How to prepare for the ACA 51-100 group redefinition in 2016
Come January 1st, 2016, the ACA’s new definition of small group will mean dramatic changes to the plan designs to which groups and brokers are accustomed.
One change is that groups with 51-100 employees, currently considered large group employers, will be reclassified as small group employers. These groups will need a broker’s help reorienting to their new classification.
One example of the new landscape that these groups will need to acclimate to is the restrictiveness of the plans. Small group plans must fit into one of the four metal tiers: Platinum, Gold, Silver, and Bronze. These plans have set benefits and cannot be customized, a feature some large group carriers allow in the 51-100 segment.
In order to help these groups transition well, brokers will need to communicate with clients early, and engage as often as possible until the 4th quarter.
In order to do that, you’ll need to know exactly what you’re dealing with in 2016.
Let’s start with the positives of this change. Once the chaos of adoption has been surmounted, groups will benefit from a larger number of plan combinations and price points.
One of the many benefits of the new ACA rules will be Guaranteed Issue which will offer a larger degree of security. Under current rules, groups can be declined to receive a quote.
Along with the security of Guaranteed Issue, another benefit is the consistency of quoted rates. Currently, rates are generated based on experience/health history, participation, and census demographics. If any of these factors happen to change (at any time), the group can be re-rated, or even declined. However, in 2016 the rates are filed and will be the same for every group. No need to panic about surprises anymore.
Also, groups of 51-100 will appreciate an easier quoting process. Currently, rates are underwritten and produced by the carrier. Going forward, these groups will be able to use the small group quoting engines and produce a proposal the same day.
Lastly, groups can look forward to having more plan options, which will mean greater employee choice.
This change will offer up small group portfolios to larger groups, which brings with it a greater freedom of choice for employees. Some examples of what this might look like include the Aetna Pick-a-Plan, Anthem EmployeeElect, UnitedHealthcare Choice simplified, and CaliforniaChoice’s seven-carrier option, which includes Aetna, Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp, UnitedHealthcare, and Western Health Advantage. This, however, may prove to be a double-edged sword as it makes administration harder for employers at the same time as it offers more flexibility for employees.
Despite these positive points, there are at least two changes coming next year that will affect your groups: age banded rates and census detail requirements.
As it is now, with composite rating, you will have the same rate based on your dependent status regardless of your age or where you live. This will be replaced next year with the new member level age banded rating. The new rating will have one rate for every age, and all family members will be rated independently.
Children under age 21 will be rated individually – limited up to 3 children. Children 21-26 will have a rate based on their age – no limit to the number.
Also, census requirements for obtaining proposals will become more complex. Currently, employers only need to know the employee’s age, location, and whether an employee intends to cover a spouse, a child, or both. For small group rating, census data will need to be provided for all dependents as well. Since larger groups are not used to providing this level of detail to see a quote, they will need to allow more time to collect the required information.
What you can do about it
To successfully care for your clients in the coming year, you’ll need to be prepared with a strategy.
Part of that will mean finding an effective solution for the strain of the census collection. With the added data requirements, the smart option would be to let technology do the heavy lifting. Fortunately, YouBenefit™ is now available to help you with the census collection process.
Another thing to keep in mind is early renewal. Carriers will be inundated with renewal requests. To create breathing room, carriers have released transition programs, which include early renewal and extended contract options, so they won’t need to worry about this transition until the end of 2016. You will need to decide whether your clients would benefit more through the early renewal postponement, or through the move into the small group market. Again, preparation is key, and the best way to mitigate the coming challenges is to communicate early with the groups that will be most affected.
Remember, Your LISI sales representative can help you every step of the way, from preparation, to census collection, to enrollment, and beyond.
Call or email LISI today to develop and execute on your strategy.