Podcast

Episode: 54 |
Molly Leeds:
Health Insurance:
Episode
54

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Molly Leeds

Health Insurance

Show Notes

Our guest today is Molly Leeds, a benefits account manager at Brown & Brown of New York. Molly helps  small and medium sized businesses to obtain the best package of employee benefits to fit their needs.

In our discussion, we focus on healthcare benefits.

If you are a solo, independent professional with no employees and no partners in the United States, your main option for getting health insurance is Obamacare, via healthcare.gov.

But if you have at least one employee, or you band together with another independent professional to form a partnership and have at least two eligible members in your company, you can start looking at small group healthcare plans, which can be a better value in some, but not all, cases.

Molly walks us through the various options for health insurance and we also discuss how to find and select a health insurance broker.

Molly’s firm, Brown & Brown, helps clients with a wide range of products and services, including trade credit, business insurance, employee benefits, risk management, and more. You can learn more at their website, www.bbinsurance.com, where you can use their office locator to find an office near you.

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Will Bachman: Hello, Molly. It is great to have you on the show.
Molly Leeds: Hello, Will. It’s great to be here. Thank you so much.
Will Bachman: Molly, I’m really excited to talk to you. I know the number one concern for a lot of independent professionals who are starting out, and I’m primarily talking for this episode about the United States because this is such a country specific market is getting health insurance. And I know your firm does a wide range of employee benefits but today we talked about just focusing on health insurance. And maybe we can start by, talk to me a little bit about an independent professional, either single sole proprietor or someone who is in a small company with two or a handful of people, what are the options for getting health insurance?
Molly Leeds: Great, no problem. I am happy to help with this. So for any sole proprietors out there, it’s really just a company of one. So right now, what the law says is that that is an individual. They cannot get a business insurance plan just yet. So what their options would be to go to their state or federal exchange, the easiest place to start is healthcare.gov and that can direct them through. Otherwise they can also reach out to insurance carriers in their state directly to buy the insurance direct from them. That’s really the only option today for the individual.
Once you have a company, meaning you have at least two individuals working, it could be an owner and one employee, two partners and then an employee, there’s various breakdowns, that’s when you can actually get a group insurance plan. The number of employees that you need to have a small group plan varies by state but we’ll focus on New York at least for this portion. In New York, a small group is considered a company of up to 100 employees.
So if you have two or three people that form a company, they could get insurance. What they would need to get insurance is typical documents such as they’re showing that they have a company, showing their tax background, different forms like the SS4 form and articles of incorporation. That’s really what would be required from the insurance company in order to obtain that small group policy, to show you’re within compliance of their underwriting rules for a small group policy.
Will Bachman: So I’ll just pause you there. Okay, so in order to get a small group health insurance plan in New York state, the minimum number that you would need would be two people?
Molly Leeds: Correct. Some carriers will allow you to write a policy with just one of those people on the plan, but they would need you to have at least two employees in the company.
Will Bachman: Okay now you say two employees, but let’s talk about a couple scenarios. One is sole individual independent professional hires one employee, so it’s an owner plus an employee, scenario one. Another scenario would be two independent professionals band together and together form an LLC or, let’s say they form an LLC partnership. Would that count? If two independent professionals are partners and form an LLC, could they get a small group plan?
Molly Leeds: They could as long as the carriers underwriting requirements allow for it. Each one is a little different but there are some that do allow it. The only situation that can prevent it is if the two business owners or the owner and employee are a married couple. They would then be considered a company of one. So if that was the case then they would need a third person at the company to make it really a company of two.
Will Bachman: Okay. So my wife and I, we’re just joined at the hip, we’re one person I guess. So you need someone outside your marriage. So if it’s an employee, is there a minimum number of hours per week or a minimum wage? Could you get someone, does it have to be five hours a week, 20 hours a week? What counts as an employee?
Molly Leeds: Well the federal guidelines for a full time employee is 30 hours per week. Some insurance carriers will allow you to offer coverage for 20 hours a week but the federal guideline is 30. That’s what most of our clients would see, that we would see within our clients, they would use the 30 hours per week.
Will Bachman: Okay. And this minimum of two people, is that pretty consistent across the US or are there some states where you need more than that?
