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Thursday, Mar 28, 2024

Broker Puts Faith In Health Trust

There’s been talk that insurance brokerages could be the odd men out in health care reform. With the establishment of online state exchanges, individuals and small businesses could bypass the firms and buy directly from insurers. SGB-NIA Insurance Brokers isn’t waiting around to find out. The Woodland Hills firm in May started to administer a health insurance trust specifically for its manufacturing company clients. The California Small Manufacturers Trust is a group plan intended to give member businesses access to lower cost health coverage and stable rates through a collective pool. Jim Scanlon, chief executive of SGB-NIA, said the trust is an alternative to the state-based insurance exchanges. “It is a way to show our expertise and bring value to the clients,” he said. Twenty-five companies have joined the manufacturers trust over seven months from Orange County to Ventura County, with the majority in the San Fernando and Santa Clarita valleys. SGB-NIA plans to expand the program into other parts of the state next year. The program covers 1,000 employees and another 1,500 family members and dependents. The members can choose from nine medical plans offered by Health Net Inc. and Kaiser Permanente; four dental plans, two vision plans; voluntary accidental death or dismemberment coverage; and long term disability insurance. Molnar Engineering, a precision metal shop in Chatsworth, had been with Anthem Blue Cross prior to joining the manufacturers trust. President Tom Malnar said his company faced premium increases of up to 20 percent, so he decided to switch. The new trust-administered plan with Kaiser keeps insurance expenses flat but gives coverage the old plan did not. “It is a rich plan so our guys are getting a significantly better insurance than a year ago,” he said. Trust issues The brokerage teamed with the Small Manufacturers Institute in Monrovia, a nonprofit, to create the trust. A board of trustees independent of SGB-NIA makes decisions regarding the health plans. The demographics of manufacturers make them a good candidate for a trust structure. The companies tend to have a mix of young and old employees that balance each other out in terms of medical services used, Scanlon said. Another appeal for companies to become trust members is that the community rating rule does not apply to the companies. The rule is a way to calculate premiums based on geographic area; instead the trust bases its premiums strictly on the pool of companies. “Our pool is better because it is only manufacturing. It enables the small business owner to buy like a big business owner,” said Justin Veyna, business development director at SGB-NIA, which also provides property liability insurance, workers compensation insurance and other products. These types of trusts were popular 15 years to 20 years ago, but they weren’t cost effective because not enough companies signed up as members, said Neil Crosby, a spokesman for the California Association of Health Underwriters, a Sacramento trade and advocacy organization for insurance agents and brokers. The programs were often used by trade groups and organizations to boost their membership but didn’t necessarily lower premium costs. “It did not bring them anything lower than what they could find in the marketplace,” Crosby said. But with all the uncertainties of health care reform and the possibility of sharply rising premiums, there is a chance the trusts may catch on this time. APT Metal Fabricators, a metal machine shop in Pacoima, is another member of the trust that joined for the cost savings. “Anywhere you can find a savings in your overhead it helps when bringing in new business and being competitive,” said APT President Dennis Vigo.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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