When was the last time you heard an employer say their rates were perfect? I have to imagine, not too recently. Small employers have many expenses and often, health insurance is one of the largest.
It can be challenging to pay the monthly invoice and ultimately, the burden falls on the employee. Employees face increases in payroll deductions, copays and deductibles. What if there was a solution for small employers with a relatively healthy employee population?
Small employers now have the option to join a Multiple Employer Welfare Arrangement (MEWA). A MEWA allows small employers to join together to purchase health insurance, allowing them to capitalize on economies of scale typically only afforded to larger employers. These small employers benefit by pooling with other employers to access lower insurance premiums. A MEWA can be as little as two employers or as many needed to form a large enough employee pool.
In a MEWA, premium contributions from several employers are blended into a single trust or custodial account and used either to purchase insurance or pay claims directly to providers or employees. Now that your wheels are turning let’s talk about why you would choose a MEWA over a traditional Affordable Care Act (ACA) plan. Rates are based on a few factors like company location, plan specifics and employee demographics, each playing a role in both MEWA and ACA plans. The key difference is that MEWA’s base rates on the pre-ACA rating methodology and each employee will have to complete a medical questionnaire.
In the past, employees had to complete one questionnaire for each carrier. Today, technology allows employees to complete one form online and then agents send them electronically to the MEWA carriers, saving all group participants valuable time. Carriers will then provide medically underwritten rates to the agent so that they can work the employers to select a carrier and plan(s).
In most scenarios, rates provided through a MEWA are lower than the ACA compliant plans. There will be times when the group has major medical conditions and when this occurs, it is recommended the employer look at the ACA compliant plans that do not require medical underwriting.
To put the potential cost savings in perspective, here is a scenario so from a Columbus, Ohio group. This group has eight employees with a relatively young and healthy population. Below are the rates from ACA compliant plans in column 1 and the MEWA plan in column 2.
|Carrier Name||Anthem OH||Anthem MEWA/SOCA|
|ACA Compliant Plan||MEWA Option|
|Name of Plan/Metallic Level||Anthem Gold Blue Access PPO 1000/20%/3750 Code: 3HDX||BA SOCA MEWA Option 2 w RX Option E80|
|Office Visits||In Network||Out of Network||In Network||Out of Network|
|Office Visit Copay||$30/$60 Copay||Deductible then 50%||$30/$60 Copay||Deductible then 40%|
|Retail Standard||Level 1: $15/$50/$90
Level 2: $25/$60/$100
|Retail Specialty||Level 1: 30% up to $450
Level 2: 30% up to $550
|25% up to $350|
|Annual Out of Pocket|
If you see what I see, there is $90,000 in annual premium savings for a group of eight employees. Can you imagine what this might save on a 30-life group? Did you also see where the plan is better for the prescription drug benefit and the annual out of pocket maximum?
MEWAs are relatively new and available in a few states, such as Georgia and Ohio. As they continue to gain in popularity, it will provide benefits costs savings and lower rates for many smaller employers.
Ready to take charge of your funding arrangement? Contact your OneDigital Strategist to see if a Multiple Employer Welfare Arrangement is a viable option for your business.