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Extension on Avoiding ACA?

Big news shook our firm yesterday: the PA Insurance Department released a statement that they would permit insurance companies to renew their existing small groups, with 2-50 employees, in non-ACA plans.  If press releases interest you, you can read the whole statement here.  If you are like me, and find press releases slightly… well…mind numbing… let me sum it up for you.  This comes on the heels of the federal statement that left it to each state’s discretion to govern their insurance carriers in allowing, or not allowing renewals in non-ACA compliant plans.  Pennsylvania has taken action on this ruling stating that while they don’t understand how this is allowed - they will not stand in the way of what may be in everyone’s best interest.

But wait – don’t get too excited.  This statement is a step in the right direction, but the decision to allow non-ACA compliant plans to renew lies in the hands of the insurance companies.  What does that mean for us?

As I’m sure you are well aware, our biggest insurance carriers in this area are UPMC and Highmark.  If you listen to the news, they are quite busy agreeing (or not agreeing) to a contract between the two.   If you think about it, the two companies are in such competition, that it wouldn’t make sense for one to allow this renewal and the other not to.  Hopefully, that means they will both allow it, and make everyone’s life that much easier.

Why would they not allow this?  The truth is that there is a potential for a large cost to the insurance companies if they do allow this.  They have spent a countless amount of time and money developing systems to handle ACA.  With this release, they would essentially be throwing that out and going back to square one, at least for the time being.  Hopefully in seeing all of the changes and revisions that have been made to ACA thus far, they were prepared for this and are ready to do what is best for all of their groups.  For now, we wait to see.

The other big hitch with the option is that groups that have already renewed in an ACA plan have no option but to stay in ACA for the long haul.  July has historically been the biggest renewal month for the carriers. Last year, when the mid-year renewal was allowed for many groups that took a large portion of their business to a December renewal.  I tell you this to make you aware that there are not many groups that have already renewed this year, however there are some.  It doesn’t seem morally correct to enable the vast majority of groups to renew in their current plan, but seclude groups who happened to renew before PA made this announcement.  For right now, there is nothing being talked about to help these groups, but we will keep our ears open and update you if anything comes out.

Stay tuned.

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