I used to think a SUB-GROUP was a bunch of floating boats the Navy kept in the water. Boy, was I wrong! A sub-group in the world of health insurance is the salvation of many a broker and many an insured.

A business owner in New Jersey who offers health insurance to his or her employees has the advantage of “tailor-making” a plan or plans to fit the needs of all or some of the employees. If they employ 10 people, they can theoretically have 10 different sub-groups with 7 different carriers, each with its own variation of coverage. HOW GREAT IS THAT? This helps to reduce cost and allows the employee greater flexibility of choice. Everyone is happy and we have done a great service for all. REALLY?

We open sub-groups for all types of reasons. Sometimes an insured has a high deductible plan and finds out they will need to go into the hospital for a costly procedure. Why pay that deductible when we can move them to a new sub-group with a 100% in-network in hospital coverage. Sometimes an insured has been prescribed an expensive drug and their current plan has a barely adequate or no prescription plan. Lets open a sub-group with better RX coverage.

Sometimes a doctor leaves the network of a carrier. Lets open a sub-group with another carrier so the insured can still go to that provider. 

What are some of the ramifications of this process?

·        Can you imagine the poor bookkeeper who has to sift through the mass of bills from various carriers every month, checking to see if all the proper additions and deletions have been made and if premiums and coverage are correct.

·        How about explaining to an employee why his or her colleague has better coverage than they do.

·        How about the broker who has to spreadsheet 186 plans from all the carriers and then tries to explain all those options to the client.

·        How about the carrier who  now inherits a larger claim to pay because all of a sudden, there is no “COST-SHARING” between the insured and the carrier.

Sub-groups have become a very comfortable solution to the overall problem of rising health insurance costs being inflicted upon the small business owners in New Jersey. IT IS NOT THE RIGHT SOLUTION, just the most comfortable one! Unfortunately, sub-groups have also become a catalyst for rising costs.

What would happen if the SEH Board and/or the Dept. of Banking & Insurance issued new regulations limiting the number of sub-groups a small business owner could have? It is something to seriously ponder. It could happen sooner than you think.

WILL YOU BE PREPARED IF IT DOES?

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