Hey all,
I’m trying to find out what the rules USED to be for small businesses (less than 50 employees) buying health insurance for employees/offering that as an option. I have not had any luck at all finding out what the old rules were. This is a topic that could get stuck in IMHO real fast, so I’m just trying to find out what the facts are about how the rules previously worked. I know what they are for what we have now (both nationally and in Oregon), but exactly how were they different in the past?
For instance, all that a business needs to have now is one full time employee who isn’t a spouse, partner, or relative. But what did the law say about that requirement before? Was it just plain impossible to get coverage for your employees as a business anywhere near that small? What if you HAD only one, or two, or three? What if any of them had pre-existing conditions? Yes, it clearly was more expensive, but was it even possible? (For an individual trying to buy health insurance on the open market, it was not possible for any amount of money at all. Oh, this could go IMHO so fast… but let’s not and say we didn’t.) Was there a mandated six or twelve month waiting period before insurance was available, even if the employer didn’t want it to be that long? I have to find out these things…and PLEASE, just the facts!!
I’m only sticking to the few things I know, so this won’t answer all your questions.
#1 It was never mandatory for businesses to offer health insurance
#2 Regulations varied by state
#3 In Missouri, Blue Cross/Blue Shield required a minimum of 10 employees/dependents to write a group policy. I think other companies may have written for smaller groups.
#4 (At least with the companies I was familiar with) Pre-existing conditions were covered after a certain waiting period - I think it was six months. Pregnancy and birth weren’t covered for the first year.
#5 You could buy an individual policy, if the insurance companies chose to sell you one. I had one, but I was one of the few people in the world who didn’t have anything they considered a pre-existing condition. Cancer survivors, heart patients, diabetics, etc. were usually out of luck. I personally know two women who had some sort of weird illness in childhood that never recurred, but were unable to get health insurance on their own until the ACA.
Regulations/company practices in your area might have been different.
As a small business,I had to cover three quarters of my employees to qualify for a plan where the employees paid a portion of the cost. I had one employee who was covered by her husband’s insurance and did not want to participate. When I had four employees including myself, I had a plan for three of us. When I dropped to only three employees, I was told that I had to cover everybody to qualify. Since the one employee didn’t want to pay for a portion of the premium for a plan she didn’t want, my only choice was to cover everybody and pay 100% of the cost for them all. Since I couldn’t afford this, I ended up dropping the plan and only hiring employees who had other insurance and getting an individual plan for myself. In short, it was a stupid crazy system and it kept me from hiring otherwise good employees who needed insurance. (The cost to fully cover the one employee would have been more than $1000 a month which is a lot for somebody earning $14 an hour, not to mention the extra cost of fully funding the third employee’s cost instead of having her pay 25%). Just my personal experience.
I don’t know if there were government regulations about the group size or if it was just up to the insurance provider. I know Blue Cross in Texas allowed groups as small as 2 full-time employees. There was no waiting period. Once the policy was written, all covered employees had insurance. Each person in the policy had the same premium based on their coverage size (single, spouse, or family). The employee’s health did not factor into the cost. If I remember correctly, a comparable individual policy cost about half what the group premium was. So if the group cost for an employee+family was $800, then an individual family plan might be around $400, but with lots of exclusions.
The insurance company would change the company’s premium from year-to-year based on how much medical billings the employees incurred–typically premiums would go up. The company would then need to decide whether to pay the higher premium or select a plan with less coverage so the premium wouldn’t go up so much.
I had lunch today with a friend who ran a small business with her husband for many years. One employee did get cancer–twice–and they could no longer afford to insure anyone.
This Kellyanne Conway bullshit that “people should just get jobs and their employers will cover them” is just that: bullshit. Not all employers offer insurance, and as mentioned above, employees can turn it down. I worked for an organization that offered insurance, but paid the lowest workers so little that most of them could not afford the employer-sponsored insurance.
There really isn’t any way to just stick to the facts, is there… I don’t know if I can do it either, but I’ll try. Thanks for all the info!! I suspect that it was very very complicated and varied by state, insurance company, etc etc etc. Okay, here’s what we’re trying to do with the family business: if the ACA goes away, I don’t know what we’re all going to do. Everyone involved has a “pre-existing condition,” including the employees. I was told by the reps of several insurance companies before 2013/2014 that there was no amount of money I could pay to get insurance, no matter how high the deductible, no matter how little it covered. (The one from Humana actually laughed…) I’m trying to think of any kind of a solution to this if worst comes to worst. It sounds like we might be better off with the state high-risk pool if it comes to that, though (assuming those even return.)
No, it was possible, but not easy. Some professional societies offered insurance–I was a registered massage therapist for a while and the professional association (can’t remember the name) offered insurance. Of course, it wasn’t strictly “individual,” because you were part of a large group.
