Rights and Rules for Small Employers

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Starting in 2014, the Affordable Care Act bans insurers from denying small employers group medical coverage based on the health status of your employees. Also beginning in 2014, insurers may only vary premiums based on scope of coverage (individual vs. family), geography, tobacco use, wellness program participation and age. The latter is limited to a 3-to-1 ratio. Rating can no longer take into account gender, health status, occupation, genetic information or claims history. Deductibles can’t exceed $2,000 annually for individuals and $4,000 for families and cost-sharing can’t exceed limits for HSAs.

Starting with plan year 2010, the HHS Secretary and the states established a process for the annual review of premium increases. As of 2011, insurers were required to publicly disclose and justify rate increases of 10% or more in the individual and small group market. Proposed increases will then be analyzed by the Secretary of Health and Human Services and the state to determine whether they are unreasonable.

Some key provisions pertaining to small group markets:

Guaranteed Issue & Renewal: Beginning in 2014, all health insurance plans must guarantee the availability and renewal of coverage regardless of health status. Small employers with 50 or fewer employees already have guaranteed issue in all states, but this provision of the ACA expands the guaranteed availability of insurance.

Rating Protections.
Also, beginning with plan year 2010, the secretary and the state established a process for the annual review of premium increases. Insurers are required to justify “unreasonable” premium increases to the secretary of Health and Human Services and the state, and to post the information online.

States will be required to make recommendations to their exchange about whether insurers should be excluded from the exchange due to unjustified premium increases. States will receive up to $250 million from 2010 to 2014 to help them develop or enhance rate review programs.

Some states have also introduced or passed legislation to limit annual increases and/or require state approval of premiums. Learn more about the rate review program in your state here.