Molly Leeds: Nope, it’s pretty consistent. It’s just a cap where it reaches the small group plan. So the example would be in New York, a small group is defined as a company with up to 100 employees. In New Jersey, a small group is defined as a company with up to 50 employees.
Will Bachman: Okay. All right. So I think for our audience we’re mostly worried about more hitting the minimum than hitting the maximum. So two people, and are there some carriers that would actually require you to have, no kidding, an employee with a W2 as opposed to just two or three partners?
Molly Leeds: Yes. There’s a few carriers that would require that. It just depends on the underwriting guidelines for each carrier. But there are plenty of options out there for small groups so generally our clients won’t have too hard of a time finding one even if one carrier won’t allow for their specific type of setup. There is another one that generally will.
So what we usually do, when I get introduced to people that would fit this type of model, it starts with a conversation, just to understand their setup, who’s there, who’s involved, what kind of documentation they have. And then that’s when we would go to the market to see who would be the right fit for them based on the state that their in, their size and the makeup of their company.
Will Bachman: Okay, great. Let’s talk a little about, I’m sort of just jumping the gun a little bit and assuming that a small group plan is going to be better than what you could get on Obamacare on the ACA healthcare.gov exchanges. But talk to me about that a bit. Are the small group plans typically either less expensive or better coverage? Is there any difference between them?
Molly Leeds: One of the big differences can be the network. So like a standard carrier in New York, whether it be Oxford or Blue Cross or Emblem, they’ll have a network for their group plans and then there’s a network for the exchange plans. That can be one differential. There could be more doctors within the group plan network versus the individual exchange plan network. I would say that is one of the big differentials. And you also have more ease of use when you have a group plan instead of calling on an individual insurance plan and possibly calling to the exchange or jumping around through healthcare.gov and the carriers website directly having just a small group plan keeps it all together. And the rates are different because the individual rates are based on that employee and where they live. And the group insurance rates are based on where the company is located. And there sometimes are other variables depending on where the company is.
Will Bachman: So the group rates are where the company is, so if you have a two person LLC based in New York City, does every two person LLC based in New York City going to be offered the same rates? So it doesn’t matter how healthy, sick, male, female, the people are in the LLC?
Molly Leeds: That’s exactly correct. New York City, New York has a small group rate called community rated. So they’re not based on age or gender. They’re based on the plan design, meaning the deductible, the copays, the network, where the company is located. So it’s not … I wish that I could say, “I can save everybody a bunch of money on their insurance,” but I can’t. The rates are filed with the state of New York and once they’re approved those are the rates that everyone has. So you could have two companies that just happen to be next to each other in the office building and one could have five 25 year olds and one could have five 45 year olds and if they’re on the same plan and they renew at the same time, they have the same exact rates. It wouldn’t matter on their age or usage. And an employees health does not come into question any more anyways. Neither do pre-existing conditions.
Will Bachman: I didn’t know that. But for the individual plans on Obamacare, I hear about pre-existing conditions, what do the rates vary on? Do they vary on age or gender or anything else for the individual plans?
Molly Leeds: Well when you go to get individual insurance they ask you a few basic questions which are going to get you the rates, which is where you live, your name, your age, your gender, whether you smoke. So those are the few things that are going to come up. And then it’s going to be a lot with what carriers are available in your marketplace as well. So there’s a lot of other variables with the individual insurance. But that’s the only way they would be able to start is to see what the rates are available for them specifically.
Will Bachman: So a 25 year old non-smoking person, maybe, might get a better rate on the Obamacare. But a pair of 55 year old smokers might get a better rate on a small group plan.
Molly Leeds: Right. Exactly. Especially if they were in New York, they could. So it’s an exercise to do. A lot of times you get better coverage, a better network when you’re on the group plan.
Will Bachman: Okay, just in terms of getting these plans before we talk about how to choose among them, so we talked about Obamacare, that’s not really your belly wick. People just go online and get it. To get a small group plan, does someone need a broker like your firm or can you interface with these firms? Could you go to Oxford or Blue Cross or Emblem and set up your own group plan directly with those plans?
