What's the Big Deal?

Our friend and colleague David Fluker tipped us to this Sunshine Golden* State news:

Beginning w/July 1 start dates, Anthem Blue Cross CA will allow employees covered under individual health plans both ON and OFF exchange a valid group participation waiver. This is big news for a lot of California small businesses! #BlueCross #Anthem #SmallGroup #California pic.twitter.com/M1mSkqBwHP

— David Fluker (@FlukerDavid) May 24, 2018

I replied that this was, indeed, a big deal, and several folks asked me why.

It's actually kind of interesting (well, to me, anyway):

Carriers in the group market - and particularly in the small group space - are often subject to something called "adverse selection." This occurs when a company buys a group plan, but only those with health issues actually sign up (or mostly those). As one can imagine, this isn't good for he carrier or,m really, the employer. A significant wand effective way to mitigate against that is to require that a minimum number (and/or percentage) of the employees sign up.

But what if Joe is already has coverage through his wife's employer, or the VA? Well, then he has what's called a "valid waiver;" essentially a "hall pass" to opt out, and not affect the group's eligibility.

But what if he has an individual medical plan instead. This gets tricky: depending on the circumstances, some carriers don't consider this a valid waiver and it does count, potentially threatening the group's eligibility (and thus whether or not the carrier will issue a plan).

So this decision by Anthem California could be a big boost to small employers looking for a group plan.

* Thanks, Bob!