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Can Employers Keep Pre-ACA Health Insurance Plans?

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ICCF — Pre-ACA Health Insurance Plans

The Affordable Care Act (ACA) has led to changes that affect insurance companies, consumers and especially employers.

Some companies have pre-ACA plans in place, but all employer-sponsored plans must be converted to a PPACA-compliant plan per the current Centers for Medicare and Medicaid Services (CMS) guidelines.

The rule applies to “grandmothered” plans, or plans that were written prior to 2014 that aren’t fully ACA compliant. Grandmothered plans were purchased between 2010 when the ACA was signed into law and the end of 2013, before the law was officially implemented. They include benefits like preventive care with no cost-sharing and no annual benefit limits for the 10 essential health benefits (hospitalization, ambulatory services, maternity and newborn care, prescription drug coverage and more). These plans also don’t exclude people from coverage for pre-existing conditions.

Grandmothered plans are different from “grandfathered” plans in that the latter refers to plans written prior to March 23, 2010 that not have had their original plan rates changed in accordance with the new health care law. Grandfathered plans aren’t subject to the 2018 deadline, but insurance companies do have complete discretion about whether to terminate these plans. An estimated 1.2 million people with grandfathered and grandmothered plans were allowed to keep coverage they had prior to 2014. However, amid a public outcry, the Obama administration granted an extension that allowed grandmothered plans to be maintained through October 2016 in states that approved the extension, which means Americans with these plans can keep them until 2017 if their renewal date was sometime this year.

If your company offers employees a grandmothered plan, Jan. 1 2018 is the deadline to ensure your health insurance is ACA-compliant. Here are some things to should consider.

Keep Your Plan or Convert It?

The question of whether to convert your plan now or wait until closer to the 2018 deadline all comes down to costs for most businesses.

Many companies are now investing in preventative care and wellness programs and other health incentives for employees, such as smoking cessation programs, subsidizing gym memberships and providing fitness trackers, which may lower their business’ total insurance costs if their overall insured population is healthier.

As an employer, if you’re concerned about changes to new health insurance and how these will affect your business and employees, talk to your insurance advisor to get detailed information on the potential plan changes and when these changes will go into effect. Also learn about opportunities to lower your premiums, like participating in employer-sponsored fitness programs or screenings.

In addition, health carriers are launching new products in the partially self-funded space. These products may provide a better solution and bridge between pre-ACA and fully compliant ACA plans. If you are self-insured, the ultimate decision about whether to keep a non-compliant ACA plan until 2017 is up to you. You can avoid the penalty by doing it now, but others who are self-insured may want to delay the hassle of converting their plans and switching to new health care providers.

For businesses, it’s best to maintain your grandfathered plan for as long as possible, which may help your company generate some health care savings in the interim. For those who have small group grandmothered plans, check to see if your state allows these plans to be renewed for 2017.

Employers should do their research, shop around and compare overall insurance costs under their current plan to other plans they may consider switching into the marketplace. Premiums are likely to go up, but smaller firms (50-100 employees) can save money by negotiating premiums with their insurer, setting a employer contribution limit for each employee’s health care cost, by choosing a high-deductible group plan and establishing a health reimbursement arrangement (HRA) to cover part of employees’ medical expenses, or even more radically, by offering a stipend for employees to pay for their own health care (just keep in mind federal rules regarding this).

If your firm has insurance questions, the exchange-certified professionals at ICCF can help answer them. Contact us today at (407) 740-5337 or info@myiccf.com.

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