On Feb. 22, 2013, the U.S. Department of Health and Human Services (HHS) issued a final rule to implement the Affordable Care Act's (ACA) fair health insurance premium (adjusted community rating), guaranteed availability (issue), guaranteed renew-ability, single risk pool, catastrophic plans and rate review provisions. Under the ACA's adjusted community rating (ACR) provisions, the use of actual or expected health status or claims experience to set group premiums is prohibited. Health insurance issuers may vary the premium rate charged to a specific non-grandfathered individual or small group from the rate established for that particular plan only on the following factors: family size (individual or family), geography (rating area), age (within a ratio of 3:1 for adults) and tobacco use (within a ratio of 1.5:1). This seems like allot of insurance jargon, so what does it mean?
Effective January 1, 2014, this means that all small group plans must be rated the same, charging the same premium regardless of health status, for the same plan design. This means there will no longer be underwriting, only enrollment. This means that going to market looking for lower premium rates will be a moot point as only plan designs may offer cheaper alternatives. In Minnesota, every small group has been assigned a risk factor on a scale of .75-1.25 or Tables 1-12 for Blue Cross. When they file their "community" or median rate each quarter, it is in the middle, or 1.0 and Table 6. Analysts are projecting the "community rate" to be somewhere around 1.10 to meet all these requirements. If your current risk factor is below this figure, it will go up at your 2014 renewal. For groups that were rated at the base level, that can mean a 33% increase! We can only hope that some rethinking will occur on this subject, as it has for large group mandates and penalties, but it is something that you may want to start addressing now. Changing your renewal date is one way to allow more time for adjustment.
Medica has just announced that they will send out notifications in mid-August to all their small group (2-50) block of businesses with a 4th quarter renewal assessment, and a form to change their renewal date, if it makes sense. Obviously, if your group is rated higher than a 1.10, or around a Table 11 or 12 with Blue Cross, then this ACA change may actually offer some relief. HealthPartners and Preferred One are also offering this 12-1 renewal opportunity, and Blue Cross is also open to considering renewal date changes. For example, if you have a March 1st renewal, this exercise would initiate an earlier renewal in late fall, but you'd be locked in to those rates for an additional 9 months versus adjusting to the "community rate" for your March 2014 renewal.
Contact us right away if this is something you would like to explore and discuss further.