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Obamacare questions lead web insurance broker GoHealth to employer health market

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Small employers' uncertainty about what Obamacare means to them may end up benefiting a major web-based health insurance broker.

GoHealth — which until now has focused on selling individual market insurance plans online — is making a foray into the employer-based health coverage market, a move spurred by several years of fielding questions about companies confused by Obamacare.

A key part of that new strategy is GoHealth's recent purchase of Connected Benefits, a provider of employee benefits management software and solutions for group health insurance, the type of coverage that people get through their jobs.

GoHealth CEO Clint Jones said that the acquisition will be followed this coming open-enrollment season by GoHealth offering employers a way to accurately compare what it would cost to provide health insurance coverage to their workers versus having them enroll in individual market plans.

GoHealth also will offer companies the option of signing up their employees in group coverage, or provide a place they can direct their workers to so that they can sign up for individual plans.

"It gives us access to a market that's probably three times the size of our individual market," said Jones about the strategy, which will be focused on small employers, typically with less than 50 workers. "And it gives us access to an underserved market."

During the last open enrollment season, Jones said, about 700,000 people ended up going through GoHealth's platform. That number included people who bought individual market insurance plans for themselves, and people who signed up on health exchanges that use GoHealth's technology.

Clint Jones, CEO of GoHealth
Source: GoHealth

GoHealth's business to date has been helped by implementation of the Affordable Care Act, which in 2014 required most people to have some form of health coverage or be subject to a tax penalty. That so-called individual mandate led to big increases in the number of people who purchased health plans from either from government-run exchanges, or places such as GoHealth, other web brokers, traditional brokers and insurance companies themselves.

The ACA also required large employers to offer affordable health coverage to workers or pay a potentially hefty fine. That "employer mandate," which was delayed by a year, finally went into effect for employers with 100 or more full-time workers in 2015, and 50 or more workers as of this year.

The delay in the mandate, as well as other aspects of Obamacare, created confusion.

"Over the last couple of years, especially during open enrollment, we had a lot of employers calling in to buy health insurance," Jones said, "We told everyone we couldn't help them," he said, noting that GoHealth didn't offer group plans at the time.

But, "quite honestly, we realized that employers didn't know what the law really meant for them," Jones said. "There's a big education gap."

Employers were asking for help buying health insurance because they believed, mistakenly in most cases, that Obamacare required them to offer coverage to their workers, Jones said. The law's employer mandate only applies to larger employers. Those with 49 or fewer workers, who traditionally have offered health coverage to workers at a lower rate, have no such responsibility under the law.

Jones said the companies calling GoHealth had, on average, "probably 15" workers.

The calls also revealed, to GoHealth, that "they're all very interested in what benefits they can provide to employees, and what they can afford to provide employees."

The employers' questions about the law, and interest in possibly offering benefits, led GoHealth to look into "how we can give them a tool to make their lives easier."

"What we want to do is provide a solution... with a point and a click," Jones said. "We can show them easily what it would cost them if they bought group health plans," as well as what their workers' share of the costs would be.

At the same time, the tool will show employers what their workers might end up paying if they bought individual plans. Because Obamacare offers tax credits, or subsidies, to lower the premiums that low- and middle-income people pay when they buy plans from government-run exchanges. In some cases workers would actually spend less on getting coverage through those marketplaces than they would if their employer offered group coverage.

While the tool is clearly geared toward helping GoHealth drum up business for its new small-group plan offerings, Jones acknowledged that "a lot of employers believe that group health insurance is still too cost-prohibitive." But at the same time, he said, small companies often want to offer their workers some kind of benefits.

"Those can be dental, vision, short-term disability plans. And it doesn't cost the employer that much," he said. GoHealth's tool will help employers figure out exactly how much it would cost.

GoHealth's tool will also be available to insurance brokers, who could partner with GoHealth or might pay a usage fee for the tool, Jones said.

"In the sub-50 [employee] market, there's not a lot of technology that would help the brokers," he said.

A spokesman for one of GoHealth's competitors in the web-based insurance business, GetInsured, said, "While we do not have any plans to offer group coverage in the near term, we are always exploring opportunities that will benefit the business as well as our employer partners."

Another competitor, eHealth, goes offer group plans via its web platform.

Scott Flanders, CEO of eHealth, said that the purchase of Connected Benefits "is a brilliant acquisition on the part of GoHealth."

"They've identified an underserved part of the small group market and come up with what we think is a very smart way to provide value," Flanders said.