California State Senate Bill 1446 Frequently Asked Questions

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Gloria O’Brien’
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1 California State Senate Bill 1446 Frequently Asked Questions A new California law gives your small business clients another coverage option at renewal. This FAQ gives you all the information you need to answer your client s questions and help them make 4 th quarter 2014 renewal decisions. SB 1446 OVERVIEW The Affordable Care Act requires all small group health plans and policies to comply with the major market reforms upon renewal on or after January 1, California State Senate Bill 1446 (SB 1446) was signed into law on July 7, Effective the date it was signed, the law allows small business groups renewing July December 2014 to remain on their 2013 plans for one (1) additional year. This renewal option is referred to as grandmothering and these transitional plans are commonly called grandmothered plans. Blue Shield is offering October, November and December 2014 renewing customers the choice to remain on their grandmothered plan(s) or purchase plan(s) that are compliant with applicable California and federal laws (henceforth referred to as ACA plans). Prior to SB 1446 passage, the ACA required new coverage, with expanded levels of coverage, be issued on or after January 1, This meant that since January 1, existing coverage was withdrawn from the market and small business customers had to choose from the ACA plans. With SB 1446, 4 th quarter customers may remain on their grandmothered plan(s) for an additional year, before moving to an ACA plan upon renewal in

2 UNDERSTANDING SB What is SB 1446? SB 1446 allows small business groups renewing July December 2014 to remain on their 2013 plans for one (1) additional year. In other words, customers will have guaranteed renewability of their current coverage for another 12 months. This renewal option is referred to as grandmothering and these transitional plans are commonly called grandmothered plans. 2. When did SB 1446 become effective? SB 1446 went into effect immediately upon the Governor s signature on July 7, Which small business groups can renew a grandmothered plan? Blue Shield is offering October, November and December 2014 renewing customers the choice to remain or grandmother into their current plan(s) for one additional year or purchase plan(s) that are compliant with applicable California and federal laws (henceforth referred to as ACA plans). The DMHC and CDI have approved Blue Shield to offer grandmothered small group plans to all 4 th quarter 2014 renewals. 4. Which small business customers cannot renew into a grandmothered plan? Grandmothered plans can only be offered to customers that are currently on grandmothered plans and renewing coverage in the 4 th quarter of Customers who have already migrated to an ACA plan(s) and new businesses enrolling with Blue Shield may only choose ACA plan(s). 5. What is the difference between grandmothering and grandfathering? Grandmothering means keeping a plan that was in force on or before December 31, 2013 for one additional year. Grandfathering means keeping a plan that was in force on or before March 23, Unlike grandmothering, there are no time limits for grandfathering. (Note: Blue Shield does not have any grandfathered small group plans). 6. If a customer chooses to grandmother their current plan for an additional year, when will they be required to move to an ACA plan? Upon their 2015 renewal, grandmothered customers must purchase an ACA plan. 2

3 BLUE SHIELD AND SB How is Blue Shield implementing SB 1446? Blue Shield is offering grandmothered plans only to 4 th quarter 2014 renewing small group customers. Fourth quarter small business customers (with the exception of Baja plans which are being withdrawn from the market) will be automatically renewed into their existing 2013 medical plan(s) at October 2014 grandmothered rates. If a group does not want to grandmother into their current plan,, they must opt out of their grandmothered plan and purchase an ACA plan. 2. What Blue Shield clients will be grandmothered? Blue Shield is making this option available to small business customers (with the exception of Baja plans (which are being withdrawn from the market) with October, November, and December 2014 renewal dates. 3. What Blue Shield clients will not be grandmothered? Even though the bill was signed into law on July 7, 2014, Blue Shield of California made the business decision to offer the grandmothering option only to 4 th quarter renewing customers. Small business customers whose plan years end prior to October 1, 2014 have already begun the transition to an ACA plan and therefore will not have the option to reinstate their previous coverage. Also, Baja plans cannot be grandmothered as they are being withdrawn from the market. 4. What are the renewal options for renewing 4 th -quarter small business clients? Renewing 4th-quarter small business clients have two options: Option 1: Accept the renewal offer for existing grandmothered plan coverage. In the renewal kit that the customer receives, grandmothering will be the default option. In other words, if they are happy with their current plans, this is the coverage the group can continue at its renewal at 4th-quarter 2014 rates. If a group elects to remain with their current plan(s), they cannot make any group-level changes. Option 2: Purchase 2014 ACA plan(s). Small businesses may purchase any of the available ACA plans. In order to do so, the group simply follows the instructions in the renewal packet. If the group purchases ACA plans, their current grandmothered coverage will no longer be available. 5. What if a group does nothing? What happens? As noted in option 1 above in question 4, if the group does nothing, the group will auto renew into their grandmothered plan(s) at 4 th quarter 2014 rates. 3

