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2018 Premiums impacted by ACA’s new age-banded rating ruling for children

January 2018

If you are a business owner with 100 or less employees (considered a small group in California), new regulations took effect on January 1, 2018, that will impact premiums for your employees who have children up to age 20 years old. This change for your employees with dependents could raise their rates at renewal significantly, and should be taken into account as you engage your 2018 renewal process and explore real ideas and options that are available.

The New Rule: multiple age band rates for children                                                                             

Regulations issued by the Centers for Medicare and Medicaid Services as directed by the Affordable Care Act (called the ACA or also known as Obamacare, whose provisions are still in effect for 2018), the single age band cost for all children ages 0 to 20 years will no longer be used.

Instead, the new rule splits the one age rate band and establishes the following:

– A single age rate band for children age 0 through 14

– 1 year age rate bands for children/individuals ages 15 through 20

The other age ratings will remain the same:

– 1 year age rate bands for individuals 21-63

– A single age rate band for individuals age 64+

This change will take effect for new, renewed, or amended small group plans effective on or after January 1, 2018.  

Under the regulations, when determining the premium for family coverage under a per-member rating system, the total premium is determined by adding the cost for each family member. With respect to family members under the age of 21, the premiums for no more than the three oldest covered children must be taken into account in determining the total family premium.

For small group plans, the rate for the family is based on the combined ages of the employee, spouse, all dependents 21 and older, and up to three oldest dependents 20 or younger as mentioned above. The premium is still determined on the employer’s principal business ZIP code.

Is your company affected?

The new rule applies to Small Group health plans.  Remember that in California, an employer with between 1 and 100 employees will be covered by a Small Group health plan as defined by SB125.

SB125 revises the definition of a small employer, for plan years commencing on or after January 1, 2016 (both new and renewing), to be at least one, but no more than 100 employees.  It is important to note that this number is reached when counting both full-time and full-time equivalent employees as specified under the Affordable Care Act. The other existing portions of the California small employer definition remain and must also be used to determine employer eligibility in the small employer market.  Contact us for further information or to start a conversation.