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What small to midsized business should know about employee health coverage

Patterned after the National Association of Insurance Commissioners' (NAIC) recommendations for small business health insurance, the Small Employer Health Market Reform Act would establish uniform rating rules that all insurers in the state would abide by, thus spreading risk more evenly among insurers and stabilizing rates for small businesses in Michigan.

This act was recently introduced as an identical bill in the Michigan Senate and House of Representatives.

In the past, Michigan was one of just a handful of states that had not adopted small group market reform to help small businesses. These businesses are in general paying higher premiums than similar sized businesses in many other states.

There are several key elements to this act:

Allows 10 geographic pooling areas, none of which can be smaller than a Michigan county (deters carriers from segregating communities with different economic characteristics)
Gives clear definition as to who a small employer is (gives more stability to pool of small employers)
Additional premium of up to 25 percent allowed for sole proprietors (protects carriers against elevated risks of health care coverage)
Upon renewal, rate adjustments are limited to 15 percent for changes in case characteristics
Self-insured business can be assessed an additional 50 percent premium for two years following its move to underwritten coverage with the carrier

These are just a few elements related to this act as it was introduced to the Michigan Legislature.