4 They simply pay their monthly premium at the new rate and continue with their current coverage. 6. Are medical plan choices linked with Blue Shield Specialty products? Blue Shield is aligning our Specialty options to synch with grandmothering medical plans to keep customer renewals as simple and seamless as possible. This means: If a group chooses a grandmothered medical plan, it can retain its existing pre-2014 Specialty products at tiered rating. If a group chooses ACA medical coverage, it can retain its existing pre-2014 Specialty products at tiered or member-level rating. If a group chooses grandmothered medical and wants to add specialty as new business, it can choose from open 2014 plans at tiered rating. 7. Once a group chooses to purchase and ACA plan, can they go back to a grandmothered plan? No. Groups that elect to move to a non-grandmothered plan cannot elect to return to their grandmothered plan. There is no 30-day free look period. Once an option has been chosen, the group moves to the new plan. 8. Can a group change its renewal month when it elects to keep its 2013 plan? No. Changing a renewal month would make the group ineligible for a grandmothered plan. 9. How does grandmothering affect RAF in 2014? Groups who elect grandmothered plans will retain their current 2013 RAF. 10. Are group-level changes allowed with grandmothered plans? No with the exception of the new hire waiting period. Member-level changes are allowed at open enrollment upon renewal within the grandmothered plan(s) that the group has. 11. Does a change in qualification status affect a group s ability to choose a grandmothered plan? No. Being shifted from qualified to non-qualified status, or vice versa, does not prevent a group from choosing a grandmothered plan. 12. Are rider changes to grandmothered plans allowed? No. If a group has chiropractic, acupuncture or infertility rider(s) today, they must keep the same rider(s). And groups without rider(s) cannot add them to a grandmothered plan. 13. Which mandates apply to grandmothered vs. ACA plans? 4

5 Mandate/BSC Change Eliminate Pre-Existing Conditions (PEC) under age 19 Elects to keep 2013 plans Moves to ACA plans Eliminate Pre-Existing Conditions (PEC) age 19+ Dependent age change from 19 to 26 Child can remain on plan to age 26 Child can remain on plan to age 26 Eliminate RAF RAF still applies RAF no longer applies for qualified small groups* Max 60 days for new hire waiting periods Change to employee zip code rating Change to memberlevel rating 60 day max still applies Employer zip code rating still applies Subscriber age and tier rated (i.e. EE only, EE + Spouse) 60 day max still applies Employee zip code rating applies Member-level rating applies Apply ACA taxes All taxes apply All taxes apply Implement bill prorating birthday rule Billing grace period Mid-month enrollments to be pro-rated First of the month following birthday Group has 31 days from their bill due date to pay premium and avoid termination. Mid-month enrollments to be pro-rated Upon renewal month Group has 31 days from their bill due date to pay premium and avoid termination. *The RAF will still apply to groups not eligible under AB 1672 California s Small Group Act. 5

6 14. Why are these renewal options not available for September clients? Carriers are required to notify customers 90 days in advance of plan withdrawals and 60 days in advance of rate and benefit changes. Further, rate and benefit changes must be filed with state regulators 60 days in advance of the effective date. SB 1446 passed on July 7, which would not allow the required filing and notification timing for September customers. 15. Are regulators permitting Blue Shield to offer transitional plans to 4 th quarter customers only? Yes. Both the Department of Managed Healthcare and the California Department of Insurance have confirmed that Blue Shield can offer the choice of extending current coverage for an addition year to customers renewing in the 4th quarter only. 16. How have other carriers been able to offer grandmothered plans to September customers? We are not aware of arrangements other carriers are making with state regulators. Those carriers permitting September customers to continue current coverage for an additional year will have to explain how they re doing so. 17. Can customers with October and November renewal dates keep their grandmothered coverage until December of 2015? No. Group contracts are for a 12-month period of time. 18. How will small business clients be notified of their new options and supported in making decisions? In mid-july, 4th-quarter customers received a letter explaining their options. Customers with October renewal dates received their renewal packets in late July. The information in these renewal packets went to print prior to the new law being passed, and therefore directs customers into ACA plans. As a result, the October renewal packets will include an insert about the law and the customer's new option. Additionally, the packet will include the new rates for medical and specialty benefits plans renewing as of October In mid-august, our online renewal system relaunches. At that time, brokers can compare alternative quotes and begin helping October renewal clients select their renewal options. November and December renewing customers will receive their renewal packets in August and September respectively. The renewal packets will be updated to show clients their current grandmothered plan options as well as the ACA plans. As always, brokers will receive copies of their clients' renewal packets. 6

7 19. Is there an easy way to compare grandmothered plans to ACA plans? Yes. We have created a crosswalk of grandmothered plans to the ACA plans to help make choosing similar plans easy. 20. What tools are available to help brokers educate their clients about renewal decisions? We are updating the online renewal system on Producer Connection so you can compare alternative quotes between grandmothered plans and 2014 ACA plans. As we make this change, the renewal system will be unavailable starting in mid-july and will relaunch in mid-august. We will keep you posted, and when it relaunches, you can guide your clients through their new options and help them to complete their renewal. 21. Will grandmothering impact the commission schedule? No. Blue Shield will use the same commission schedule as when the group first joined Blue Shield. LEARN MORE Questions or concerns? Please contact your Blue Shield representative to learn more. 7

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