Molly Leeds: There are some people that do set up their own group plans directly. You can do that. One of the benefits of having a broker is really you have an advocate. So when issues come up, possibly, you have someone you can call. And really when you need the guidance from someone who’s trained to read through these plans and understand these plans, it’s a huge benefit. When your plan comes up for renewal, you’re either calling the insurance company to see what other options there are or your broker is bringing you a proposal with various options because they know you, they understand you and they’re only going to show you what they think you’re going to like based on your experiences thus far between the plans.
Like if you say to me, “Molly, I want to raise our deductible next year upon renewal.” Well I know that. So when I send you the proposal I’m already going to have that note, you’re going to get the type of plan options you want to see. And you build a relationship with them and when, like a lot of times with our clients, sometimes if they have claim problems or a billing error, they don’t really necessarily want to call the insurance company, they don’t have time to call the insurance company. And that’s just some of the other services that brokers can do. They can help out with the day to day stuff as well as understanding the plan and all the compliance rules around it.
Will Bachman: I didn’t know that. Okay. And not to be too indelicate about it, but how do brokers get paid? So if the plan was, let’s say, $2,000 a month if you go directly to the insurance company, is it the same rate if you go through a broker or how does that work?
Molly Leeds: So with brokers, our clients don’t send us a check so we get paid by commissions from the insurance companies. It’s a standard set percentage that the insurance company chooses and it’s just based on the monthly premium. So that’s how, at least for small group insurance, a majority of the time that is exactly how insurance brokers would be paid.
Will Bachman: And those premiums are established with the state and published, from what I’m hearing.
Molly Leeds: Correct.
Will Bachman: So you can go through all the trouble and go find it yourself if you want to, but by state law you’re going to get the same price whether you go through a broker or go direct?
Molly Leeds: I believe so, yes. It’s definitely helpful to have the added resource on your side when problems arise or when you need a little extra help.
Will Bachman: Okay. So it’s kind of a no-brainer. Because it’s not like, you’re going to pay the same price anyways so you might as well get the help. I suppose that’s why most companies probably do end up going through a broker, since it’s set up to favor that.
Molly Leeds: I’ve never seen small group rates directly through a carrier. So maybe there’s a slight differential and that I’m not too sure with. But most of our clients, anytime we pick up a client, we’ve had a few that just never had a broker. And usually they just set up the plan and then they never did anything with it again because there’s not someone necessarily calling to check in with them and their plan. So that’s the other difference is they might set it up and they just forget about it and years go by and their premiums go through the roof and then that’s when they need to talk to someone about containing their premium. And that might be the time that they find a broker.
Will Bachman: Okay. So just to kind of set where we are, we talked about how in order to even be talking to someone like you, you have to have a company with at least two people. Depending on the carrier you might have to have an employee but a lot of carriers you can have just two partners in the firm. And if you wanted to get with one of those plans, it probably makes sense to use a broker. Before we get into the details of health plans, so someone could call you, right here let’s give your firm’s info. What would be the way for someone to contact you or your firm and find you online if they wanted to get some help?
Molly Leeds: Well I work for Brown and Brown. It is a nationwide insurance company. We’re within the top 10 largest insurance companies in the United States. So if people wanted to reach em, they can go to, obviously my website and my phone number, but our website is bbinsnyc.com. It’s for Brown and Brown insurance New York City.com. My name is Molly Leeds and I can be reached at 212-818-9570 extension 228. That’s the best way to reach me and to talk more about our services and our company. But we, our specific office, Brown and Brown has over 200 offices throughout the United States. So we are just one of the many offices that operate within the Brown and Brown family.
We do specifically employee benefits at our office. Some offices do business insurance, it varies, the type of insurance that each one offers.
Will Bachman: Okay. So let’s say that someone is gonna call you and let’s say they also wanted to talk to two or three other providers just to feel that they’ve done their due diligence. What is the category of firm that you guys would fit into so if you’re going to Google it or search for it, what do you even search for?
Molly Leeds: I would say employee benefits broker. If you just say insurance broker, you’ll get various types of insurance brokers. Because that will just basically combine everything from car insurance and homeowners insurance to health insurance.
Will Bachman: And life insurance, right.
Molly Leeds: And life insurance. So employee benefits would be exactly as it reads, benefits for your employees. So that would be a good way to narrow down the search.
