Good News for Employee Benefits in 2021
by Kayla Northrup, Senior Account Manager
This year started out like any other year leading up to a Presidential election. Candidates vying for the public’s vote. A year of prosperous growth in the stock market. Unemployment at its lowest in years or maybe even ever! Then March rolled in and there was COVID-19. Its impact became “real” in many people’s lives. What does all this have to do with the health insurance market in 2021? Actually, quite a lot. Physicians’ offices are not as busy with sick patients due to choosing telehealth appointments. Elective surgeries have been put on hold for several months. People who lost their job as a result of COVID-19 have delayed going to see their physician or chose lower cost quick-care clinics. Each one of these factors has slowed the rate of growth in healthcare costs. Even with expanded coverage for COVID-19 tests and treatment, the overall cost trend is downward.
2021 premiums were recently released by the Nebraska Department of Insurance and overall, it’s good news. Small Group health insurance premiums will be increasing in 2021 but at a more modest rate than we’ve seen in the past few years. BlueCross BlueShield of Nebraska has an average increase of 3% and we’ve observed an average increase of 5–7% for United Healthcare. This does not mean all plans will have the same increase. Variables such as location and benefit plan will be a factor. In addition, two new insurance carriers will be entering Nebraska’s group market as of January 1, 2021—Medica and Bright Health. They plan to offer ACA fully-insured and level funded plans to small groups. This is great news for Nebraska and the employer market.
A level funded health plan (also known as a partially self-funded plan) combines the cost savings and customization of self-funding with the financial safety and predictability of a fully insured plan. Employers still contract with an insurance company and it will look and feel like a traditional health plan to employees. The difference lies in that premiums are based upon the health of those enrolled and employers have the opportunity for a portion of the premium to be refunded back to them if claims are lower than predicted. Typically, insurance companies require a minimum of five enrolled employees to write a level funded plan but a couple carriers will write the plan with as few as two enrolled employees. If you are currently on a fully-insured plan, we recommend looking into level funding at least every few years.
Another health insurance option available to small companies is an Association Health Plan (AHP). This is a type of group medical insurance that allows smaller companies (as well as freelancers and the self-employed) to access the health insurance savings associated with large group medical coverage. There will be a few new association health plans available in 2021.