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After a prolonged battle in the Spring and Summer months of 2010 over the Rate Cap issue between Massachusetts Insurance Carriers and the Division of Insurance, rates for the second, third and fourth quarter of 2010 were finalized in late August. However, with January 2011 closing in, the carriers filed rates in September, but the rates have not been accepted by the Mass DOI. This means that all renewals and new business health insurance rates between 1/1 and 3/31/2010 are on hold. The DOI is due to report the information back to the Carriers by 11/15/10 on whether or not they will accept the filed rates. If rates are approved, we will provide the renewals and new business quotes immediately to our clients and prospects. Keep in mind, that the DOI may or may not settle with all the carriers at the same time, although we are hoping that it does happen that way. Check back to our website or call our toll free number at 800-821-6033.
Mass Division of Insurance Rate Cap
Update 05/14/2010
If the health insurance situation wasn't confusing enough, the rate cape issue battle going on between the insurance carriers and the Mass Division of Insurance will surely send everyone over the edge.
The April, May and June 2010 health insurance rate issue for companies with less than 50 enrolled employees has not been settled. With the average renewal increase for our book of business for 2010-2011 approaching 25%, businesses were traumatized by these high increases after already absorbing nearly 9 years of annual increases in excess of 10%. Governor Patrick and the Mass Division of Insurance (DOI) have instructed the state insurance carriers to freeze insurance rates back to April 2009. This has had a profound effect on the renewals this spring. The following is an outline of the dates and scenarios:
If your health insurance plan renews in April, May and June: Letters have been mailed out to outline the recalculated interim (temporary) premium rates for April and May renewals. Bills for June will be sent out this week which will reflect the rate adjustment. June renewals will encompas the interim premium rates. These recalculated rates may and most likely will not reflect your exact 2009-2010 rates. The carriers were able to adjust the rates to reflect demographic and census adjustment factors. These factors can positively or negatively affect the interim rates. Keep in mind that these rates will be adjusted (most likely upwards) once the DOI and the carriers settle the issue on what rates are justifiable and appropriate.
If your health insurance plan renews after June: The interim rates will be utilized for all renewals going forward until a resolution between the DOI and the carriers is finalized. We will be creating renewals based on these interim rates, but please understand, the rates being utlized are NOT the final rates.
All companies renewing after April 2010 will need to budget accordingly until the rates are approved. Since these rates are temporary interim rates, they will change, and most likely be more expensive. Rumors are that this rate cap battle may stretch into the fall. Once finalized, business will be back charged retroactively to their renewal date. This could result in a large bill.
For instance:
A small business renewal April 1. The total monthly bill is $4,000 based on the 2009 rates. The rates are temporary, interim rates. Fast forward to October 2010 and there is a resolution between the insurance carriers and the DOI. The new, revised, final rates are now $5,000 per month. The business will now owe:
- October - $5,000
- In addition, they owe $1,000 for the months of September, August, July, June, May and April.
- The total bill is $11,000 to be paid in full.
- This will have ramifications for the business owner and the employees. Ouch!
Our Recommendation?
We recommend putting monies away to cover the difference between the interim and future finalized rates. In addition, you may be tempted to call our office to run options in the short term. The problem is that the carriers are backlogged on all quote requests (upwards of 4 weeks), they have initiated 30 day prior submission deadline and any rates quoted at this point are only temporary. Our recommendation for the short term is to stay put. We will monitor the situation and update you with any changes. For the long term, once the rates are finalized, it may be worth requoting your existing plan. With the strict rerating guidelines implemented throughout the insurance industry, moving to another carrier may be advantageous. MDSIS-Spring will contact you with all the options once the rate cap issue is resolved.
Amidst all this activity, you may have specific questions or concerns about its direct impact on you. Please do not hesitate to reach out to us to discuss these or any other employee benefit issue. Call us at 1-800-821-6033 or visit our website at www.mdsis.org. We will do whatever it takes to answer your questions and or ensure a smooth renewal and new business transition for you!
News Updates
Health Care Reform Update – Winter 2008
Minimum Creditable Coverage (MCC) – Jarnuary 2009
HIRD and Fair Share Reporting – December 2009
Articles
At MDSIS-Spring, we want our customers to be informed about insurance and how it relates to their practice. We have included some articles that we hope are informative, timely, and entertaining. Is there a specific topic you would like to see covered here? Contact MDSIS-Spring and let us know.
- Flexible Spending Accounts
- Dependent Care Accounts
- Consumers to Take a Larger Role in Managing Care and Costs
Consumers are paying more for healthcare, could that be a good thing?
- Direct Reimbursement Dental Plans
The time is now for a new, better approach to Dental Benefits
- Insurance is Like an Onion - Many Layers
What do you find when you peel back the layers?
- Take a Trip with MDSIS
- Bracing for the "Boom"
- Health Care Reform - It's All About Accountability
- Identity Theft is a Growing Concern: Are You Protected?
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News, Articles and Seminars
