Why The Changing Health Insurance Renewal Dates?!?

by Holley Maher

Before the Affordable Care Act (ACA), insurance companies analyzed medical conditions to determine premiums. Companies with “healthier” employees received lower rates than companies insuring individuals with chronic health conditions.

When people say, “Thanks to ObamaCare, my health insurance cost will double,” it’s likely because of community rating. In a community-rated environment, low users of health care are thrown into a pool with high users and the risk (and premium cost) is shared – which means prices for lower-risk people increase.  

When the ACA first rolled out, companies with one to 100 employees expected to move to a community-rated environment. When projections of how community rates would impact premiums were released, many CFOs, insurance companies and politicians grew anxious.  Thankfully, the market responded and “transition relief” was introduced.  

In layman’s terms, ACA regulations were written in such a way that employers could move their renewal into the fourth quarter in an effort to extend the existing plan design and rating structure.  Why fourth quarter? Simply stated, it marked the anniversary of when a bill was signed. The option to move to an October renewal date was only a short-term fix, but many employers with two to 100 employees made the shift.  

Never before has the insurance industry had so many extensions, interpretations, changes and delays. It’s truly chaotic. That being said, here are a few things that could happen at your next renewal:

1.    An automatic shift to a January plan year.

2.    An option to shift to a January plan year.

3.    Additional opportunities for rate relief.

There are pros and cons to each option, and it’s important to be well-informed about the logistics impacting all the changes referenced above.

Holley Maher (hmaher@SmartBenefitsPlus.com) is a partner at Maher, Rosenheim, Comfort & Tabash LLC, specializing in group and individual insurance.