California Group Health Plans
California has a very competitive market for small group health insurance. Our state purchased over $122.9 billion of health insurance in 20131. As shown in the chart below, six health insurance companies accounted for ninety-three percent of the money spent on health insurance.
|Health Insurance Company||Percent of Total Revenue|
|Anthem Blue Cross||20%|
Each of these companies offers unique California group health plan benefits and provider networks. They all compete on price for small group business. Our task is to help you select the benefits, providers and monthly premium that best fits the needs of your business. Give us a call and we can help you with this process.
Kaiser Permanente is a “staff model: HMO, which means that the insurance company includes hospitals, doctors, nurses and insurance personnel. Kaiser is a “closed” system so that you must receive all of your treatment from a Kaiser doctor or hospital – except in an emergency. By being a closed system, Kaiser can contain costs better than other California group health plans. Doctors are paid salaries for their services as opposed to traditional arrangements where doctors and hospitals are paid for every test and procedure they perform. The Kaiser system offers high quality comprehensive benefits at a low cost relative to other companies. You give up the freedom to see non-Kaiser doctors for the Kaiser benefits and low monthly premium. Kaiser offers many co-payment HMO plans; deductible HMOs; and HSA-compatible plans. Kaiser also offers PPO plans where a member does not have access to Kaiser – this is intended for business owners or key employees whose company offers Kaiser but who want to use non-Kaiser doctors and hospitals.
California small group employers can purchase Kaiser plans three different ways: through CalChoice; through Covered California for Small Business (SHOP); or directly from Kaiser. The benefits and rates are identical regardless of which way an employer purchases coverage.
As of 2015 Kaiser had about 10.1 million members in nine states. Kaiser’s California membership is the largest by far with 7.9 million members2.
Anthem Blue Cross is the California subsidiary of Anthem, Inc., the largest health insurance company in the United States, insuring 33 million Americans. As of 2010, Anthem Blue Cross insures about 8.2 million Californians. Anthem Blue Cross offers HMO and PPO plans to small businesses. They have been the most innovative of all of the California health insurance companies in creating new plan designs. Anthem Blue Cross has many PPO copay plans with deductibles from $250/yr. to $5,000/yr. They also offer PPO plans with low deductibles but no brand medication as a way to keep their premiums low. Anthem Blue Cross offers “Lumenos” HSA plans that integrate an HSA trustee with the insurance company so that members receive a combined accounting of their HSA account fund and the amount of money applied to their deductible in the insurance plan.
Health Net is a regional insurance company that provides health insurance to about 6 million people. Approximately 3.1 million of Health Net’s members are in the Tricare program for military personnel. As of June 30, 2010, Health Net insured 441,000 in the individual and small group market in a number of states. Health Net of California offers more types of health plans than any other insurance company in California. They offer 58 HMO plan options; 5 HSA compatible health plans; 2 HRA plans; 2 POS plans; and, 10 PPO plans for a total of 77 plans! This is too many choices in my opinion. It creates more confusion than it helps. In their PPO product offering they have “standard” plans with lower deductibles and copays and “value” plans with higher deductibles and copays. The Health Net HMO plans include “Elect Open Access” (EOA) that enable members to get a consultation from a Health Net PPO provider in addition to receiving care within the HMO network. The Health Net HMO and HMO-EOA plans have “standard,” “value,” and “advantage” options with progressively less benefits for each.
Further complicating – or offering more choice – is Health Net’s reduced HMO provider network options. They offer their full HMO network, a smaller “silver” network and the smallest “bronze” HMO network. The networks with fewer doctors and hospitals are less expensive. So, the Health Net Advantage HMO Bronze plan is one of their lowest benefit plan offerings. Health Net also offers plans for employees and dependents who prefer Spanish Speaking providers in Southern California and Northern Mexico. These plans are the “Salud Health Net Y Mas” HMO plans and are very inexpensive.
Blue Shield of California is a not-for-profit health insurance company that operates exclusively in California. Blue Shield insures 3.5 million Californians of which about 160,000 are Tricare military members leaving commercial membership of about 3.3 million people.
Blue Shield of California offers 8 Access Plus HMO plans which enable members to go directly to certain specialists within designated medical groups. Two other “Local Access” HMO plans have fewer doctors and hospitals and are less expensive options. Small businesses can only offer their employees the full network or the small network HMO plans, not both. Blue Shield has 9 HSA plans, 14 PPO plans and one Point of Service (POS) plan. The Blue Shield “Standard” and “Premier” PPO plans have the richest benefits but they are also expensive. The PPO “Value” plans are less expensive but also have higher deductibles, copays and out of pocket limits. The Shield Spectrum 1000 and 3000 PPO plans have high deductibles, reasonable premiums and have been popular with small business owners. Blue Shield also offers competitive group dental, vision and life insurance plans.
