HCR Alert: Should I Change My Plan Year to Delay Compliance with ACA Provisions?

Representatives from several insurance carriers are encouraging employers with 51-100 full-time employees to move their policy years to December 1 – November 30, effective December 1, 2015, to delay certain design requirements applicable to non-grandfathered group health plans for plan years beginning on or after January 1, 2016, summarized as follows:

  • Small,1 insured group health plans must offer essential benefits and provide a bronze level of coverage.
  • Insurance carriers will be subject to new underwriting rules with respect to small, insured groups. Instead of using experience rating,2 carriers will use community rating.3 Rating variations will be restricted to (a) benefit coverage elected (plan and tier), (b) geographic area, (c) age, limited to a ratio of 3 to 1 for adults, and (d) tobacco use, limited to a ratio of 1.5 to 1.

The definition of “small employer” will increase from an employer with up to 50 employees to an employer with up to 100 employees, beginning with the 2016 plan year. However, it is possible that this could be delayed.4  

USI has identified several compliance issues associated with this proposal. Contact us to learn more.



A “small employer” is an employer that employed an average of not more than 100 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year. For plan years beginning before January 1, 2016, a state may elect to substitute “50” for “100.” All states elected to substitute 50 for 100.

2 Experience rating is a method used by carriers to determine pricing of premiums for different groups or individuals based on the group’s or individual’s claims history.

3 Community rating is a method which requires carriers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of health status.

4 See: http://www.actuary.org/files/Small_group_def_ib_030215.pdf

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