Small Companies Look to Early Insurance Renewal

Small companies seeking to ward off key health-law provisions—at least for a while—are weighing offers by some large insurers to hit the reset button on their yearlong health plan service contracts in December.

Many contracts normally restart at the beginning of January. But, pushing the date to December could allow small companies to delay the impact of key health-law provisions that broadly kick in once plan services renew after Jan. 1.

Insurance companies including Aetna Inc., UnitedHealth Group Inc. and Humana Inc. are all offering companies the chance to do so. Under the law, small businesses’ health plans would have to cover a range of required services and face pricing rules that spread the risk of costly medical bills. That can particularly raise prices for companies with younger, healthier workers but may lead to small increases, decreased service, or even reductions, for companies with less-healthy workers.

Humana projected a rate increase of up to 78% for one small, relatively healthy employer if it renewed its policy at the regular time, in January, according to a document provided to a broker. Renewing early could limit the increase to 15% or less, according to the Humana document.

Companies with less-healthy workers would save money by waiting for the law to take effect before renewing, the document showed. In some cases, the less-healthy small companies listed in the document would even see their premium rates decrease under the law.

Humana said it “aims to be responsive to the needs of our customers” and that it is offering early renewals “upon request.” Aetna said in a blog item that “helping individuals and small businesses who want to keep the plan they have, as allowed under the [health law], can help save on premiums and limit disruption.” UnitedHealth said it has always offered the opportunity to renew plans early if an employer wants to.

Some regulators and benefits lawyers have questioned the tactic. The Illinois Department of Insurance warned health insurers late last month it wouldn’t approve policies with “arbitrary” renewal dates meant to “delay compliance with the reforms.” This month, Rhode Island regulators said they wouldn’t allow early renewals of health plan services for small companies.

Hill House Products, a distributor of small industrial motors with 10 employees, plans to consider renewing its health plan early, said Lianne Hill, the San Clemente, Calif., firm’s co-owner. If she can delay an increase in her coverage costs, she will likely start a new plan late this year, rather than next March, when her current plan runs out. “Everything helps,” she said. “Even if it’s short term, at least it’s something.”

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