Is early renewal right for your group health plan?

In a continued effort to keep employer groups informed regarding health care reform, Parelius Insurance has been researching the option of early renewal for health plans.  Beginning January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) will change the types of small group plans offered and how premiums are calculated.  Group rates will no longer be based on claims experience and health status, which could mean significant premium increases for small employers.

For some groups renewing prior to January 1, 2014 may be beneficial in delaying certain provisions of the PPACA.  Many of our carrier partners are offering an Early Renewal Program/Advanced Renewal Program.  This early renewal allows employer groups more time to evaluate health care reform changes and select plans that best fit their needs in relation to cost and coverage.  In most cases, only small groups (under 50 eligible employees) will benefit by renewing early.   By opting for early renewal the following PPACA provisions can be delayed:

  • Underwriting regulations that may result in significant premium increases
  • New product mandates and limited plan design choices
  • Requirement to provide essential health benefits

Note: employers who opt for an early renewal will not avoid the taxes and fees associated with PPACA.  In order to stay in compliance with ERISA and Code Section 125 cafeteria plans, the plan document and Summary Plan Description (SPD) will need to reflect the changes made to your group health plan.  We will continue to keep you posted as additional details regarding early renewals become available.  Please feel free to contact your Parelius Insurance benefits professional if you have any questions.