This post is to provide you with some information and strategies regarding the impending implementation of health care reform, formally known as the Patient Protection and Affordable Care Act of 2009. This post specifically relates to group health insurance. Individual health insurance information will be posted in the near future.
As you are aware, the Patient Protection and Affordable Care Act (PPACA) is scheduled to go into effect in 2014 and 2015. You might not be aware that there are certain strategies available to you, if desired, to mitigate or avoid the expected crush of changes and cost differences. I would like to summarize some basic information for you here, and let you know your options currently.
First a quick explanation of how health insurance is rated (priced). Currently, it is based on a system that includes factors relevant to your particular group. This is called group rating. In other words, the specific characteristics of your group - industry, zip code, size, age, gender, health conditions, etc ., are used to determine the rates. Starting in January of 2014, rating mechanisms will change to a community rating system that only includes a very few variables - self only or family enrollment, geographic area, age, and tobacco use. Other factors traditionally used, such as health status and gender, are no longer allowed.
Community rating will generally favor younger, healthier groups for lower rates, and will be more expensive for older, unhealthy groups. This may negatively or positively affect the rate for your group.
Community rating spreads the rating over the whole community, not just your group. This is the way the law was written, and the carriers must comply with this method.
Because of this, and generally speaking, a younger, healthier group may want to protect its rates for as long as possible. This can be done by requesting an interim term, early renewal for the current plan. This would renew your plan in late 2013, ( September 1 through December 1), for another full 12 months. Any plan issued in 2013 is done on the old system, which means you would keep the old rating system and avoid an expected negative rate impact.
It is expected that there will be a considerable amount of confusion and commotion in the first and second quarter of 2014 as the reality of these new plans and PPACA comes into being. You should consider that unless you would benefit from lower rates from the new PPACA, you should renew again this year, so that when your 2014 renewal comes around in late 2014, the "kinks" will have been worked out. Different carriers will offer this option with different possibilities.
It is also expected that a huge number of groups will be pursuing this early renewal option. Therefore, the fourth quarter of this year will have heavy volume. It will likely set records for activity and movement. PLEASE DO NOT WAIT UNTIL THE LAST MINUTE TO MAKE A DECISION. Some carriers will force you to notify them ahead of time; you should make yourself aware of these requirements.
It is important to note that an early renewal in late 2013 WILL be re-rated in the traditional manner, for changes in health conditions, census, etc, just as was done earlier in the year. It will NOT be a simple extension of the current year plan. However, if you think community rating will be a detriment to your group, taking this early renewal for 12 more months will push that back. Then we will review the situation in another year based on conditions then.
The information in this post is of a GENERAL nature only, and does not specifically address your group. If you are interested, we will examine your group individually. Also, I should point out that there are different rules for different groups. 2-50 member groups have a set of rules. The rules for 51-100 and 100+ groups are different. So, be careful as you talk to your peers in other companies about this. They may be subject to different rules and conditions if they have a larger group category.
Certain calculators will be available to help determine the impact of new rating. However, these calculators are not guarantees, and conditions and regulations may change in the interim, affecting the actual results. Carriers will not guarantee the calculator results provided by them or an agent. Results for the actual renewal may be different. This uncertainty needs to be considered by the employer when determining whether to change the renewal date.
You should discuss the implications of this health care reform activity and compliance with your employee benefit advisor, and/or legal counsel, as well as your agent.
Bob Ruzicka Insurance Agency is committed to your success. We will be proactive to try to help if you so desire. Please let me know if you have any questions, and if you are interested in pursuing this strategy.
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