With the beginning of the Affordable Care Act, firms that had coverage prior to March 23, 2010 were able to keep their coverage under what was termed “Grandfathering” of prior coverage, so to quote President Obama “If you like your health insurance plan, you can keep it.” In March of 2014, the Department of Health and Human Services created a transitional policy for small groups to keep their current health plans, issued after March 23, 2010 under their renewal in 2015. This extension of coverage was referred to as “Grandmothering.”
With 2015 year end renewals coming up, small employers can expect to be impacted by Affordable Care Act changes depending on how their group, and its employees, fit with the new small group requirements. The following are examples of ways that small groups will be impacted:
Age: The rates for Affordable Care Act compliant plans must use rates that are no more than a 3 to 1 ratio higher, from the young to the old. Prior plans for small groups used a rate differential of 6 to 1. Groups with older employees should see a discount, and groups with younger employees should see an increase.
Dependent Costs: Old dependent costs used to include a rate for a family and for children, regardless of how many. The new changes will require a premium for each dependent based upon their age. Families with many dependents will pay higher costs and employees with 1 or 2 dependents may see no change or a reduction in costs.
Reinsurance:: Because the prior ability of insurers to ask and require satisfactory health for coverage, the inability of insurers to ask for employees to prove their good health and insurability, insurance companies will need to purchase re-insurance to protect themselves against large losses or claims. The premium for this reinsurance will be part of the new costs of Affordable Care Act plans.
Pediatric Dental: Pediatric dental is an Essential Health Benefit (EHP) under the Affordable Care Act, so all small groups will pay a new portion of their premium to provide this benefit, whether or not they have children covered under their employer plan.
We look forward to reviewing how to deal with these mandate Affordable Care Act changes to continuing the benefit value for you and your employees.
As always please feel free to contact us with any questions or concerns you may have.
Malcolm and Stacey Cutler – Cutler Insurance Services, Inc.