Affordable Care Act and Assembly Bill 1083
This article is designed to educate small business owners in the arena of group health. This information is provided by Hughes-Norton Insurance Services Inc. and is the opinion of Rhonda Norton.
To understand AB 1083, you must first understand the significance of AB 1672
In 2011 AB 1672 was modified and became AB 1083. The foundation to 1083 is AB 1672 which was passed in 1993. California’s AB 1672 dramatically affected the way health insurance carriers treated small businesses in California. Small Group employers were considered employers with 2 working people up to 50 full time working people. Before the advent of AB1672 a carrier would examine a group’s health history and could either rate up the premiums significantly or decline the entire group. For many small businesses this represented a large hurdle in accessing health insurance for their employees. After 1993 (since the passing of AB1672) carriers such as Anthem Blue Cross, Blue Shield of California, Sharp Health Plan, Health Net, Kaiser, Aetna, Cigna and United would accept groups of 2 employed people or more. AB1672 also provided guaranteed medical insurance. Carriers needed to accept all small businesses that applied for any of the carriers’ small group plans. The company needed to be a California company and present wage information on their employees. Health questions, industry and group size could affect the premium rate adjustment factor. The rate adjustment factor could range from 90% to 110% of published premium.
Carriers could decline a small group employer only for specified reasons.
An employer terminated coverage with their chosen carrier in the prior 12 months. Participation requirements are not met: An employer fails to offer coverage to 75% of their eligible employees **an employer refuses to meet reasonable participation and contribution requirements. Over 51% of the employees live outside of California. Failure to pay the premium.
ACA and AB 1083
Today, the Affordable Care Act has greatly affected husband and wife company plans that do not employ any other full time people. Upon the company’s 2014 renewal, those husband/wife companies may not be able to continue a “group plan”. They will get a non-renew letter asking for information on other employees. If they do not have other full time employees, they may not be able to continue with a small group plan. The non-renewal letter can be used to qualify them for enrollment with Covered California plans or guaranteed issue plans offered by the insurance companies. It is important to pay attention to the time frames. Qualifying events must be acted upon within 30 days. Therefore submitting paperwork showing a NON RENEW should be done in advance of the 30 days.
- As of January 1, 2014 there are new rules for calculating premiums.
- Nine year age bands are no longer used. Each birthday may bring an increase in cost.
- Most insurance companies will calculate the increase in premium for members at plan renewal.
- Families are no longer charged according to the age of the enrolling member ( the employee ).
- The spouse’s premium is calculated according to the spouse’s age.
- An employee with children may experience an increase. An employee with one child will experience a decrease in cost. The children’s premium is singularly calculated. Eldest is first in the calculation.
- The premium stops being charged after the third child unless all children are over 19. If a parent has 4 children all over 19 then each child is calculated in the premium.
- This new method of calculating the premium creates the need for an updated census with birthdates for each member.
- For now, rate factors are gone. Previously employers with 50 or fewer employees were subject to a rate factor adjustment each year. Previous to the ACA, a company could get a rate of .90 of published premium due to age, industry, pharmacy usage and other factors. This could change in the future. With an emphasis on wellness, financial incentives for check-ups and wellness are being designed.
This overview covers just the changes of the new regulations. You can look it up under California’s State web page and also check with your insurance broker for specific changes to many more aspects of group health insurance.
Rhonda Norton, Hughes-Norton Insurance Services Inc. License # 0C18588