Traditional plans don’t work well for small businesses. The main reason for this is that these plans are priced based in the members of the “pool”. In this case the “pool” represents the employees on the plan. By rule, small businesses have fewer employees so when anyone actually uses their coverage throughout the year the company pays a disproportionate penalty on their renewal premiums.
There are no health considerations or pre-existing issues that are considered when a company sets up health insurance under a Traditional plan. This is good and bad. It is good for the minority of people that have ongoing health needs and/or actually use their coverage. It is bad for the large majority (80%+ in our experience) that either never use their insurance or only use their coverage for a couple doctor visits here and there. First and foremost, because there is no underwriting on these plans they end up charging everyone as if they’re sick. That’s one reason they continue to be so expensive. Additionally, when it comes time to renew, the insurance company is comparing how much usage there was throughout the year versus the number of people on the plan. In an office of 10, for example, it only takes 1 person actually using the coverage to skew the numbers which forces a huge renewal increase. Contrast this with a larger company of hundreds or even thousand of employees. They can have many, many people using the coverage without having a huge renewal increase because there are so many other participants on the plan to balance out the number.
With each small business we speak with, there is one constant dread that they all face: renewal time. For the most part, people have accepted that this is the way things are so, they know that it’s now time to shop for a new plan. Again. This is happening year-in and year-out. If our personal experience tells us anything, we’ve learned that no one enjoys having to shop for group health insurance- let alone every year!
This is one of the reasons we developed our new Health Insurance 2.0 plan. The current system has become unsustainable and, by design, unfairly punishes small businesses. We wanted to show people a superior alternative to the Traditional “one-size-fits-all” plans that most people are stuck with now. Our approach is a complete 180 from the current dynamic. We customize our plans based on the needs of the business and even account for specific employee needs. And, importantly, our plans have stable renewal rates which provides business stability and eliminates the annual dread of shopping for new coverage. All for 25% lower cost than a Traditional low deductible PPO plan.