For Schools: Combating the Big Cost behind Small Groups

When the Affordable Care Act (ACA) definition of a “small group” employer increased to 100 or fewer employees, it meant a lot more than a titular shift—especially for schools.

Based on ACA requirements effective January 1 of this year, schools formerly considered a “large group” employer, with more than 50 but less than 100 employees, are now defined as “small group” at renewal.

This update means that schools are being pushed into small group medical products, including community rating (also known as member level rating), narrow networks and specifically defined plans.

This isn’t good.

In fact, groups sized 1-100 are faced with significant rating restrictions, including:

  • Community Rating (member level rating) for Groups of Under 100 Employees
  • Mandated increases for employees with children of 21+ years of age
  • Factors effecting premium increases and decreases
  • Employers adopting high deductible health plans to mitigate premium increases

Historically, as a “large group” employer, things like industry, location and claims history had been taken into account when determining rates.  Now, with these redefined small group employers, rates can only be based on family size, geographic location, tobacco use (for certain states) and age.

What’s a school to do?

This aforementioned situation can be frustrating, and we understand the challenges that former “large group” institutions are facing with the restrictions of being lumped into a small group arrangement.

If you’re an independent school in California caught in this situation, The California Independent Schools Benefit Trust (CISBT) has a solution.

Ultimately, CISBT empowers small employers with access to health coverage on terms similar to those available to large employers, and it will combine all of its schools—small and large—to be able to leverage a combined size and offer large group plans.

But how does it work?

Under a Multiple Employer Welfare Arrangement, CISBT has established four medical rating tiers, regardless of age:

  • Employee Only
  • Employee + Spouse
  • Employee + Child(ren)
  • Employee + Family

In addition, each school’s demographics and risk are reviewed by an underwriting team in order to determine which rating band your school will be assigned.

Why get involved?

CISBT is here to support those schools who might fall into this dreaded definition switch. And because we are banding together to leverage size, all of the available plan options have the full, traditional HMO or PPO network of providers. The trust also offers multiple plan options to give each school flexibility in choosing which plans to implement.

Interested in learning more about this solution? Let’s connect. We’re hosting a webinar on this very topic on Wednesday, October 19, 2016.


About Michelle Cammayo, Compliance National Practice Leader, Employee Benefits

Michelle Cammayo has close to 20 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She is also the IMA National Practice Leader for Compliance and endeavors to ensure IMA helps its clients manage and eliminate risk in the most effective manner. She is passionate about educating others and her passion for this shined in the COVID era where Michelle conducted weekly and then monthly webinars providing guidance to employers. Her podcast, Cammayo’s Compliance Talk, has gained popularity in the last three years to become a favorite amongst our clients. She also contributes regularly to our Blog and has authored several articles for industry-related newsletters. Michelle’s consultative approach with employers provides practical advice as employers endeavor to be compliant.

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