Large employers with 50 or more full time and full time equivalent employees have been given an extension of one year (until 2015) before many of the Patient Protection and Affordable Care Act requirements will need to be met to avoid fines. The focus has now shifted to small employer groups with 50 or less full time and full time equivalent employees. Although small employers are not required to provide a group health plan for their employees, most will continue to do so in order to remain competitive within their industry. These employers will see many changes occur with their group health plan during the coming year.
Starting with all small group (group size 2-50) renewals after January 1, 2014, we will say goodbye to the traditional 3-or-4 rating tiers that employers/employees are accustomed to. There will be no more Single, Two Person, and Family tiers. There will be no more Employee, Employee with Spouse, Employee with Child(ren), and Family tiers.
Premium rates are age-banded
This method of attaching a premium rate to each individual in a contract has been coined “counting belly buttons.” Rates will be age banded, which means that premiums will be based on age ranges. There will be an age banded rate applied to each subscriber, another to their spouse, and then a rate for each of their first 3 children under the age of 19. If a family has more than 3 children under the age of 19, an additional rate will not be applied to those children. But for each child over the age of 19 until their 26thbirthday, an additional rate will be applied regardless of family size.
On a positive note, carriers will no longer be able to rate group plans based on medical conditions, or exclude member coverage of pre-existing conditions.
Essential Health Benefits (EHBs) coverage will be mandatory for all small group plans renewing after January 1, 2014. The Affordable Care Act has a list of compiled services which they consider to be essential to a person’s well-being. These EHBs are:
- Ambulatory Patient Service
- Emergency Services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs (this will no longer be optional with small group plans)
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
For small group health plans, the additional requirement of providing pediatric (birth to age 19) oral and vision care will also mean additional cost added to each child’s premium. Vision will be a nominal upcharge but the addition of pediatric dental care will increase the cost for each child by an estimated $22-$24 per month. Families that already have dental coverage through a dental carrier, such as BCN Services’ Delta Dental plan, will be able to “carve out” that extra premium added to their children’s health coverage.
Small group health plans cannot be customized with flexible options for office visit co-pays or additional riders to enhance or decrease the cost of your plan. In order to comply with meeting certain levels of coverage of EHBs, all plans sold by health carriers will be packaged and will not be able to be altered.
Health plans designed to cover actuarial value
Health plans will be designed to cover the “actuarial value (AV)” of EHBs on 4 different metal levels: Bronze, Silver, Gold and Platinum. The AV is the estimated amount of coverage a subscriber will receive for EHBs. The AV of each metal level will be as follows: Bronze – 60 percent, Silver – 70 percent, Gold – 80 percent, and Platinum – 90 percent. All plans must fall within these percentages of AV with a 2% margin either up or down.
For example, a Gold metal level plan will cover between 78 percent and 82 percent of AV of EHBs (with the margin of 2 percent taken into account), and a Platinum level plan will cover between 88 and 92 percent of AV of EHBs. Would your plan be compliant if it covered 85 percent of AV or EHBs? No, it would not. Plans must fall within these metal bands to be compliant with ACA requirements.
Small group health plans will be required to have a maximum Out-of-Pocket (OOP) amount for all of their plans starting at the group’s renewal after January 1, 2014. The 2014 OOP maximums will be $6,350 for individuals, and $12,700 for families. After these OOP maximums are reached, all EHBs will be covered at 100 percent for the remainder of the plan year. However, pediatric and adult dental costs will not apply to the OOP maximum even though pediatric dental is included in the list of EHBs.
Throughout this blog, I have indicated that all of these requirements and changes take effect upon the group’s renewal after January 1, 2014. To clarify, if your current small group plan does not have its annual renewal until, for example, November 1, you will be able to keep your current plan design and rating structure until that date. Upon renewal after January 1, 2014, is when your plan will need to comply with these ACA small group requirements.
The health insurance landscape will be a strange new world in 2014. BCN Services will be blazing the trail for you and your employees to be able to navigate through all of these changes and the questions they will bring. Please contact your BCN Partnership Manager if you’d like to discuss in further detail what to expect in 2014.
Frank Lewandowski, Partnership Manager