Keeping Your Health Plan in Good Shape When You Cross State Lines

A strong health plan is crucial to the success of a middle market business. A 2013 National Center for the Middle Market study found that 90 percent of executives saw health care benefits as critical for talent recruitment and retention. However, things get complicated when you cross state lines. The insurance business may have to meet various federal regulatory guidelines, but it's also under state control. Because of the way insurance has developed, a health plan, no matter how good, is generally intended to be used within one state. Therefore, it's important to do your due diligence when finding a plan that works for your employees.

A nurse takes a person's blood pressure with a pressure sleeve.

Economies of Scale

This isn't an issue for middle market companies that have all their facilities and employees in one state. For the most part, you can cover everyone under your group plan and then find additional coverage for those who travel on a regular basis. Should something happen outside your home state, those employees can still be covered.

If you have significant operations in multiple states, you'll likely still have enough people within one single state to negotiate a good plan. Problems start when your company expands into a new territory with a small satellite office. A handful of employees won't be covered under your usual insurance, and there won't be enough people to develop a new group plan. Yet, you still need insurance coverage to find and keep the best employees. You'll also need to offer comparable benefits to those who transfer to and open that new office.

Check With Insurance Carriers

Some insurance carriers operate in multiple states, so be sure to check if yours does. If your carrier operates in the state to which you'll be moving, what level of coverage can it provide beyond the essential services required by the Affordable Care Act (ACA)? If it doesn't go beyond the basic requirements, others might. There could also be options for out-of-network coverage that would allow employees to receive the care they need in the new state, although typically these costs are higher.

The ACA also enabled Multi-State Plans (MSPs) that provide coverage in multiple states. These plans are backed by the U.S. Office of Personnel Management (OPM), which has run the Federal Employees Health Benefits Program for 50 years. OPM contracts with the Blue Cross and Blue Shield Association, along with the Consumer Operated and Oriented Plans, to provide 200 MSP options in 36 states.

Beyond these options, you could potentially pay an employee additional money to purchase coverage from a health exchange.

Look at an Employer Association

If those options won't work, look at an employer association in the new state. These private associations bring together companies, usually smaller ones, so they can purchase insurance at better group rates than individual businesses. Your company would pay for a membership, which allows for access to better insurance rates, until your new operations have scaled up enough to obtain more favorable terms. From there, you can purchase a new group rate for your own firm.

Get an Expert's Help

Ensuring insurance coverage for employees in multiple states is not an easy task, and it's one that can be fraught with technical details that require specific expertise. Talk to a number of brokers about your needs and see what options they suggest. It may be that they know of some additional solutions.

For a middle market company, health insurance is not an option — it's a necessity. Your benefits package can help attract and retain talent, especially when larger companies compete with yours for the best employees. By exploring options and obtaining an expert's help, you can provide employees in another state the coverage they need, all while keeping costs under control.

Does your company offer health insurance to satellite offices or remote employees? If so, how do you approach this? Tell us by commenting below.

Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc. and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter and circle him on Google+.


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