Employers are required to give members 60 day notice of any material plan modification (Mod). Here’s the fine print…only for mid-year modifications.

January 3, 2013

In my opinion, one of the biggest issues to face brokers and employers in 2013 will be ACA’s rule that employers must give members at least 60 day written notice of any material plan modification. We say this because this rule is unknown to many, misunderstood by most, and interpreted differently by some.

First, let’s clarify that this 60 day rule does not apply to modifications made at time of renewal on the group’s plan anniversary.

So, having clarified that it applies to mid-year mods only, let’s bullet a couple items.

  • Material mods include both increases and decreases in benefits
  • Change in premium is a material mod
  • Small employers may be impacted more than large employers
  • Changing from one carrier to another mid year is a material mod
  • Some carriers are defining a mid-year carrier change differently than others

We state that this will be a big issue because history tells us that people, and by that I mean employers, particularly small employers, don’t usually make their health plan decisions 75-90 days in advance of the desired affective date. I have heard many people state that small employers will just have to change their ways about making timely decisions. I agree but I am not sure that it will happen that way.

As brokers counsel small employers about new plans it may become common for brokers, carriers, and TPAs to let employers assume the responsibility and therefore liability of complying with this rule. Let’s face reality, if a small employer can comply with Essential Benefits and reduce its cost 25% by enrolling on one of BEN-E-LECT’s EDHPs™ how are brokers going to stop that.

BEN-E-LECT will comply with the carrier’s guidelines, as it always has, but do what the employer requests. The employer can simply sign BEN-E-LECT’s newly created enrollment form called the Statement of 60 day Notice Compliance and away the group goes.

One final note, this notice was/is intended to benefit our citizens who are usually uniformed or disinterested. So the result of this form actually makes it harder for employers to improve benefits and do the right and moral thing for their employees. Watch in the coming days for more information about how carriers are applying this 60 day rule. We have already witnessed two large carriers handle a mid-year new enrollment in a diametrically different way.

More to come, but don’t worry because we will keep you abreast of the goings and comings of these rules.

Mark Reynolds, RHU

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