Make Sure to Know These Important Health Risk Changes

Discussing Health Risk Changes with a Benefit-Risk Advisor

By Chris Gertz

Before 2014, when the Affordable Care Act (ACA) came into effect, insurance carriers had the authority to assess the health risk of individuals applying for coverage under an individual health plan and the risk associated with groups looking to implement a group health plan. This involved evaluating various factors such as health status, medical history, and other risk elements of applicants or employees within a group. This meant that carriers could adjust rates based on the perceived health risk of the group, meaning younger, healthier groups or individuals often received more favorable rates compared to older groups or those with higher health risks.

The implementation of the ACA in 2014 discontinued the practice of health risk assessment for determining rates. Carriers are now restricted to considering specific factors when setting rates:

·        Individual's age

·        Geographical location determined by ZIP code.

·        Who will be covered by the plan (employees, spouses, or dependents)

·        Smoking status

·        Chosen plan tier (platinum, gold, silver, or bronze)

Following the enactment of the ACA, there were significant increases in premiums because carriers could no longer assess the health risks of individuals or groups. Unlike traditional underwriting plans where rates are fixed for twelve months and adjusted based on claims experience and known risks, ACA plans review the claims history of the entire covered population and demographic changes to determine rate adjustments.

In response to these changes, carriers introduced Multi-Employer Welfare Arrangements (MEWAs) in 2016, offering employers an alternative route to medical underwriting for rates. This allowed us to circumvent the constraints of the ACA rating structure and offer more tailored options and competitive rates for employers.

If you have any questions regarding your company's benefit plans, please don't hesitate to call us at Hummel Group.

‍