the details?
