HCR Update-Early Renewals

HCR Update-Early Renewals

by Posted on: May 1, 2013Categories: HR & Compliance   
  • (April 29, 2013)

Over the past two weeks, we have seen many carriers send out information for small employers regarding an early renewal. This option allows small employers the option to renew their coverage in late 2013 instead of waiting to renew their 2014 policy anniversary dates. For example, if you renewed on February 1 of 2013, you could renew your coverage again on Dec. 1, 2013 and have your first renewal after ACA on Dec. 1, 2014. What are the advantages of renewing early:

Premium Rating-Premium rates for non-grandfathered health plans will be generally prohibited from determining rates based on health status, gender, or other factors. Issuers will be able to vary premium rates based only on age, rating area, family coverage, and tobacco use. This will cause upward pressure on non-grandfathered groups on their first 2014 renewal.

Essential Health Benefits-Effective for plan years beginning on Jan. 1, 2014, health insurance issuers that offer coverage in the small group market will be required to provide the essential health benefits package required of plans sold in the the ACA exchanges. This requirement does not apply to grandfathered health plans.

Pre-existing Condition Exclusions-There will be no pre-existing condition exclusions on coverage for any enrollees, effective for plan years beginning on or after Jan. 1, 2014.

Cost-sharing Restrictions-Effective for plan years beginning on or after Jan. 1, 2014, n0n-grandfathered plans will be subject to limits on cost-sharing and out-of-pocket costs. Plans in the small group market need to comply with ACA’s out-of-pocket maximums limit and ACA’s annual deductible limit

According to health insurance issuers, by renewing before the end of 2013, small employer plans will not be subject to ACA reforms, such as the new community rating requirements, until the 2014 renewal

Legal Concerns-When considering an early renewal, it is important to keep in mind that the federal agencies in charge of implementing ACA and other employee benefit laws have not addressed whether these early renewals are permissible. Because federal agencies have not addressed these early renewals, small employers should proceed with caution and consult their benefit advisers if they are considering early renewal.

Click here to read our Legislative Brief on Early Renewals




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