Small group plans are defined at the state level. In Pennsylvania, this applies to groups that employ fifty or fewer people. Also, these plans are “modified community rated” by which “an enrollee’s premium may be adjusted based family size, geography, age and tobacco use.” In contrast, in New York small groups are defined as 1-100 employees and are priced on a “community rated” basis.

One of the interesting issues in managing a benefits consultancy is dealing with the tradeoff of lower average commissions/fees arising from small groups, offset by the improved ability to scale solutions based upon some standardized results due to rating models. For example, on 9/27/22 the Pennsylvania Insurance Department released 1/1/23 rates and product results, which also includes a summary of insurer filings and a workbook with backup data. While it is true that each customer requires some level of customization and attention, there are consistent insights that will apply across entire geographies, which supports some efficiencies when supporting SME.

Example of Pennsylvania insurer rate filing decision summary

There are some really interesting takeaways in Pennsylvania from the 2023 filings, by the way. The general renewal book is relatively stable, for both insured and small group segments. Aetna stands out as seeking a substantial decrease, but focused on a specific metal level and certain geographies.

Aetna result of filing with PID, to which PID indicates, “[t]he resulting average final rate change approved for this insurer is -32.19%, ranging from -32.47% to -31.70%”

Best Practices

There are a number of ways plan sponsors and insurance agencies should manage employee benefit renewals. These should be segmented by market size, state of client domicile, and client goals. Then, some considerations:

• Small Group
  • Compare costs and benefits of options
  • Compare pros/cons of an ICHRA solution leveraging the individual market
  • Consider level funded solutions in the marketplace
    • Understanding the risks and benefits
    • Also, understanding state-specific limitations (e.g. NY vs Pennsylvania) and other implications (e.g. possible implications to ACA reporting)

Some of our favorite consulting and client work involves analyzing the cost structure underlying a given financing strategy for health and welfare benefits and then contrasting the approach against another model, while stress testing the model against future scenarios.

A few charts for review

We thought our friends might be interested in a few ways to slice-and-dice the small group and individual data for Pennsylvania. If you are interested in this type of analysis and discussing implications for a different state, specific geographic region, market, employer, or payer, reach out!

Data for select counties, silver plans in the small group segment in Pennsylvania

Comparison of Centre County, Pennsylvania rates for silver plans across individual and small group market segments