Indy Chamber starts new benefits plan for small firms

For 25 years, the Indianapolis Chamber of Commerce has lured in small businesses as members by offering a 5-percent discount on health insurance coverage.

But Obamacare has disallowed such discounts for any new companies that wanted to join ChamberCare and will soon render the discounts out of bounds for all companies. Since the program has a shrinking life span, the number of participants in ChamberCare has dwindled by about 400 since 2012 and the chamber's overall membership has declined by a similar number.

So the Indy Chamber, as it's now called, has come up with a plan it hopes serves the same purpose: helping attract small-business members while giving them a better deal on employee benefits.

The new program, called TogetHR (pronounced like together), will give a 15-percent discount on the fees required to join a professional employer organization, or PEO, formed by Greenwood-based Tilson. Starting July 1, chamber members that join the TogetHR PEO can get the cheaper insurance rates offered to large employers, rather than the higher rates typically offered to small businesses.

Tilson already operates a PEO with about 5,000 employees in multiple states. But the TogetHR PEO will be just for Indy Chamber members. It will offer not just health benefits, but also dental, vision, life and disability insurance, as well as retirement and college savings plans.

Anthem Blue Cross and Blue Shield, which provides the health benefits through ChamberCare, also will provide the health benefits for TogetHR.

The Indy Chamber hit upon the idea after it put its own 50 employees into a PEO three years ago, said Chief Operating Officer Melissa Cotterill.

"It was a model that we loved and we wanted to take it to our members," she said.

As a PEO, Tilson becomes a co-employer of the workers at any company that joins. It handles all legal and compliance issues, as well as contracting with insurers and other benefits companies.

Mark Sherman, a benefits consultant at Indianapolis-based LHD Benefit Advisors, said it would likely cost employers about $700 per worker to join Tilson. But that makes sense, he said, because most small companies will face health insurance price spikes of about 35 percent once Obamacare's rules kick in fully next year.

Since companies typically spend $10,000 per employee on health benefits, they would pay about $3,500 more per worker for health benefits.

Those increases will hit businesses with younger-than-average workers because Obamacare requires insurers to charge no more than three times as much for the oldest workers as for the youngest. Before Obamacare, it was common for older workers to cost five or six times more than the youngest workers.

Those rules have been delayed by the federal government to late 2016 for small employers, but that means most companies need to decide what to do about their benefits by year's end.

"Probably 75 percent of employers with 100 employees and under are going to make a [benefits] renewal decision between now and Jan. 1," Sherman said. LHD is one of 27 brokers the chamber picked to sell TogetHR to employers.

Employers can avoid Obamacare's new rating rules in other ways, such as insuring their own health benefits and buying catastrophic insurance for claims higher than, say, $25,000. Other employers are considering ending group health benefits and instead helping employees buy their own health insurance on Obamacare's individual exchanges. Still others are joining self-funded health plans created by industry-specific trade groups.

But Brent Tilson, CEO of Tilson, said all the new rules - including increased reporting requirements for employers - make him think he has the right solution.

"It's all these things aligning at the right time," he said.