Will Bachman: All right cool.
Molly Leeds: The good thing to know with that, sort of a time saver for small businesses, in New York, you’re going to get three proposals that are exactly the same because it’s community rated. No broker can reduce the rates because they’re filed with New York State. So that’s one thing that we do tell people that call us to talk about options. Is they should do their due diligence but it’s more important to find someone you feel comfortable working with because the rates are the rates and they’re not going to change. And while I would love to say I can save you money, I can’t because they’re filed with the state.
Will Bachman: You’re competing on service.
Molly Leeds: So it’s really important to find … Yeah, exactly. Find someone you can talk to, someone you trust, someone that’s available when you need them. Because it’s really about the service.
Will Bachman: Interesting. So it’s really finding somebody you trust because the actual rates you get are going to be the same but it’s more about who’s going to answer your questions, help you with the paperwork, follow up and to be friendly and a good advisor. Got that. So an employee benefits broker, we’re not really focusing on this show, but maybe just right now, why don’t you mention what are some of the other employee benefits, for example, that your firm would help your clients with?
Molly Leeds: Yep. So we do everything from, of course, medical insurance and then dental and vision. Life insurance, short and long term disability as well as the New York mandated short term disability. Flexible spending accounts, health savings accounts, health reimbursement arrangements. We do wellness programs for some of our larger clients. And then we have partners in various other areas and then between 401K and all of the Brown and Brown family helps out with the business insurance for some of our clients as well.
Will Bachman: What’s this health reimbursement thing?
Molly Leeds: A health reimbursement arrangement?
Will Bachman: Yeah.
Molly Leeds: Similar to an HSA but it’s an employer established benefit plan that reimburses eligible employees for qualified medical expenses. So instead of an HSA being that’s owned by the employee, the HRA is owned by the employer.
Will Bachman: So the employer would fund that?
Molly Leeds: Correct.
Will Bachman: Oh interesting. So the employer funds that and then that could reimburse employees for their deductibles, for example?
Molly Leeds: Exactly. You’ve got it. They would have that tied to an account and then an employee would have a debit card similar to a flexible spending account that they could use to pay for the qualified expenses. And then it would just deduct from that HRA account.
Will Bachman: Okay. Cool. So healthcare. I always get confused and I never put enough attention onto it, I suppose. But it seems that every decade or every half a decade the whole language changes of health plans. So HMO, PPO. Walk me through what are … So for somebody just getting into this who maybe was that employer who was providing benefits and they’re not a healthcare industry consultant so they’re not super up on it. Someone walks in and they have two people in their firm and you’re going to help them. What are the different categories of health insurance plans and then how do you define those? What are the distinctions between them?
Molly Leeds: So an HMO means the health maintenance organization. Basically an in-network only plan that requires you to get referrals to see specialists, most of the time. Your plan specifics, when I review with my clients, I let them know which plans require referrals and don’t. But generally, an HMO plan would require you to get a referral from your primary care provider to see a specialist.
Now there’s also what’s called an EPO which is an exclusive provider organization. Now these are also in-network only plans but you generally do not need a referral. However, there are EPO plans on the market today that do require referrals. So that’s why I said, it’s just a part of a conversation with your broker to go through the options and which ones require referrals or not.
And now there’s a PPO, which is a preferred provider organization, or participating provider organization. And that has out of network coverage. So that means that you have your in-network benefits for the doctors that you see that participate, and then you have the safety net of the out of network benefits. So if you ever want to see a doctor that maybe doesn’t participate in your insurance network, you can see them and then it would just be applied to a larger deductible.
Will Bachman: Okay.
Molly Leeds: And those plans generally do not have referrals required on them as well.
Will Bachman: Okay. So those are the major categories. What are some of the key dimensions that you want to be looking at when you’re comparing plans?
Molly Leeds: Well I always tell clients that the first place to start, there’s obviously the budget. But it’s also what plans does your doctor participate in? Because there is a budget but if you pick a plan or a network that your doctor doesn’t participate in then it’s a decision of seeing all new doctors or you’re spending a lot of money at a doctor that doesn’t participate. So the first thing is really seeing if you have doctors that you don’t that are really important, what insurance carriers do they work with? What networks are they involved in? And then the budget as well as, is out of network important?
