BCBS Early Renewals Decoded!
BCBS of Illinois Early Renewal Option Simplified
BCBS is currently releasing an early renewal option (also called Impact Analysis) for groups with under 50 total employees. All non-grandfathered groups must move to a 2014 ACA (Affordable Care Act) compliant plan upon their renewal in 2014. Based on your group’s composition, you may benefit or be adversely impacted by the 2014 changes. The early renewal option allows you to change your renewal date to help keep your premiums as low as possible for as long as possible
Here is a quick breakdown of the changes for non-grandfathered groups upon renewal 2014.
1) No Health Rating:
Upon renewal in 2014, groups under 50 employees will no longer be rated based on health conditions. This change will most likely help groups that have significant claims history. Healthy groups have been receiving some type of “good health discount” because of their lack of claims, actually might see an increase because of this change. This is sometimes referred to as the rating teeter-totter as health rating will even out over the general population, increasing some rates and lowering others. (See Graphic Below)
2) Age Ratio Change:
In 2014, the max differential a carrier can charge based on age is 3:1. For example, if a 20 year old is charged $100, the most the insurance carrier can charge the oldest age bracket is $300. Right now, the differential is larger than 3:1 and this change will shrink the window of ratings. Theoretically, older groups will see a decrease and younger groups will see an increase. (See Graphic Below)
3) Family Size:
Currently, BCBS gives on average rate for each employee tier (Employee, Employee & Spouse, Employee & Child, and Family). Starting in 2014, small groups will move to an age banded platform, meaning each person on the policy will have their own rate. Medicare Primary rates will also be removed come renewal 2014.
4) Plan Changes:
2014 ACA compliant plans will have to meet certain minimum actuarial values referred to as Metal Levels. To read more on metal levels, you can click here. Because of this, the selection of BCBS group plans will shrink from over 100 plans currently offered to 36. Another change is that all copays except prescription copays will go towards the out of pocket max. Currently, there is no limit on the amount of copays paid by a member on PPO plans. Also included is 2014 ACA compliant plans is a pediatric dental and vision plan.
Because of these changes, each group will be affected differently based on the group’s makeup.
Example #1: Young, healthy group with a June renewal date
This group may see an increase in rates come 2014. This group would most likely want to move to a December 2013 renewal date so they can prevent these changes by five months and renew into a 2014 ACA compliant in December 2014. (See Graphic Below)
Example #2: Older, sicker group with a June renewal date
This group most likely will see a decrease when moving to a 2014 ACA compliant plan and therefor will want to move as soon as possible. This group’s best option is a January 2014 renewal date. (See Graphic Below)
If you would like to see how these changes specifically apply to your group and how the 2014 ACA rates will impact your business, please let me know and I will be happy to give you an assessment of your early renewal options.
Early Renewal releases from BCBS: