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Joe Ellis: Middle market benefits supply looks fine

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To Joe Ellis, reports of the death of commercial health insurance seem highly exaggerated.

Ellis, a senior vice president at CBIZ, a company that provides accounting, tax, insurance and human resources services for midsize employers, says he sees strong insurer interest in CBIZ clients’ benefits business.

“It’s looking for me as if they’re looking for market share,” Ellis said today in an interview. “They’re trying to get as much share as they can.”

Insurers may be shying away from the Patient Protection and Affordable Care Act (PPACA) public exchange market because of the fear that there would be problems with understanding the risks involved, but, in the midsize group market, “the risk profiles are pretty much known,” Ellis said.

See also: 5 things to know about the health product pipes

CBIZ publishes its own Small Business Employment Index. The index for February, which was based on data from 4,000 companies that employ 300 or fewer people, shows that a little more than half kept head counts the same. The other employers were about equally likely to increase or decrease their head counts. Company analysts speculated that uncertainty about oil market volatility, the global economy and interest rates were making small employers cautious about hiring.

In the benefits unit, Ellis has noticed improvements in the tools CBIZ and its clients can use to connect with insurers, but no big improvement or deterioration in other aspects of insurance administration, such as speed at processing midsize groups’ claims.

Some insurers have tried to break broker compensation out from other costs, by putting that figure on a line of its own, but, at this point, Ellis said, he has not seen the kind of pressure on compensation that agents in the individual market have seen.

Insurers “realize they can’t push the envelope too far,” he said.

Competition for ancillary and voluntary products is even tougher than the competition for major medical accounts, Ellis said.

The typical private exchange in the midsize employer market may offer a fairly short menu of plans, and the plans may all come from one carrier, but one strength is that many of the private exchange systems offer workers access to decision-support tools that can help them find and compare the benefits options, Ellis said.

For Ellis, the big change this spring has been helping midsize employers prepare to start sending out PPACA Form 1094 and Form 1095 coverage offer notices.

“It’s always more painful when you’re just beginning,” Ellis said. He said he thinks reporting will be easier once employers get used to the coverage notice requirements.

Most of the kinds of employers his firm serves were already collecting the data they need to send out the notices. For employers with many short-term or temporary workers, the problem has been getting the right data into the right systems.

Originally, he was expecting the PPACA penalty on the uninsured to increase group health take-up rates, especially at employers with low take-up rates. But CBIZ analyzed the numbers at one employer that seemed as if its take-up rates might increase, and the numbers stayed the same. “There was no additional take-up,” Ellis said.

Take-up rates might increase next year, once workers affected by the penalty see that. For example, for a worker with an annual income of $50,000, the penalty could be as much as $1,250, he said.

Ellis has heard of individual tax clients getting notices from the Internal Revenue Services (IRS) about problems with how they handled individual PPACA reporting for 2014. But he said he does not expect to hear about many employers getting notices about employer shared responsibility penalty obligations for another year.

See also:

PPACA PCORI fee: Due July 31

CBIZ Small Business Employment Index Shows Gain in May


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