Some people need to have it, some people don’t want to pay for it. And that’s the type of information that we take to then put together a proposal based on that conversation of the types of plans that they’re looking for. Like I have a client, client A, they need a plan for their employees but they don’t have a lot of money. They’re okay with a higher deductible and it being in-network only. They just don’t want the deductible over $5,000. Well then we take that and we go and we find the best options that fit their criteria. As well as a few that are slightly outside of the criteria but not that far. Just because sometimes they might be a little bit over certain aspects but still within the range that they might be interested in looking at.
Will Bachman: How do you … What happens if you’re living in the New York Metro area but you spend part of the year somewhere else? So maybe you have a vacation home or you travel? Or you travel for business? What happens to you if you have to go to the doctor out of state? Are these networks usually nationwide or are they more limited in geography?
Molly Leeds: A lot of them are nationwide now so it’s kind of two different scenarios. If you have an emergency and you go to an emergency room, you’re covered as if you’re in network no matter where you are, no matter what plan you’re on. So that’s first and foremost. It has to be an emergency and you have to seek care in an emergency room. So that is on all plans.
Now let’s say you’re out of town or you’re traveling or you’re at your vacation home and you get a cold or something happens and you want to go see a doctor. And most importantly is confirming that you have a nationwide network. An HMO would not work to go to a doctor. A New York HMO would not work if you had a vacation home in Pennsylvania and you or your kid got sick and you went to the doctor. Because it would not work outside of your network.
Now let’s say you had an EPO plan but it latched onto a nationwide network, then you would have no problem. It doesn’t necessarily mean that you need a plan with out of network benefits, it just means you need a plan with a nationwide network, which most of them are. That’s one of the various things that come up during the initial conversations with new clients of traveling or being away and when a plan requires referrals or is an HMO, those are the types of things that can limit some of the nationwide network options. So it’s just part of the conversation.
Will Bachman: So let’s say for someone who doesn’t really have a go-to doctor right now, or maybe they … Let’s say they don’t have a go-to doctor but they’re getting health insurance in case something happens. So they’re not so worried about checking the network to see if a current provider is in it. How do you suggest to people that they actually compare the networks of different providers? I mean you could look at the total number but you don’t know if one network has everybody that was in the bottom of their class. How do you compare the quality and the depth of coverage strength and different specialty areas of these different networks? Is there any good websites for this? Or it seems like just a tough problem when you’re trying to compare these plans.
Molly Leeds: Yeah, you can review the carriers themselves with various websites like the Better Business Bureau, JD Power, Consumer Affairs. What a lot of people do is they will go to the carrier websites and do a search in their geographical area just to get an idea. Like, how many specialists or I know I need a podiatrist so I’m looking at these three carriers. I want to go see how many carriers are near my office. So that’s one way you can do it. That’s what a lot of people would do. I mean, if they don’t have a specific doctor that would be it. Or they would just go to their primary care and speak to them. A lot of times it would be one or the other.
Will Bachman: Okay. So I guess it sounds like there’s not a great way to check it.
Molly Leeds: Yeah. Unfortunately it’s just doing your due diligence as well. Because the days of the provider books, those are gone. Everything is web based now lately.
Will Bachman: Yeah. And I mean, I’ve encountered it a few times, it seems to be the case that they can have that “Find a Provider” thing on their website but those often are not accurate. So you might have someone listed that’s actually no longer taking that insurance. You might have other providers that take the insurance that aren’t listed. So even if you do check …
Molly Leeds: Unfortunately yes that can happen. And that’s just because provider websites, while they’re updated very regularly, they’re not daily. And as providers come and go and miss that next update or it takes a week and you happen to look in that time frame … I always tell my clients the best thing you can do when you’re verifying if a specific doctor participates in the network you’re looking at is to look online but then also call the doctor’s office and verbally confirm with them as well. So that you have a double confirmation. It’s what I do for myself as well.
Will Bachman: Okay. So we talked about looking at the network, if it’s in network or out of network. We talked about the different types, HMO, EPO, PPO. And then what about ones that are HSA eligible, high deductible plans, what are some of the other, getting more into the nitty gritty, the different dimensions that you should be looking at?
