2016 is bringing changes to the health insurance market. If you’re a small business owner, you may need to reconsider your health insurance coverage and make a choice next year. Here’s what you need to know so you can be prepared.
Types of Small Group Plans
Your small business coverage is considered one of three plan types: grandfathered, grandmothered/traditional and Affordable Care Act (ACA). Here’s a brief overview of each plan.
Grandfathered plans are plans created on or before March 23, 2010. These plans don’t have to follow certain ACA requirements, so they may be more affordable. Most grandfathered plans are no longer sold, so if you like your plan, you may want to keep it. You aren’t required to change plans.
In 2014, the federal government decided to let non-grandfathered groups keep their plans until 2015. This was later extended to 2016. These groups have grandmothered/transitional plans, which were in effect on October 1, 2013, and renewed before January 1, 2015. These plans must move to an ACA plan if the policy renews after October 2, 2016, unless the government grants an extension.
If you have both a grandfathered and a grandmothered/transitional section (called a “dual option”), you are considered a grandmothered/transitional plan. When transitional relief has ended, you must move to an ACA plan.
ACA plans include all plans that are not grandfathered or transitional/grandmothered. With these plans, employers must offer 10 essential health benefits to meet all ACA requirements. Businesses with ACA plans can change benefits every year.
What You Should Do
The best choice for your business will depend on your plan type. Here are some options.
You can switch to an ACA plan or stay grandfathered. If you keep your grandfathered status, you don’t have to follow some provisions of the ACA. If you move to an ACA plan, you will have to comply with these additional requirements. Keep in mind that that if you move to an ACA plan, you can't go back to a grandfathered plan.
In 2016, grandmothered plans are scheduled to end. Therefore, if your business has a grandmothered plan, you will have to move to an ACA plan. You may be wondering if you should switch to an ACA plan before it’s required. If your plan is working for your business, it may be best to keep your grandmothered/transitional status. You’re not subject to mandatory benefits, community rating or rate benefit design limitations. There’s also a chance the government will extend transitional relief again.
You aren’t affected by the changes in 2016. You will just be required to recertify your status as a small group.
If you have questions or need guidance, talk to your broker or Medical Mutual Sales Representative.