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The ACA and Future Rates

UNDERSTANDING THE CHANGES FOR BUSINESSES WITH 51-100 EMPLOYEES

 

Next year, employers with 51-100 employees will be classified as small business under the Affordable Care Act (ACA).
This classification previously only applied to employers with 1-50 employees.

 

Employer groups with 51-100 employees who have coverage through Blue Shield of California have two options this year:

Using Blue Shield's Early Renewal Program, employers can keep their current plans through December 1, 2016. Early Renewal allows more time to learn about the ACA's changes and requirements for small businesses.

1

Employers can migrate to a small business ACA plan on their renewal date. The small business plans have the new ACA-designed products and rate changes.

2

 

SCROLL DOWN TO SEE HOW THE

PLANS CHANGE OVER TIME

ACA SMALL BUSINESS PLAN

RENEWED LARGE BUSINESS PLAN

2015

Q4

2016

2015 Renewals

For employers with 51-100 employees with contracts expiring in 2015, Blue Shield offers an Early Renewal Program that allows them to renew the same plan through December 1, 2016.

 

 

ACA Plans for Small Business (SB)

All SB products are offered at the following metal levels: platinum, gold, silver, and bronze. Pricing and share of cost varies according to metal level.

 

 

Starting January 1, 2016, and upon renewal in 2016, employers will be issued a small business ACA plan.

Q4

 

Covered California Plans

When employers sign up for coverage through Covered California for Small Business, they select a metal level tier of coverage for their employees. Employees can then sign up for coverage with any participating plan within that metal level. In some cases, subsidies are available for employers through Covered California.

 

 

Mirrored Plans

Carriers participating in Covered California are required to offer identical plans off-Exchange that small businesses can purchase directly from that carrier.

 

 

Alternative Plans

In addition to Covered California and off-Exchange products, Blue Shield offers other plan options outside of Covered California. These alternative plans also comply with the ACA and provide more plan choices and network options for small businesses.

2017

TRANSITION TO ACA PLAN

Employers who chose the Early Renewal Program will transition to a small business ACA plan effective December 1, 2016.

Four Factors Affecting Rates

Prior to 2014, the price of health coverage in the small business market could vary within an established range according to the health status of employees of the group. The ACA has created new standards on how all carriers set rates in the small business market. Select a factor below for more information.

 

  • UNDERWRITING ADJUSTMENTS

    Before January 1, 2014, carriers could adjust rates by plus or minus 10% of their published small business rates on a group basis to reflect the expected risk. This amount is known as a risk adjustment factor (RAF). For new and renewed plans, the ACA no longer permits carriers to use RAF; carriers must rate the total small business population together.

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    +

    Rates might decrease for a group that uses more healthcare services since carriers cannot charge higher rates now for using more services.

    Rates might increase for a group that uses fewer healthcare services because carriers cannot charge lower rates for using less service.

  • STANDARDIZING PRODUCT AND PRICE

    All small business plans are required to cover 10 essential health benefits at the following
    metal levels: platinum, gold, silver, and bronze.

    Plans issued before January 1, 2014 lack standardization in pricing
    and benefits.

    ACA plans contain standardized benefits priced at platinum, gold, silver, and bronze levels, which refer to the amount each plan pays for the employees’ healthcare costs.

  • MEMBER-LEVEL RATING

    Previously, carriers could use multiple criteria to set rates. For example, older members generally paid more, reflecting higher healthcare costs for that age population. Spouses and dependents also paid rates based only on the age of the subscriber.

    Plans in effect since January 1, 2014 now set rates defined by specific criteria. For example, all plans are restricted to a 3:1 ratio of rate variation based on age, meaning an older person cannot be charged more than three times the rate of a younger person. The ages of spouses and/or children will now also count toward the family rate, eliminating the previous blended rate for children.

    RATE

    AGES

    John Doe (single) is a 28-year-old employee and will see a rate increase based on the change in age rating.

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    28

    Jane Doe (single) is a 55-year-old employee and will see a rate decrease based on the change in age rating.

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    55

     The Jones family will see a rate decrease based on the fact that both parents are 32 and have one five-year-old daughter.

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    32x2,
    5

    +

    53, 56,

    16, 18,

    22, 23

     

    The Brown family will see a rate increase based on the fact that the parents are 53 and 56 and they have four children, ages 16, 18, 22 and 23. New family ratings count both parents’ ages, the first three children under age 21 and every child over age 21.

  • CONFORMING TO NEW PRICING REGIONS

    Prior to January 1, 2014, California health plans had more flexibility in establishing their geographic pricing regions, which are intended to reflect differences in healthcare costs by area. Now, in California there are 19 pricing regions established by law that all plans must use.

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    -

    Example: John Smith runs a coffee shop in the San Francisco area. The rates for his five employees will rise based on the change in pricing regions.

    Example: Sarah Jones works at a 10-person gift shop in the Santa Cruz area. Her plan rates will go down based on the change in pricing regions.

For more information or to determine subsidy eligibility, please visit coveredca.com or contact your broker to discuss your options.