Putting off PPACA with early plan renewals – Saxon – Employee Benefits, Insurance & Wealth

By Allen Greenberg

Why wait?

That’s the attitude a growing number of employers are expected to adopt this year when it comes to renewing their health plans and, as a result, putting off the day when they have to deal with the many provisions of the Patient Protection and Affordable Care Act.

“It’s actually not anything new,” said Cheryl Randolph, a spokeswoman for United HealthCare Group. “Employers have always had this option.”

Of course, that’s true. But this year’s different.

With the PPACA going into full effect Jan. 1, a number of employers are expected to pull the trigger on renewals in November and December. Just how many, no one knows right now.

But UnitedHealth, Humana and Aetna, among others, are all expected to offer early renewals, health insurance brokers say.

There’s plenty of incentive for employers to renew early.

Health insurance premiums on average could rise by 40 percent under the Patient Protection and Affordable Care Act, according to a study by Milliman, the consulting firm. The study was done on behalf of Center Forward, a bipartisan organization. It focused on premiums for individual and group comprehensive medical insurance plans in Arizona, Florida, Illinois, New Jersey, Ohio and Wisconsin.

Individual premiums, on average, will increase 25 percent to 40 percent due to PPACA, the firm said, while small market group premiums could increase by 6 percent to 12 percent.

Karen Harrison, a broker with Lakewood, Colo.-based Braddock Harrison Agency, said she expected to receive renewal packages from carriers in late August and was letting her clients know now they should consider early renewals this year.

“There are pros and cons to doing this,” Harrison said.

One con? Any employer renewing early this year would not be able to move their renewal date again.

The big pro? For companies with younger, healthier employees, renewing early could limit their rate increase to 15 percent or less, according to an estimated projection Humana shared with brokers.

Whether renewing early will work as a strategy is unclear.

The Illinois Department of Insurance recently warned health insurers it wouldn’t approve policies with “arbitrary” renewal dates meant to “delay compliance with the reforms.” Also, Rhode Island said it wouldn’t approve early renewals of health plans for small businesses.

Harrison, for one, said she didn’t think regulators would have much choice.

“So long as everyone follows the rules, I think it would be very hard” to fight this, she said.