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Say Goodbye to the 90-day Waiting Period

Beginning in 2014, the Affordable Care Act will require a maximum 90-day waiting period for new hires to join a group medical plan.  California has taken this a step further: Governor Brown signed AB 1083 into law near the end of 2012, reducing that maximum waiting period further — to 60 days.  Let’s take that a step further, as the practical application for small business effectively makes the maximum waiting period one month or 30 days.  Why is this?  Well, currently every carrier for small groups uses a “first of the month following completion of the waiting period” as the eligibility date for a new hire.

If new employee Jane Smith begins work on March 15, 2014 and her employer has a 60-day waiting period, her effective date in the current system would be … June 1, 2014.  Seventy-seven days after her date of hire, or 17 days beyond the maximum waiting period.

We expect the carriers to adapt their plan contracts upon plan renewals in 2014, to help small employers adapt to the new requirements.  Kaiser Permanente officials have stated they will offer three waiting period options for plans that renew on or after January 1, 2014:

  • First of the month following date of hire
  • First of the month following 30-day waiting period
  • NEW: Sixty days following date of hire (partial months to be prorated)

We expect other carriers to offer the same or similar options.

Many of our small group clients in competitive industries already have a first of the month following date of hire policy, but others will need to prepare and adapt.

Interest in HSA’s Continues for Small Business and Individuals

More than eighty percent of my small business clients offer an HSA-compatible health plan as an option to their employees. Some of them partially fund accounts for the employees to help offset the high deductibles, and still find that this is the most cost-efficient way to finance employee health care.

Ditto for individuals and families. It is particularly pleasing to help a family paying $1,000 – $1,500/month on COBRA or a small business plan realize that they could save $10,000/ year in premiums by switching the family to an HSA-compatible plan from their choice of carriers.

More on this trend, from the Kaiser Family Foundation, here.

Anthem Blue Cross rate hikes

Even if you are not an Anthem Blue Cross subscriber, it would be hard not to have heard about the recently announced rate hike for many California subscribers.  If not, you can read about it here (LA Times, 2/14), here (SF Chronicle, 2/14), and here (NY Times, 2/16).

For additional perspective, here is the full letter of explanation written by Brian Sassi of Anthem Blue Cross in response to Health and Human Services Secretary Kathleen Sebelius’s inquiry into the rate increases.

A couple of key points, without getting into the meat of the debate:

  • The rate increases are affecting Anthem Blue Cross individual subscribers, not small business subscribers
  • Anthem has delayed the increases for two months (to May 1) while the issue is investigated

We understand that a number of our individual clients may be experiencing an increase in rates — and not necessarily just from Anthem.  Please remember that we are always here to assist you.  Contact our office via email or call (888) 992-2244 to schedule an an appointment to discuss whether a different plan or a different carrier is the right choice for you.

Window closing on COBRA subsidy?

The most recent iteration of the current jobs bill being considered by the Senate has stripped out a second extension of the 65% COBRA subsidy for certain laid-off workers, according to the Christian Science Monitor (2/11).

With Congress back in session this week, we should get an idea of whether the subsidy will be added back in, considered in a different bill, or allowed to expire on March 1.

California workers at smaller companies who qualify for Cal-Cobra, not COBRA, may also eligible for the subsidy if they are involuntarily terminated before March 1.  You can find detailed information from the Department of Managed Healthcare.

Employees terminated in December will not be eligible for COBRA subsidy

The U.S. Department of Labor has provided clarification to the eligibility guidelines for the 65% COBRA under the current ARRA legislation.

Because employees of California small groups are typically covered through the end of the month in which they are terminated, they are not eligible for COBRA (or Cal-Cobra) until the first day of the following month.  For December terminations, that means January 1, 2010 — one day after the eligibility period for the subsidy expires.

The DOL points out that this is based on current legislation.  There is a pending bill in the Senate as well as a House counterpart, both of which would extend the eligibility period, and the length of the subsidy for new and current beneficiaries of the subsidy.

12/22/2009 UPDATE: President Obama has signed a bill extending the COBRA subsidy.  The eligibility period for laid-off employees is extended two months, to February 28, 2010.  The benefit period is extended six months (to a maximum of 15 total).  The extended benefit period applies to the newly qualified and to those who have been receiving the subsidy under the original legislation.  Story here, from the WSJ.