If you’re a small to medium-sized business (SMB) you’ve likely heard the term “community rating” as it relates to health insurance. It’s also likely that you’ve been unfairly penalized by this system. For those unfamiliar with the term, community rating refers to the way health insurance companies calculate healthinsurance rates for businesses with up 50 employees (in several states, this includes businesses with up to 100 employees).
With a community rated plan, the rate a business pays is based on the collective, average health of other businesses within their given territory, rather than the actual health of their employees. To put it simply, with a community rated plan, different businesses within a community pay the same price for health insurance regardless of their health status. For some businesses, this may work in their favor, but for other healthy businesses, they are paying much more than they should.
The community rating approach is also particularly bad for SMBs with a large population of young employees. With this method, insurance companies inflate the rates for young people in order to balance the risk of all others within the pool, meaning that younger-than-average businesses often pay more for health insurance than they actually cost to insure. Therefore, it’s a double-whammy; young, healthy SMBs are being unfairly penalized for two reasons.
Gravie recognized this problem and we fixed it. We call it Gravie’s Private Marketplace for Group Plans. This approach doesn't use the community rating scheme. Instead, it calculates a business’s rates based on the actual health and actual ages of their employees. This means it's ideally suited for SMBs with a large population of healthy and/or young employees; it gives them the rates they deserve, potentially saving them significant amounts of money. In addition to these savings, Gravie’s Private Marketplace for Group Plans is level-funded (read more about level-funding here), which means employers may be eligible to receive a claims refund at the end of the year.
With Gravie’s Private Marketplace for Group Plans, SMBs now have a way to offer competitive, more affordable benefits similar to the way large businesses are able to. Gravie has found a way to level the playing field.
Is your business being unfairly penalized by the community rating system? Gravie’s Private Marketplace for Group Plans may be the perfect fit for your business. Contact us today by submitting a form here or by calling 800. 540.8701.