How the Affordable Care Act is changing Group Health Plans in CA

There is a lot of talk now about how the ACA (Affordable Care Act) is changing the way we purchase Group Health Plans in CA.  In previous years, there was no restrictions on how high the deductible could go.  Employers had the flexibility to move to a plan that was very inexpensive, with a large deductible and then “underfund” the deductible for employees.  At Brauer Insurance we called it “insuring your deductible”.  It was a great strategy and worked tremendously for many groups.  It also cut their bill almost in half.  The ACA has put limits on what employers can use as their Group Health Plans and how high the deductible is.  Good or bad, the law is here to stay.

Business Health Plans beginning to all look alike

With the Affordable Care Act, all the fully insured plans within the nation have to have “essential benefits” embedded in each plan.  Mostly that is a good thing.  Many people feel that they should not have to pay for maternity if they don’t want it.  The ACA makes it mandatory now, along with 10 other essential benefits that are mandated to be included in each Group Health Plan.  With the addition of the extra benefits, comes a cost.  The insurance companies, to which I’m not a fan of, had to adhere to mandates and compliance issues that are part of the Health Reform Law.  Again, another cost driver.  If you were a small employer and you had an RAF (Rate Adjustment Factor) that was on the higher side, you might actually benefit, a bit, from the new rating system.

The Affordable Care Act rating system, all Group Plans rated the same, fair or not, you decide

Prior to 2014, if you had a group of 30 employees, there’s a good chance you could see a discounted rate of up to 20% from what smaller groups were paying.  Why?  The insurance companies figured, more people to spread out the risk, the less they will charge.  Makes sense, right?  Wrong.  The ACA mandates that everyone has a flat rating system.  If you have 2 employees or 49, your rate is solely based off of the person’s age, and their home zip code.  Larger employers are not happy, some smaller employers got a bit of a reprieve, for now.  The ACA has changed the way we look at Group Health Plans and Employee Benefits in general.  Unless you are a Health Broker specifically, there is almost no way for you to stay current on the ever changing landscape of Health Reform.  Employers, find a specialist, like Brauer Insurance, to guide you through the maze of mandates and compliance issues.

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