Many people covered under a California small or large group employer plan have found that adding their spouse and children is far more expensive than the employee only coverage. Part of this has to do to the fact that the employer must contribute to the cost of the employee’s premium, anywhere from $100 to 50% of the cost. The employer is under no obligation to contribute to the premium amounts of the employee’s family members.
With the Covered California state health insurance exchange set to start insuring people in January 2014, the new healthcare reform initiative may save families money under certain situations. This may be significant for employees who have dependents that aren’t eligible for health insurance under an Individual and Family Plan (IFP).
Let’s look at one scenario: A 40 year old employee with a family and the Blue Shield Base PPO 50 Plan. The employer is contributing $100 to only the employee’s premium.
|Base PPO 50||Only||and Family|
|Family only cost||$505|
Blue Shield of California, Region II, RAF 1.1, Rates 4/1 – 6/30/2013
If the employee’s spouse and child, ages 40 and 10, were to purchase a comparable Blue Shield IFP Shield Wise 4500 the premium would be $314. That’s a $191 savings over the group plan. If the employee had three children, ages 10, 9, 8, with the spouse, the premium for the same plan would be $486. Because small group plans don’t differentiate between the number or age of the children covered, the more children you have, the better the value.
Stable premium rates
The big assumptions in this scenario are that both the small group and IFP rates will stay relatively the same in 2014. This assumption should hold true given the fact that California’s benefit coverage under individual and family plans are very comparable to small group plans. Additionally, small groups plan premiums have been fairly stable in the last couple of years.
Dependents with medical conditions
Consequently, the covered benefits under the small group and individual plans are very close. However, small group plans are guarantee issue meaning that the plan must enroll the employee and family members regardless of their respective medical conditions. The guarantee issue aspect of employer based plans is what leads many employees to enroll their family members even if individual coverage maybe less expensive if it was available.
There is the possibility that under the health insurance exchange and the construction of the new individual plans we could see premium rates less than what is being quoted today. Important for all Californians will be that regardless of a person’s pre-existing medical condition they will be able to purchase health insurance. Some one who has their medical condition under control will no longer be penalized or denied coverage. This alone could go a long ways to saving families money in the future as healthcare reform rolls out next year.