Post-Harvey Challenges to Small Employer-Sponsored Benefit Plans
The challenges confronting small businesses across southeast Texas in the wake of Harvey are being further compounded by the burden that fourth quarter annual health care benefit renewals are imposing. Already overwhelmed with the burdens of financial losses & processes of returning to full productivity, employers have little to no resources left to contend with evaluating options and developing solutions as they learn the medical benefit plans they sponsor are increasing 20% to 39%, which triples previous quarters.
Burdens are not limited to the employers, but extend to individual members and the plan carriers and administrators as well.
Sellers Benefits Services is committed to serving our clients and community, and we are reaching out to federal and state authorities to achieve relief for businesses confronting this challenge. We propose easing the extreme burden of these renewals by allowing the current contracts to be extended from 12 months to 18 months . An 18-month contract would effectively set a new renewal date for these employer-sponsored plans; e.g., if a current 12-month contract renews on December 1, it would renew on July 1 as an 18-month contract.
Points to consider:
- 75%-85% of small employer sponsored health plans renew in the final quarter.
- Rate increases of 20%-39% for the 2017 final quarter will require much deliberation and planning for small employers to accommodate.
- Employer groups based in these hard-hit areas specialize in industries that are vital to the rebuilding of Houston & the rest of southeast Texas, and thus their productivity is vital to a larger national economy.
- Carriers need options to offset the hardship that renewals add; post-Harvey, they are struggling to meet higher than normal demands and do not have an appropriately trained & educated staff to cover the extra workload.
- Many individual employees will likely be displaced for several months, thus complicating their ability to adjust to plan changes as well as receive & respond to necessary communications related to plan changes surrounding renewals.
How the extension helps:
- Employers would have the time & resources for making decisions & implementing plans that serve the needs of their employees.
- Current coverage would continue at current rates, so that cost increases would be manageable over time.
- Carriers and administrators would have time amd resources to accommodate the special demands of this final quarter of renewals by spreading the workload into the first and second quarters of 2018.
- Besides employer-sponsored benefits, CMS, Medicaid, Medicare, Section 125 Plans, and COBRA will affected:
- Insurance carriers file plan designs and rate increases with the state of Texas 12 months prior to renewal.
- Adjustments cause impacts at the federal as well as state level due to Medicaid and Medicare and the CMS* filings.
- Section 125 could be amended to 18 months, or extended by 6, so that the plans are aligned with the medical plans.
We will continue working to affect this change!