| |
| |
| |
| Posted on: Monday, June 4, 2007 |
| |
In 2003, Colorado insurance law was reformed so that health insurers could offer premium discounts of up to 25 percent off of the insurer’s index community rate for small group employers (those with fewer than 50 employees) with good health records. Additionally, small groups with poorer health records could be charged a premium “rate up” of up to 10 percent. However, Colorado General Assembly House Bill 07-1355, which was signed into law June 1, 2007, reverses those reforms, and through a phased-in approach disallows small group health insurers from basing premiums on the health status of employees within a particular company. Starting January 1, 2008, the 25 percent rate discount for those groups with favorable health status will still be allowed, however, the 10 percent rate ups will not. Then, beginning January 1, 2009, neither rate ups nor discounts will be allowed, and every small group employer health plan will get charged the insurer’s index community rate. Factors such as the group’s geographic location and age/sex demographics will impact the index community rate they receive.
Proponents of HB 1355 say the bill will spread the escalating health care costs more evenly over the general population. Opponents say small employers will see their medical rates increase even more, and it will drive more healthy individuals out of the small group market in favor of individual policies.
So who’s right? According to the 2007 Colorado Division of Insurance report on the effects of the 2003 reforms that permitted discounts and rate-ups, since 2003, 60% of small groups are getting a good health discount and for the first time in several years more employers are buying small group insurance. With the passage of House Bill 07-1355, most of the small groups currently receiving the discount will face significant rate increases. This would suggest that we may return to the days where some companies with healthy employees end up dropping their health coverage due to the loss of premium affordability. And when the relatively more healthy companies drop out of the system, only the relatively unhealthy companies remain, driving insurance premiums ever higher.
The Denman team will be working individually with each client affected by these changes in reviewing the pros and cons of various renewal plan options.
Should you have any additional employee benefit questions or would like to discuss this material in detail, please don’t hesitate to call the Denman Team |
| |
 |
| |
| Information
on this site is for general information only. It does not constitute
nor should it be construed as legal, financial, health or any
other kind of professional advice. This site makes no claims,
promises or guarantees about the accuracy, completeness, or
adequacy of the information contained in or linked to this website. |
| |
| |
|
| |
| |
|