Molly Leeds: Yep. So a high deductible health plan is a health plan that basically has a large deductibles and then lower premiums, generally is how that would work. Once you have a high deductible health plan, you can tie a health savings account to that. A health savings account is basically a tax exempt trust or custodial account established by an individual to pay for qualified medical expenses. The company can set it up, but the accounts are individually owned by the employees. So if an employee leaves the company, they actually take that health savings account with them. The employee or the employer can fund the HSA. That’s the difference between that and the HRA. But it leaves with the employee. So that’s the offset for some employers. That’s why some employers prefer to do the HRA, some just want to have the HSA.
But it’s a great option for offsetting … Like employee contributions come up pre-tax. So one of the big things is it lowers down your taxable income and then you’re putting this money into a health savings account that does not max out. It rolls over. So from year to year it will continue to roll over so you can continue to add to it until you reach the age of … You can’t be enrolled in Medicare, you have to be covered by a high deductible health plan, you can’t be covered by any other health plan and you can’t be claimed as a dependent.
Will Bachman: Okay.
Molly Leeds: That’s who can participate.
Will Bachman: And then when you’re getting into the nitty gritty of comparing plans, at some of the detail level there will be if there’s a deductible then usually you have to satisfy that before the plan will pay out anything. But then it can get a little bit confusing, right? Because there’s some types of services where they might require a copayment and then there’s some that might require, instead of a flat copayment, they’d share the cost. And they might pay 80%. So can you walk through those different structures of how insurance starts picking things up?
Molly Leeds: Yep. So with a lot of plans, there’s a deductible now days. Most people have deductibles nowadays. So we’ll speak of it as a non-high deductible health plan because they work a little different. So if you have just a regular in-network only plan, if you have a deductible plus copays, very common. Generally that means if you go in for an office visit to your primary care or your specialist, you’re just paying a copay of say $25 or $50. After you pay your copay, you’re covered at 100% then.
On those plans, let’s say you get admitted into the hospital. That’s in the case where your deductible’s going to come into play. So let’s say an example is your deductible is $1,000. That first $1,000 is out of pocket and then sometimes the hospital benefit will be what’s called co-insurance. I always tell my clients to think of this as cost sharing. You and the insurance carrier are sharing the cost after you’ve reached the deductible. So a typical one is 20-30%. That means that for the employee’s sake, after they satisfy that $1,000 deductible, they’re responsible for that 20% of the bill up until they reach what’s called the out of pocket maximum. The out of pocket maximum, another good way to look at this is your worst case scenario number. It includes everything. That’s the most that you can spend out of pocket on healthcare for that year. Not including your premiums.
Another way that that could work is they could have the same scenario but after you satisfy that deductible there might be a copay instead of co-insurance. Now in this instance, this is how it works on a high deductible health plan is that might have a $5,000 deductible and everything applies to it. So you go to your doctor because you have strep throat, it’s no longer the $25 copay, it’s their contracted rate. So let’s say it’s $125. You pay the doctor the $125, that $125 is now applied to your $5,000 deductible.
You then go pick up a prescription. It’s not going to be a copay amount, it’s going to be the contracted retail rate. So it could be $35 or $235. You pay that amount and it’s applied toward that $5,000 deductible. And once you reach that deductible, some plans say you’re covered at 100% after that. Some will give you the co-insurance or a copay. They can be set up a little bit different. And they will all have that out of pocket maximum so that’s a good number to look at sometimes because that’s their worst case scenario number. We factor them all in but that’s an important feature to look at.
Will Bachman: Mm-hmm (affirmative). Okay. So I guess I don’t know if this is typical, but I guess what I’ve done over the years to choose among the plans is to just do a little Excel chart and say what if I had zero medical expenses for the year? I’ll say, okay what am I going to be paying in premiums? And then I try to do a little X,Y graph of different amounts of medical costs and say what would my minimum be out of pocket, what would my maximum be out of pocket with the various different plans on offer. And I guess the minimum would just be your premiums times 12 and your maximum would be premiums times 12 plus your max out of pocket. So sometimes the choice of plan might vary depending on what you’re betting your actual medical costs would be.
