Finding Creative Solutions to 2014 PPACA Mandates: “Early Renewal” Strategy for Small Groups


In addition to avoiding some of the changes in small group benefits, some insurers are advising their group clients to “Early renew” and have a new effective date of December 1, 2013, thereby avoiding the more expensive January 1, 0214 changes until later in 2014.  If a policy is renewed before January 1, 2014, this allows individuals to effectively postpose the impact of PPACA changes and rating.


Reasons to Consider a December 1, 2013 Effective Date (“Early Renewal”) Versus Waiting Until 2014

As a “Trusted Advisor,” we need to take a more strategic look at the Group Employee Benefits package, including plan design, ensuring the right networks of doctors and hospitals, calculating employer contribution, meeting participation requirements, and of course, providing affordable options that fit within the Employer and Employees’ budget.

Beginning January 1, 2014, all carriers have had to make changes to their plan portfolio options. For small group, the carriers had to ensure they included the 10 Essential Benefits, including pediatric dental and vision, were meeting a minimum actuarial value of 60%, 70%, 80%, 90%, and were required to significantly change the rating structure, just to name a few.

It is important to evaluate and market your benefits for either November 1, 2013 or December 1, 2013 for the following reasons:

  •  Lock in Q4 pre-community or member-level rated rates.
  • Evaluate if your client has the best, preferred Risk Adjustment Factor  (“RAF”) available.  The carriers are getting aggressive.
  • Access to current known plan options.
  • Buy more time to evaluate the impact of PPACA, including physician networks and hospitals, community rating/member level rating, and plan designs, as this is ALL changing in 2014.
  • And most IMPORTANT: Be proactive and evaluate your options!


How Small Group Rating in 2014 and Beyond Differs from prior to ACA:

Rating 2013 2014 and Beyond
RAF .90 – 1.10 No longer available as plans renew on or after January 1, 2014.
Age Bands 7 different age bands Single year age bands, with the exception of those 0-20 years of age and 64+
Rate differentials between younger and older No Limit 3:1
Member-level rating One rate for family, regardless of age or number of children (based on employee age band) Separate rates for employee, spouse, EACH child 21 or older, and rate for the oldest 3 children under the age of 21.
Rating areas in CA 9 19


Listed below is a brief summary of how the small group carriers in California are planning on handling early renewals as of May 3, 2013.   As you know, things may change, however, we will do our best to keep you informed.

  • Aetna: Employers will have the option of renewing in 2013 to postpose the date they need to comply with ACA.
  • Anthem Blue Cross:  will offer small groups the opportunity to purchase a new agreement and adjust their renewal cycle, allowing eligible small group employers to stay on a 2013 benefit plan until later in 2014.  Groups accepting this offer would have their medical renewal month adjusted to December 2013 and rates adjusted to correspond with the new renewal cycle.
  • California Choice: Groups with a renewal month of January through November 2013 may change their renewal effective date to December 1, 2013.
  • Health Net: Employers will have the option of renewing in December 2013 to postpose the date they need to comply with ACA.  Sharp: Details pending
  • United HealthCare: For groups renewing January-June 2014, they can request and early effective date. The group will need to complete a UHC Attestation Form and it must be submitted directly to UHC by June 15, 2013.


Information above is not a guarantee, and may be subject to change.  Please note: Different rules apply to large group (see Transitional Relief for more details).


This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.