Many business owners would be in shock when they see their group health insurance renewals these coming months. Effective from 12/1/2015, all grandfathered and grand mothered groups (those group plans that enjoyed low premiums because they stayed with the original benefits before the introduction of ACA) are to be renewed with plans in compliance with ACA minimum benefits. The new benefits would include pregnancy and pediatric dental coverage even the members are neither female nor minors. What can they do to counter the sharp increase? Not much as all health insurance carriers are required to offer the ACA plans after 12/1/2015 and there are no other alternatives unless they cancel their plans. But if they have 100+ employees (two part time employees counted as one full time), then they are required by law to provide the health insurance to their employees.
Brokers are cancelling their vacations and getting ready for exhaustive long hours to work with their clients trying to smooth the wrinkles of the “premium shock”. Carriers are sharpening their quoting tools and sales effort working to entice their competitors business transferring to their books of business. September and October would be the frantic months as few business owners would like to wait till the last minutes to make the changes.
To quote you a real life example – one of our clients with less than 30 employees are experiencing an unforeseen 45% increase in premium for their Grandfathered Health Plan. We checked with other carriers, similar plans are even offered at more than 10% higher rates.
Golden Gate Bridge by N. Yuen taken on Aug 30 2015
We would also like to share beautiful vista with you besides the awful news of premium increase.
When I was reading The New York Times, 4/26/2015 Sunday version, I came across an article which really caught my attention. The topic of the article is “Spurned by an Insurer After Filing Small Claims” by David Segal, under the Banner of The Haggler.
In the article, Mr. Segal was answering a write in question regarding a reader who is living in Forest Hills, N.Y. complaining about his homeowner insurance carrier- State Farm - non-renewed his homeowner insurance policy – because he filed two claims in the span of 2 years. The claims are for 1) A ceiling fan that dropped off the ceiling and 2) A stolen bike. The reader was puzzled why State Farm non renewed his policy as he has been a loyal customer of State Farm since 2010 and State Farm did not pay out a dime for the two claims.
This brings out an unspoken rule in insurance: insurance companies put more weights on frequency than severity. Severity means big or severe loss. The rationale behind such rule is if the insured is experiencing frequent losses; even they are small losses, then this insured is considered as careless and disinterested in risk management. A severe loss is bound to happen soon. Insurance companies either cut the tie with this insured or raise the premium to sky high to compensate the assumed increase risk factor. The insurance mechanism is designed to protect you from large or catastrophic loss not the minor loss that you can sustain easily.
Christoph Hitz, New York Times Company
This rule also applies to Workers Compensation Insurance Coverage. If your workers compensation insurance premium reaches a certain level, you would be assigned an experience modification factor calculated by the Workers Compensation Rating Bureau according to your loss experience. The base factor is 100 and if you get 125, you would have to pay at least a 25% surcharge on your premium; but if your factor is less than 100, say 88, then you would enjoy a 12% credit on your premium. High experience modification factor would also bring forth non-renewal.
Be careful! Make just a couple of small claims – nonrenewal. Is it fair? Think of it this way. If every insurance policy holder files a claim, even for a tiny compensation; then no insurance company can survive financially.
3-Day Sick Leave Law
Effective July 1, 2015, all employees (including full time, part time and temporary) in California will enjoy 3-Day Paid Sick Leave. All Employers are required to post a notice in the office and give individual notices to employees starting 1/1/2015. We provide free 2015 posters and individual notice samples to our clients.
Useful links: http://www.dir.ca.gov/dlse/Paid_Sick_Leave.htm
DLSE- Division of Labor Standards Enforcement provides a detailed list of Questions and Answers for employers and employees to learn more about the new law.
CoveredCalifornia - ObamaCare
You still have time to sign up for ObamaCare (from now to April 30) if you are required to pay for the Individual Shared Responsibility Payment (the penalty for not buying health insurance in 2014). The penalty will double for 2015. Act now to avoid the penalty.
If you have filed your taxes, you will be familiar with the IRS forms 1095 (A, B, or C), form 8962, or form 8965. If not, then please be prepared with these forms when you file your 2014 tax return. The IRS is using these forms to track your health insurance tax credit and share responsibility.
If you went without coverage for less than 3 consecutive months during the year you may qualify for the short coverage gap exemption and will not have to make a payment for those months. There are more exceptions that you may claim to avoid the payments. Call us to find out more.
The materials contained in this Newsletter are strictly for informational purposes only and are not intended as legal advice. Please consult your attorneys or legal advisers for proper interpretation and enforcement of the law.