Molly Leeds: That’s correct. Because you could say, “I need to save money on my premium, I want a really high deductible.” But once you add in the premium plus the deductible or the max out of pocket, if you happen to meet it, you might be really close to that other plan that was a little bit more money per month but a lower out of pocket. So there is math work. There is also a lot of times I’ll work with clients to look at their past usage or have them look at their past usage. They can get a report from their current insurance carrier of their claims from the last 12 months, just as a, “Well if everything is the same as last year, this is what I can expect.” Or this plus 10% or I know I’m going to have surgery this year so I know I’m going to max it out. There’s various variables depending on each person’s circumstances.
Will Bachman: Okay so that’s super helpful. Let’s talk a little bit about renewing a plan. What should people expect, maybe they’ve been an employee and now they’re heading out on their own for the first time and let’s say that they are in a two or three person LLC so they’ve got this group plan. What should they expect around renewal time? What kind of paperwork are they going to have to see?
Molly Leeds: Well usually about 90 days prior we reach out to our clients with a questionnaire and that’s just updated information from our clients that maybe we don’t have. Did they move and forget to tell us? Are there any new employees that maybe aren’t on the plan because they forgot? Are there any other benefits they’re interested in? Any things we should know about? Then generally, the carriers release their rates and renewals 60 days prior. It’s not exactly 60 days. Sometimes it’s a little bit more, sometimes it’s a little bit less. And once all the carriers release their rates, that’s when we are actually able to say, “Okay here’s where you are today. If you want to keep your same exact plan, this is going to be the increase.” And then we actually present a proposal of, “Here are other plans similar to yours, but that might save you some money. Now that doesn’t mean they’re exactly the same as yours, it just means they’re similar.”
So sometimes if someone has a $1,500 deductible, we will show other options similar but then maybe I’ll also show the $2,000 deductible. Because it’s close, it’s not the same. But they might not necessarily want the $5,000 deductible plan. And that’s just the first one because generally then there’s a conversation and then sometimes they might say, “Oh I forgot to tell you that I want to switch over to an HSA with a high deductible health plan.” No problem, that’s when we would just change the proposal to meet more what they need. And that happens sometimes. A few times throughout calls, if different types of plans are of interest.
Will Bachman: So in addition to choosing among the plans, will insurance company require any kind of paperwork to show that you’re still a company in business? Do you have to show your tax returns or any kind of IRS paperwork, filings? What are they going to want to see?
Molly Leeds: Most insurance companies are asking for that yearly now. Some still do it at random but the general rule of thumb is if you make any changes, it’s definitely a guarantee that there is paperwork. Now generally, what pretty much most insurance companies want now, just to renew your plan is there’s usually a form and it just breaks down how many employees you have, how many hours they’re working. They do ask for tax documents. That can be things like, if it’s an owners, K1 or schedule C. And then for the staff, people on payroll, it’s a quarterly payroll report. Each state it’s called something different so I won’t bore with the acronym. It’s called something different in every single state.
Those are the type of documents and they need them because that shows the insurance company that A, the company is still there, the employees that are on the plan are working for that company or they have valid waivers because maybe they’re covered by a spouse. They also do this because insurance companies, most of them require a certain percentage of the eligible employees to be on the plan. Meaning you can’t have a company of 50 employees with just one person on the plan, unless others have specific valid waivers. And valid waivers would be things like spousal coverage, Medicare, Medicaid, Veteran’s Care. Oxford Healthcare just released that the parental coverage is now going to be one of those as well. So a valid waiver. But that’s specific to Oxford.
But each carrier will have documents like that. Some require them before the renewal is even released, but generally it’s just the renewal comes out, you can pick your plan or say, “I’m happy based on our review of. I want to keep my current plan.” But they would still require that paperwork just for the back end renewal to go through.
Will Bachman: Got it. And one question I should have asked right at the very beginning is if someone sets up a company, let’s say two or three people set up a company, is there some waiting period? Or do you just get your employer identification number and you can go and get your health insurance right off the bat?
Molly Leeds: Most important is that you have all the documents. If you have employees on staff, it’s such a brand new company and you have them on payroll, the only delay is that the carriers do need to see two weeks worth of payroll for anyone on payroll. So there has been a time that we’ve had clients come and say, “We’ve just started.” And then they have to wait because they need that two weeks of payroll to be able to actually have the plan.
