What do getting a good home loan and saving on employee health insurance have in common? One word: underwriting.
Untangling the terminology, “underwriting” is the process an expert will use to figure out what kinds of risks you have – and how much to charge you based on them. If you’ve ever applied for a home loan, you know you can’t get a sweet interest rate without having a good credit report (no late payments or surprise dings), going through an appraisal and an inspection – and, of course, signing all that paperwork at the end. (But hey, that’s a good thing because it means you’re approved!)
An underwritten group health plan (sometimes called “level-funded,” “self-funded” or “alternate-funded”) is based on the same principle.
You can choose to fill out a census about your employees and ask them to provide information about their health histories to an insurance carrier (this is never shared with anyone else). If you have a generally younger, healthier workforce in a less-risky industry, you’ll usually end up with a lower premium.
Underwritten plans are able to do that because they’re not regulated by the Affordable Care Act (ACA). Under the ACA, insurance carriers aren’t allowed to charge more for premiums based on medical conditions. But the flip side is – they can’t give you a discount for them either.
Underwritten plans let you see how your claims are running throughout the year, which gives you a better idea of what issues you may have at renewal. Your employees all pay the same rate because their individual rates are averaged – which makes it easier for you to budget.
And even though these plans ask health questions, they still cover pre-existing conditions, provide preventive care benefits, cover dependent children, give you the option of co-pays vs. no co-pays, and provide national PPO network coverage too.
You may still end up choosing an ACA plan for your business because you have a workforce with more medical needs or you just want to be approved automatically without underwriting. But if you’re interested in exploring an underwritten plan, a Mylo benefits advisor can help you decide which one is a good fit for you and your employees.
P.S. Did we mention that just like closing on a home, there’s a lot of paperwork at the end? (But remember, that’s a good thing!)