Early Health Insurance Renewal: Take Advantage NOW!

With significant provisions of the healthcare act set to take effect on January 1, small businesses may want to renew their current coverage early in order to lock in potential lower rates. This loophole in the Affordable Care Act should, in the short-term, help small businesses save money on their healthcare expenses in 2014. If you have a January 1 or later renewal, and if your broker or insurance company has not yet reached out to you, contact them this week to see if you are eligible for early renewal this December.

The Wall Street Journal reported that a Youngstown, Ohio electronics manufacturer with 100 employees will see an increase of 10% if they renew this year, compared to a 26% increase if they wait until the company’s normal March renewal date.

Some states (not Ohio or Michigan) have attached limits or have down-right prohibited early renewals, claiming they will negatively impact everyone. However, we have yet to see this happen. These states’ lawmakers would prefer that their citizens sign up for individual coverage through their states’ exchanges or marketplaces instead of continuing their coverage through a group insurance plan provided by their employer.

The new healthcare law prohibits insurers from denying coverage to those with pre-existing conditions and limits their ability to charge older customers more than three times the premium for a younger, healthier customer. It also specifies certain “essential health benefits” that insurance plans must cover such as prescription drugs, hospitalizations and maternity care, no matter what the mix of employees. As such, insurance companies will provide benefits that previously had been discretionary or specific to certain plans. It is expected that these provisions are part of the reason for the premium increases for 2014.

On October 1, the government released a “representative sampling” of rates for plans sold on the federal small-business health exchange. However, the actual premiums a business will pay will not be available until sometime in November.

Call your insurance company or broker today to explore your options for early renewal. As always, please feel free to call your William Vaughan Company professional with questions or advice.

By: Sharon Trabbic, COO