Transitioning from Group to Individual Coverage

Jay Mclauchlin

Jay Mclauchlin

As premiums for employer-sponsored health insurance coverage continue climbing – up 42.4 percent for employee-only and 57 percent for family coverage between 2005 and 2013 according to one analysis – employers are searching for new solutions to the largest uncontrollable expense most of them deal with in their business.  One consideration they should explore is the possibility of transitioning their workforce to individual coverage options.

In fact, a recent study by S&P Capital IQ predicted that 90 percent of workers currently covered by their employers will transition to state-based exchanges or federally facilitated marketplaces by 2020. It is a move that can benefit employees. First, direct government subsidies are available if they earn less than 400 percent of the poverty line wage (most Americans earning less than $100,000 per year for a family or about $45,000 per year for an individual) and the employer doesn’t offer a qualified health plan.

Additionally, by switching to individual insurance, employees have access to a broader choice of plans, as well as multiple carriers and their varying provider networks. It’s also portable, eliminating the need to stay tied to an undesirable position with an employer out of fear of losing medical coverage. Finally, transitioning from group to individual health insurance provides access to plans that can be less expensive for both the employee and employer.

One approach employers are taking to jump-start the transition is allocating to each employee a fixed amount of money to purchase individual health insurance. The contribution is usually added to the employee’s paycheck and allows them to choose their own provider and plan based on their individual needs, while enabling the employer to control costs and still be viewed as an active participant in the benefit decisions of their employees.  .

One strategy in the successful management of transition is leveraging a consultative relationship already in place with an agent or broker. By working with a trusted advisor to map out the benefits of individual plans, employers can mitigate and quickly resolve any obstacles. It can also provide access to well-designed private marketplaces that offer employees broader coverage options that even extend to Medicare eligible products.

For example, a growing number of agents and brokers are leveraging MyConsumerLinkSM from HealthPlan Services, a turn-key private exchange solution providing access to a variety of plans from leading insurance providers, to help meet both employer and employee needs. In addition to a staff of licensed and marketplace/Medicare-certified sales consultants, MyConsumerLink provides convenient and comprehensive information, research tools and personalized guidance to help employees secure the most appropriate coverage.

When properly planned and executed, transitioning from group to individual coverage can be a win-win for the employer and employee, addressing serious cost issues while providing a scope of coverage options not typically available under standard group policies.