After last year’s early renewal, now what to do?

Not long after the summer memories of the beach and vacations fade, your insurance agent/broker will be calling to set up a meeting to review your company’s 2015 health insurance options. If you are suffering from a health care reform hangover you are not alone. Companies must continue to deal with the ramifications of reform far into the future as various provisions take effect over the next several years.

Not long after the summer memories of the beach and vacations fade, your insurance agent/broker will be calling to set up a meeting to review your company’s 2015 health insurance options. If you are suffering from a health care reform hangover you are not alone. Companies must continue to deal with the ramifications of reform far into the future as various provisions take effect over the next several years.

One key question on many business owners and decision makers minds will be: “Do we take (or not take) the early health insurance renewal?”

Similar to last year, an early renewal will be offered to groups as a way to prolong the full weight of health care reform. Essentially, younger, healthier groups benefited from taking the “early bird” as they were still permitted to be rated under the old formula which gives them more credit for favorable demographics and health conditions.

The groups with older and at-risk populations benefited from not taking the early renewal and instead capitalized on the new rating methodology dictated by health care reform which softens the “rate up.”

The law of averages would suggest that 50 percent of companies would benefit from taking an early renewal and 50 percent would be negatively impacted (and were better off renewing under the new HCR rating methodology). However, reports from local insurance carriers who offered early renewals suggest that as high as 75 percent of groups took the early renewals that were offered to them. This implies:

• 25 percent of groups that took early renewals should not have, but would have instead benefited from waiting to renew. It would be wise to consult your insurance industry experts to determine if you fall into this bucket.

• There was a push from industry insiders (insurance carriers, brokers, agents, etc.) to renew all groups early. The “fear factor” is clearly indicated in the high early renewal numbers (75 percent). This allowed carriers and agents/brokers to allow groups to take the early renewal and keep them on their books for one more year until the full impact of HCR would take effect.

Companies that took early renewals will be given another opportunity to be rated under the old methodology until at least 2015 under yet another delay on HCR coming from Washington, D.C. So you may think it makes sense to just “hit the easy button” and sign the early renewal paperwork one more time.

This decision, without careful review, could cost your company tens of thousands of dollars. It is completely understandable to not want to deal with health insurance; however, you need to trust the professionals that work on your behalf.

By following the steps listed below during your renewal process this year, it will ensure you have secured the highest level of benefits for the lowest cost:

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Thursday, June 13, 2019
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Thursday, August 01, 2019
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