Will Bachman: What if they don’t have employees but it’s two partners?
Molly Leeds: If they don’t have anyone on payroll, that’s not the issue. As long as they have the required documents, then it’s not a problem. Only a problem if they don’t have the …
Will Bachman: And the required documents …
Molly Leeds: Articles of incorporation.
Will Bachman: Articles of incorporation show that you have an LLC or S-corp or S-corp show you have an LC. And then …
Molly Leeds: An SS4 form. That’s a requirement for all of them. A partnership agreement if one is there.
Will Bachman: What’s an SS4?
Molly Leeds: And generally when we speak to our clients that’s what we can determine.
Will Bachman: What’s an SS4 again, Molly?
Molly Leeds: That’s the letter that you get with the tax ID number.
Will Bachman: Okay, got it. So show you have a tax ID, show your article of incorporation. And if it’s two partners, you can basically go out and get insurance. Do they want to see a bank account?
Molly Leeds: That would just be your first month premium. So it’s just a check. Some carriers now allow an online payment for the first month premium. Depending on the setup there might be an operating agreement they want to see or a partnership agreement. So there’s various forms of documents that might be required based on the setup. But anyone that has a legitimate company set up and they’re running business, they’re going to have those documents anyways.
Will Bachman: Sure. Of course. Great. Wow. Well I see we’re almost at the top of the hour here I think. So I was thinking about should we cover dental? We might need to save that for next time. But do you want to say just a couple of words about dental insurance? I guess my first question about dental is does it even make sense and is it typically a cost savings or how should you think about going and getting dental insurance for a small group?
Molly Leeds: It can be tough for a small group. Dental insurance rates generally tend to drop down once you have 10 employees. We have a lot of clients with under 10 employees, though, with dental plans. One, a lot of employees want dental so companies are adding it as an employee retention and an attraction. But yes, if you do the math, sometimes when you add up your premium throughout the year, it will get very close to or go over what they consider the annual max on your dental plan. That’s usually, for most people, between $1,000 and $2,000. That’s the most that that insurance company is going to pay out in dental claims for that year. So if you do the math and you’re paying more in premium than you’re actually getting in benefit. That can skew things.
Now on the flip side of that, if you’re on the dental plan, you’re in the network, you get their contracted rate. So that same procedure without insurance is not the same cost as it is with insurance. So it can go either way. I know some people that don’t want dental insurance, they just pay cash. They’re happier with that and some people that have to have it. So it can work both ways. But when you’re comparing it to medical insurance, it’s pennies because of the price difference. But it can get expensive for what it is. And once you hit 10 employees, you have more carrier options because there’s some carriers that only work with companies that have at least 10 employees. And then the rates tend to drop down a little bit.
And you can play around with that a little bit. You can have a voluntary plan. You can have a plan where the employee paid all the premium. That will tend to be a slightly lower rate. Or you can have a plan where you and the employee share the premium. And that does affect the rates as well. So there’s various ways to look at it. Sometimes clients say I think I want to add it but I don’t know if I can afford it. And they can’t. But maybe their employees want it, they add a voluntary option then it’s completely employee paid. So there’s different ways that you can handle it. And sometimes they just say I can’t, and the might sign up for an individual dental plan through certain carriers out there that do offer individual dental plans. So sometimes they just decide to do that because it’s cheaper to just get the preventative coverage.
But it is the math work and breaking down what you think you’re going to need over the next year. If you know you’re going to have a lot of dental work coming up, it might be to your benefit to have the plan and the contracted rate.
Will Bachman: But you’ve got to be aware that there may be a maximum amount of benefits the company’s going to pay. It might be $1,000 or $1,500 per year for a covered person.
Molly Leeds: Right. And that doesn’t go far with dental. I mean that could be a root canal and a filling or two and then that’s your $1,000 and then you have to wait till the next year to start using the benefits again. So there’s a plus and a minus to it. You get the contracted rate but there’s also only so much that the insurance carrier is going to pay out in claims.
Will Bachman: Okay, got it. Molly, this has been fantastic. We’ll include your contact info in the show notes and thank you so much for joining. This has been super educational.
Molly Leeds: Thank you so much. I really appreciate you having me and I hope you have a great day.

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