Self Insured Plans For Small Groups

Self Insured Plans For Small Groups

For small businesses, being self-insured would let them avoid new requirements under the law that call for traditional small group plans to include richer benefits, such as mental-health and maternity care. Self-insured companies can also avoid changes to pricing rules that could increase costs for groups of healthy workers.

It comes with risks: A car accident or cancer case can leave small businesses on the hook for big medical bills. That is why most large insurers have generally offered such services to companies that have 100 or more workers and can spread the costs around.

Now, the health law is changing the risk-benefit calculation for smaller businesses. The approach is part of a growing playbook of strategies to minimize the effects—and potential costs—of the health law. Insurers are also letting small companies renew their yearlong health-benefit plans early, before the end of 2013. That would delay the impact of health-law provisions that broadly kick in on Jan. 1, but would only affect plans once they renew after that date.

There is some indication that UnitedHealth Group Inc. and Humana Inc. will begin offering smaller employers—including firms with as few as 10 members in UnitedHealth's case the option of a form of self-insurance in some markets later this year.

Officials in several states are seeking to stem the strategy by limiting so-called stop-loss insurance, which covers unexpected, large health-care bills for self-insured companies. Lawmakers in California and Rhode Island are considering bills that would impose new rules on such coverage when offered to small employers, who otherwise would find self-insurance too risky. Some states, including New York, bar stop-loss insurers from covering small groups.

Still, self-insurance by small companies "is growing because of its ability to circumvent some of the" federal health law's provisions, said Tanji Northrup, assistant insurance commissioner in the Utah Insurance Department.