Potential Factors Impacting Your 2020 Health Insurance Renewal Rates

In 2019 there have been a number of legislative updates which are bound to impact 2020 health insurance renewal rates for many employers, particularly in New York state. Below is a brief overview of some of the elements that you should be aware of as you begin to prepare for your 2020 benefit renewal and benefit enrollment.

Federal

The Affordable Care Act Health Insurance Tax (HIT)

The HIT is scheduled to return for fully-insured plans in 2020. The HIT was designed to help fund the federal and state marketplace exchanges and was taxed from 2014 – 2018, at which time Congress approved a one-year moratorium for 2019 on collecting this insurer tax. The moratorium is set to lapse in 2020 and insurers will now face an estimated $16 billion fee in 2020. Insurers are expected to increase premiums to consumers to offset this cost.

Currently, there are three bills pending in Congress to either delay or repeal the return of the HIT.  However, should any of the bills be signed, we expect it will most likely occur sometime this fall, after rates have been filed by insurers.

Cadillac Tax

On a positive note, last week the House of Representatives overwhelmingly voted to pass H.R. 748, a bill to fully repeal the ACA’s Cadillac Tax – the health insurance excise tax set to take effect in 2022.We will continue to keep you posted as this develops and is considered by the Senate.

New York State

Fertility Mandates

Passed as part of the Governor’s State Budget, including the expansion of health insurance coverage for In-Vitro Fertilization (IVF).  This new mandate requires large groups of 100 or more to provide coverage for three cycles of IVF, as well as coverage of “standard fertility services” for fertility preservation for plans of all sizes issued after January 1, 2020. Details on the specifics of the mandated coverage can be found here.

Rate Guarantees, Rate Caps and New Business Discounts

In addition, the New York Department of Financial Services (DFS), which regulates insurance across the state, has just released guidance to insurance carriers regarding rate guarantees and new business discounts.  In short, the department has clarified that rate guarantees which promise an insured group a specified rate or a cap on rate increases, for a period beyond the applicable 12-month plan year are not permitted. In addition, new business discounts on premiums are not permitted.  As this guidance is effective immediately, we will certainly be discussing this with those client organizations impacted, in conjunction with the medical carriers who are can no longer honor such guarantees.

As always, Rose & Kiernan will continue to monitor pending legislation and keep you informed of any updates.  Please reach out to us today with any questions that you have.

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