Column 58


This has been a very interesting week for the Affordable Care Act (ACA) and has likely started another round of confusion for consumers.  Two contradictory court rulings, issued on the same day addressed the ACA and in particular, the subsidies that are provided as part of the legislation.   These subsidies are critical to those that receive them.

Currently, plans purchased through the Exchange are eligible for the APTC (Advance Premium Tax Credit).  This tax credit is given in advance so it acts as a subsidy by paying part of the premium for those who are eligible.

Since CA has established its own Exchange Californians will not be effective by this ruling.  This is good news for those that are receiving subsidies.

Circuit Judge Roger Gregory has stated that regardless of the courts, the act clearly gives HHS (Health & Human Services) authority to resolve ambiguities. It is expected the Administration will appeal the Halbig case to the full D.C. Circuit Court of Appeals for an en banc review.  That ruling will not take effect until it is completely resolved, either by the full D.C. Circuit or by the U.S. Supreme Court. So we can expect to see more in the news about this important issue, particularly as we approach the next open enrollment season. In the interim, I would advise CA residents not to be too concerned about this issue.

Big News for Small Groups

There is big news in the small group market that will be a relief to many small employers. Anthem Blue Cross, one of the two major insurers in the north state has announced that they have increases of 7.5% to 13.5%, i.e. with no benefit changes to existing groups that are eligible for "grandmothering".  As of my deadline, Blue Shield has not provided information on their rate actions for these plans. In many cases, there will be a lot of happy small groups in the last quarter of 2014.


The  "grandmothering"  law provides employers with 50 or fewer employees the ability to renew their employer sponsored health insurance policy without requiring them to be comply with some of the new ACA provisions.  To be eligible the plan must be in effect as of December 31, 2013, and still in force as of July 7, 2014.  This is not a mandate for the carriers, but most are choosing to make the offer.


However since other laws already on the books require insurance companies to provide 60 days notice of their renewal action, the only plans that will have this option are those renewing in the fourth quarter of 2014.


This is a big disappointment to some groups that have renewed earlier in 2014. I expect they would have gladly stayed with their prior plan rather than be forced to accept the higher rates that go with an ACA compliant plan. Groups that have the most negative effects from the new rating structure are those that had younger employees and Risk Adjustment Factors below 1.0


It's important for groups to remember that even with the concession on rates, they continue to be subject to the new 60 day waiting period.  The CA law states that employees must be insured after 60 days of full time employment.  So the bottom line is that most groups will need to use a waiting period of 30 days.  This is because there are some months that have 31 days, and the fact that insurance companies typically make the employee effective on the first of the month following their waiting period. Many of our small groups have 90-180 day waiting periods, so this will result in increased costs for employers.  Employees will likely be happy to be insured earlier.  Isn't it nice to know insurance rules are simple? 




















Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies.