By Car­ol Tay­lor, Employ­ee Ben­e­fit Advisor
D&S Agency, a UBA Part­ner Firm

CTA Survey smallThe Unit­ed Ben­e­fit Advi­sors (UBA) annu­al Health Plan Sur­vey for 2014, which con­tains val­i­dat­ed data on 16,467 plans for 9,950 employ­ers, shows minor aver­age change for plans in the last year. The sur­vey con­tains infor­ma­tion on plans that renewed pre­dom­i­nant­ly between June 2013 and June 2014.

While the aver­age in-net­work deductible rose a mere $49 to $1,901, the larg­er plan changes are only seen in the medi­an results:

  • In-net­work out-of-pock­et max­i­mums jumped $500 for sin­gle cov­er­age and $1,000 for fam­i­ly coverage.
  • The out-of-net­work out-of-pock­et max­i­mums rose by $1,000 for both sin­gle and fam­i­ly coverage.

The medi­an num­bers show the under­ly­ing shifts for trend pur­pos­es. With the medi­an changes show­ing a large shift, it means employ­ers are mov­ing away from the low­er or no deductible plans. Since there is also, by fed­er­al law, a max­i­mum out-of-pock­et cap, we will like­ly see these amounts con­tin­ue to rise toward that cap.

Plan renew­al rates, by employ­er size, showed the oppo­site of pri­or years’ increases:

  • Employ­ers with 100 to 200 employ­ees saw an aver­age increase in 2013–2014 of 4.3%. The 2012–2013 sur­vey showed the increase was 1.3%
  • Employ­ers with 50 to 99 employ­ees for 2013–2014, showed increas­es aver­ag­ing 3.2%. In the pri­or year, the increas­es aver­aged 2%.
  • Employ­ers with few­er than 50 employ­ees had the most min­i­mal increas­es for 2013–2014 of just over 1%. In 2012–2013, the increase was almost 5%.

Small employ­ers, those with few­er than 50 employ­ees, were giv­en the chance in most mar­kets across the U.S., to renew their plans as of Decem­ber 1, 2013. The net effect was a delay strat­e­gy for sev­er­al changes required by law as of the first renew­al on or after Jan­u­ary 1, 2014. The one that is affect­ing the small group rates sig­nif­i­cant­ly is the rate com­pres­sion to a 3:1 pre­mi­um ratio, mean­ing the rate for those age 64 and old­er, can­not be more than three times the rate charged to some­one that is age 20. Pri­or to that man­date, most states had a 7:1 pre­mi­um ratio. While oth­er require­ments were part of the law, such as cov­er­age for essen­tial health ben­e­fits (EHBs) and no pre-exist­ing con­di­tion exclu­sions, the dri­ving fac­tor to take advan­tage of the ‘ear­ly renew­al’ strat­e­gy was to delay the rate compression.

From the 2013 UBA Health Plan Sur­vey, in the few­er than 50 employ­ee cat­e­go­ry, there were 507 employ­ers that had a Decem­ber 1, 2012, renew­al. The lat­est sur­vey data shows for a Decem­ber 1, 2013, renew­al date, in the same size cat­e­go­ry, there were 2,598 employ­ers. More than five times the num­ber of employ­ers took advan­tage of delay­ing their renew­al dates!

For most plans that renewed on Decem­ber 1, 2013, this was their sec­ond renew­al in one year. This would also account for the min­i­mal rate increas­es as shown above.

When the small group mar­ket reforms expand to those employ­ers with few­er than 100 employ­ees in 2016, from the cur­rent def­i­n­i­tion of employ­ers with few­er than 50 employ­ees, we will like­ly see anoth­er round of ear­ly renew­al strate­gies to delay the effects of the rate com­pres­sion. These renew­al delays will con­tin­ue to have rip­ple effects in the insur­ance indus­try for many years to come.

Some states have tak­en advan­tage of the “if you like your plan, you can keep it” exten­sion, oth­ers have not. In the states that did allow the exten­sion, they are see­ing min­i­mal increas­es, most not more than 12%. In states where the exten­sion was not allowed, such as Vir­ginia, the major­i­ty of our clients are see­ing increas­es rang­ing from 40% to more than 167%.

Con­tact a local UBA Part­ner for a cus­tomized bench­mark­ing report.

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