UnitedHealth Care/Pacificare is the second largest health insurance company in the United States with 25 million members. UnitedHealth Care purchased Pacificare in 2005 and has been operating in California as “UnitedHealth Care/Pacificare” with approximately 1 million members.
The HMO plans offered in California have been under the Pacificare name. They have 22 HMO plans that range from rich benefit-high premium $10 copay, 100% hospital coverage to low benefit-low premium, narrow network (HCP) plans with a $1500 deductible, $25 copay for primary care visits, $75 copay for specialist visits after the deductible. All of the UnitedHealth Care/Pacificare HMO plans are called “Signature Value.” UnitedHealthcare/Pacificare “Signature Value Advantage” HMO have a smaller network of doctors and hospitals. The Signature Value HCP has an even smaller network of providers than the Signature Value Advantage plans. UnitedHealth Care offers 16 PPO plans; 4 HRA plans; and 6 HSA plans. As of October 2010, the UnitedHealth Care HSA plans are extremely well priced and an attractive option for small group employers looking to offer catastrophic coverage at an affordable price.
Aetna is a national medical insurance company that insures 35.8 million people nationally. In California, Aetna offers individual, small group and mid-size to large group coverage. They have 12 HMO plans including 5 full network plans; 1 deductible HMO plan; 4 limited network “Aetna Narrow Network” (AVN) plans; and 2 Vitalidad Plus HMO plans that have provider networks in Southern California and Northern Mexico.
Aetna of California offers 10 PPO plans using their “Managed Care” (MC) PPO network, 1 plan that uses their “PPO” network which has more providers than the MC network; and, one very expensive indemnity plan where members can access any provider (this is normally used for out of state employees or those living in remote areas that are not near in-network providers). Aetna offers 2 Health Reimbursement Account (HRA) high deductible health plans and 4 Health Savings Account (HSA) compatible plans. Aetna MC PPO plans have deductibles from $250/yr. to $10,000/yr. and sometimes they are a good fit for a company.
CIGNA is the largest “other” health insurance carrier in California. CIGNA has virtually no membership nor competitive California group health plans offered in the individual and small group health insurance markets. CIGNA does seem to be competitive in the mid-size to large group markets in California and sometimes is a good fit for large companies that have employees in many states.
California Choice (also referred to as CalChoise) is not another health insurance company but it is an option for small employers in California. CalChoice allows small businesses to offer Health Net, Anthem Blue Cross, Aetna and Kaiser Permanente plans at the same time. (CalChoice also includes regional HMO plans, e.g., Western Health Advantage in the Sacramento area and Sharp Health Plans in the San Diego area.) For example, a small business may have some employees who love Kaiser while others hate Kaiser (people seem to feel passionately one way or the other about Kaiser.) All of the insurance companies require about 75% of the eligible employees be enrolled with that single insurance company, which make offering Kaiser difficult if more than 25% of the employees want Kaiser. That’s where CalChoice can help.
An employer can have half of the employees on Kaiser and the other half on Health Net or Anthem Blue Cross. Pre-ACA (before 2014) CalChoice plans were more expensive than when purchased directly through either Kaiser, Health Net or Anthem Blue Cross. That changed January 1, 2014. Now, CalChoice offers its plans at the exact same rate as plans that Kaiser offers directly. Aetna, Health Net and Anthem Blue Cross plans are comparably priced to plans these insurance companies offer directly. The benefit of CalChoice is that you can offer your employees four different insurance companies at the same time. The employer receives one monthly invoice.
CalChoice markets itself as a “health insurance exchange” as this has become a popular buss word with the Patient Protection and Affordable Care Act (PPACA). Unlike an exchange, however, prices don’t fluctuate based on demand. Rather rates and benefits are fixed. CalChoice does allow a greater choice of insurance companies, with limitations. One limitation is that a small employer can only offer the plans from one or “two adjacent” metal tiers. This means an employer can offer only Silver or only Gold Level plans, or Silver and Gold tier plans. But not Platinum and Silver or Bronze and Gold. Another limitation is that each of the insurance offers different provider networks with specific plans, for example a Bronze Aetna plan may use the Basic or Deductible (AVN) network. It’s a bit confusing. Contact BenefitsCafe.com and we can help you set this up for your employees.
1The California Healthcare Foundation Health Care Almanac, “The Private Insurance Market in California, 2013” is an excellent source of information on the market for health insurance in the state. February, 2015