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As I sit down to write this brief on health insurance and the Affordable Care Act (ACA), we are now one week into the second open enrollment season of Obamacare.
Year one had many highs and lows as people adjusted to the changes. Thus far, we have seen improvements and hope that success continues as the 2015 shortened enrollment period comes to an end on February 15.
From an area-market perspective based on my client book of business, policy holders in the individual market that kept their old plans at the end of last year experienced the largest premium increases. My clients showed an average increase of about 25 percent, with some as high as 50 percent. People with ACA compliant individual plans saw increases averaging between 10 to 20 percent.
It appears carriers are starting to price ACA compliant plans more aggressively, forcing people to make the change or pay more in premiums. However, non-ACA compliant plans continue to have lower out-of-pocket exposure when it comes to claims. Insureds are allowed to continue to keep “most” of those old non-ACA compliant plans, but will want to contact their local agent to make sure they are still able to do so.
Employers from my book of business with less than 50 employees and who provide group health plans are seeing modest increases, ranging from 5 to 15 percent. Employers with 51 to 99 employees, however, are seeming to experience increases from 25 to 30 percent, with some as high as 40 percent.
My large employers book (100+ employees) saw the most favorable renewals with most of them receiving decreases or increases under 5 percent.
I have started to hear from my customers, carriers, and colleagues about the recent clarification to IRS Notice 2013-54. It basically states that all employer arrangements that reimburse employees for individual premiums violate the ACA’s market reforms, regardless of whether the employer treats the money as pre-tax or post-tax for the employee.
During my years in the business, I have always seen this as a “gray area,” as some employers give employees money to buy health insurance on their own in lieu of having an internal group health plan. Some did it on a pre-tax basis, some on post-tax. Now it seems the ACA is trying to stop that as well, making employers form group health plans or give their employees nothing and require them to go to the individual markets/exchanges regardless of the employer’s size. It will be interesting to see how this one unfolds.
Now that the elections are over, I continue to be asked, “What happens next?” I wish I had a crystal ball, but I don’t. I expect more delays and a possible elimination of the ‘Pay or Play’ Employer Mandate. I don’t think we will see a full repeal, as some of the positives the ACA has created have really helped some folks—no more pre-existing condition limitation being one of them. One thing I do know; in this business the only sure thing is change.
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