Many business owners are having trouble keeping track of their next health insurance renewal date. Since the Affordable Care Act (ACA) was signed into law in 2010, there have been several iterations of transitional relief for companies and organizations with less than 50 employees.
It’s important for small businesses to understand what these plans options—first called “grandfathered” plans, and then later “grandmothered”—mean for their businesses.
Understanding Grandfathered and Grandmothered Plans
Grandfathered plans are the ones people already had when the ACA was signed into law in 2010. As long as the plan hasn’t substantially changed and the carrier is still offering it, businesses can continue to renew it. The initial intent was for all policies to transition off old plans and on to ACA-compliant plans in 2014. Grandmothered plans are the health insurance plans purchased after the ACA was signed in 2010, but before the bulk of the regulations went into effect in 2014.
The point of grandfathered plans, and later grandmothered plans, was to delay the pain of significant premium increases due to the “community rate” pricing formula established under the ACA. The insurance carriers and the attending government agencies have negotiated these delays by changing health insurance policy dates.
What it Means for Small Businesses
A few years ago, the majority of businesses had a January 1 effective date for group health insurance policies. The first adjustment moved the renewal date of January 1 to December 1 to avoid the need to issue ACA compliant plans. The next adjustment moved the December 1 renewal date to October 1. This short plan year renewal was to take place this year on October 1; however, we don’t expect that to be the case overall.
In a move sure to be followed by other insurance carriers, Anthem recently announced that companies who were planning to renew plans early on October 1 will be able to stay with the original renewal date from 2015. This means companies with Anthem as a carrier will be able to keep their same plans active until December 2017.
Anthem is allowing employers to lock in rates in advance of their next renewal to take advantage of transition relief; this move grants employers more time to figure out the best solution for their employee and business needs ahead of the move to a community-rating environment. A short renewal period in 2017 will lead to ACA-compliant plan renewals for January 1, 2018.
For the average small company, these continual changes are hard to manage and the result is uncertainty about their group health plan. These moves may have delayed the hard-hitting increases of community rating, but they do not change the fact that the increases are on the horizon.
