Why Renew Early?
With the next phase of the Affordable Care Act (ACA) going into effect in just under six months, many small businesses that currently provide group insurance for their workers are concerned about the law’s impact on the cost of doing so. Individuals, too, are wondering if their costs will increase under ACA. Under the law, new health plans must cover the essential health benefits, but at the same time they face pricing rules that spread the risk of costly medical bills.
In the group market, this is likely to raise prices for companies whose workforce is younger and healthier, and may lead to small premium increases — or even reductions — for businesses with less-healthy workers. The same holds true in the individual market.
Many carriers plan to offer small businesses the option of an early policy renewal. A select few carriers will also make early renewal an option for individuals. Renewing early (off cycle from the current policy anniversary date) will essentially reset the plan’s start date, and extend the current coverage as far into 2014 as possible*.
Although the specifics of each carrier’s offer may differ slightly, in general, insurers will allow their customers to renew their policies with an effective date in December of 2013, so that all current plan provisions (including premium rates) will remain in place through December of 2014. At that time, a switch to ACA-compliant plans will be made.
This will be a good option for some companies, but those with a less healthy workforce may be better off working with Virginia Medical Plans to find a reform-compliant plan with a January 1 start date. The same holds true for individuals.
Anthem customers can expect to receive a letter in September of 2013 extending an offer of early renewal.
This raises an interesting question: if younger, healthier groups and individuals delay their entry into new plans under the Affordable Care Act through an early renewal option, but less-healthy (and therefore more costly to insure) groups and individuals switch to new plans as soon as possible, will this cause the overall cost of insuring Americans under ACA to RISE, at least initially?
What do you think?
Give us a call if you have any questions about your options.
*note: an off-cycle policy renewal may cause issues with resetting of deductibles; call us to discuss the particulars of your situation.