During most of my 30 years as a freelancer, I had no insurance. I was lucky. Right after I went on Medicare (age 65), I got breast cancer.
When I married my husband, he was an executive with a large fast-food company in Texas. He left the job because of kidney failure and after COBRA, could not get insurance from anywhere/anyone. Fortunately, people with kidney failure [ESRD = end stage renal disease] can go on Medicare even if they’re younger than 65.
Dang!! Good for you. I was NEVER able to find anything new, and I had to stick with the unbelievably horrible and incredibly expensive insurance I had before. What I still can’t figure out now is if it used to be even possible to get insurance as a business with employees who all had “pre-existing conditions” (you know… such as breathing air, and having been born). Either way, though, I think that the high risk pools would be better-- even though they were far from great, at least they covered something. And if they were brought back, I hope that at least they wouldn’t be WORSE than they used to be.
And “professional society” can be a very loose term.
There were a variety of organizations ostensibly organized to support very nebulous concepts such as “bettering our members ability to conduct business” or crap like that. It was just a cover to be able to offer small businesses a way to band together and buy into a group health insurance policy.
Sure, you must pay membership dues to join the organization. So you might be stuck paying $20 per person per year to join the organization and then that opens the door to buy $800 per person per month insurance plans, or whatever the actual numbers work out to be.
Now there were plans offered by organizations that have some actual substance to the organization. This article mentions the Writers Guild of America had such an insurance plan for members. But I ran into a few that were obviously just astroturfed organizations supported by a particular insurance company for the purpose of driving health insurance sales.
Definitely. Self-employed people were desperate for some kind of health insurance. And you are correct (and I should have mentioned) that the premiums and deductibles were out of sight. All you could hope for was some kind of catastrophic coverage that you prayed you’d never have to use.
For a few of those years I was the Executive Director of a private foundation, but on a contract basis-- essentially a staff of one. Insurance was not part of the deal. I continued to go without and hope for the best. As I said,I was lucky. Also, I was single.
In CA and NY it was definitely possible to buy as an individual, and there were lost of options (in NYC and LA at least). After we incorporated, we were able to buy small-business plans (again, pre-ACA, and this is in CA). They were/are cheaper than individual but the breaks aren’t as good as for >50 companies.
One oddity is that my wife and I are insured as individuals under our plan, not as a family, because that makes the premiums cheaper.
I was paying $800 a month for… well… it did cover a decent part of prescriptions, which was something. But that was it. Because I’d moved to another state (Minnesota to Tennessee to Oregon), the Humana policy covered literally NOTHING else. The state pool in Oregon would have been a much better deal once in it (about $450 a month and a deductible that was low by my standards, probably not by those of most other people), but because of the six month waiting period, it would have cost almost ten thousand dollars to get into it. If there wasn’t any other choice at all, it would have been a whole lot better than nothing, but… well… That’s why I’m saving extra prescriptions right now… if the pools come back. Did anyone actually get into the California pool? It sounded kind of awful from what I’d always head.
This was my experience running a 20-30 person business in Missouri in the 2000s. Which was also my experience running a different but similar-sized business in the 1980-1990s in Nevada.
There was no mandate for employers to provide insurance at all. If you did choose to provide it, you had to offer it to everyone at mostly the same features/prices. Individual carriers were free to offer, or not offer, insurance for a group your size or with your claims experience. Such was the law.
The practical outcome was that each year was a mad scramble to find some carrier willing to take our particular crew of people with the statistically typical health issues for their ages & genders. My earlier business employed mostly women who, coincidentally, were all of child-bearing age. One national brand of insurance told me I should hire a couple of unmarried men and pay them minimum wage to not come to work. The premium reduction for the rest of the group would more than pay those guys’ salaries.
One year in the later business we did have somebody get cancer and the next couple years we had to switch to a “high deductible health plan” to get any coverage for our group at all. Other than the cancer patient, the group was almost all men between age 25 & 35; pretty much the cheapest demographic to insure. Going HDHP was a significant hardship for every employee, including most especially the cancer patient. Like $10K/year for premiums plus $10K+/year OOP worth of hardship.
The whole and entire point of “insurance” is pooling the risk. Insisting that each individual or each small business be profitable to insure is doing it exactly backwards. The insurer must make a profit overall; that’s the only way they can stay in business long term. But for the system to also work for the customers, the risk pool needs to be as broad as possible, not as narrow as possible.
I was NEVER able to find anything new, and I had to stick with the unbelievably horrible and incredibly expensive insurance I had before. What I still can’t figure out now is if it used to be even possible to get insurance as a business with employees who all had “pre-existing conditions” (you know… such as breathing air, and having been born). Either way, though, I think that the high risk pools would be better-- even though they were far from great, at least they covered something. And if they were brought back, I hope that at least they wouldn’t be WORSE than they used to be.