Bracing for the Impact of Healthcare Reform
As the Affordable Care Act’s January 1st, 2014 deadline looms, employers and employees anxiously watch to see what changes (if any) will occur and how they will affect their business. While Democrats and Republicans fight it out in Washington to see what provisions will stay, we are starting to see the actual impact of Healthcare Reform on businesses in Massachusetts.
The impact to individuals and businesses in Massachusetts will be split into two categories; plan design impact and pricing impact. Plan design impact should be minimal, as Massachusetts was the first state to include the key provisions of Healthcare Reform. These provisions include mental health parity, no co-pays for preventative visits, maternity and newborn care, and most importantly, no limits or exclusions for pre-existing conditions.
Pricing impact is less known. Insurance carriers nationwide will now be limited to four sets of rating criteria: age, family size, geographic area and tobacco use. In addition, Massachusetts has been granted a waiver to allow a two-year phase out of certain factors (industry, participation rate, group size). The waiver has been designed to lessen the financial impact upon renewal. We shall see if this is actually the case.
How will these factors affect your group medical premiums on or after January 1, 2014?
The simple answer is that the effect will vary on a case by case (and carrier specific) basis. The major carriers in Massachusetts have advised brokers and agents that the change in rates could range from a 30% reduction to a 40% increase (or even higher in some cases). The elimination of the “Rate Shock Bumpers”, which limited the amount of increase an insurer can give on each factor, has the potential to create a wide gap between premiums from the fourth quarter of 2013 and the first quarter of 2014.
What should I be thinking about?
If you are an employer who has a first quarter group medical renewal, you may want to consider looking at what your renewal alternative rates would be for a December 2013 renewal date (this is especially true if you have a January 1, 2014 renewal date). The alternative pricing from your current carrier (if allowed) along with bids from other carriers will allow you to analyze the next best option for your company and employees. In the end, it may make sense to stay on the current renewal date, however when it comes to health insurance (and the increasing cost every year) it makes sense to explore every option available.
To learn more about the potential impact of Healthcare Reform on your business as well as keep up with state and federal compliance issues, please contact Mat Geffin at (413) 586-0111 or MGeffin@Webberandgrinnell.com