Impacts all non-grandfathered fully insured small group plans (both in and outside the exchange) beginning with the 2014 plan year:
The changes in the rules that apply to fully insured small groups, whether the coverage is provided inside or outside the exchange, are significant. From an employer standpoint, the most significant change probably is that premiums may only be based on four factors – age (with a maximum surcharge of 300 percent for the oldest members), tobacco use (with a maximum surcharge of 150 percent for tobacco users), family status and geography. Gender and health status will no longer be a permitted factor. States also may limit or prohibit the age and/or tobacco surcharge.
Premium age bands will be in one-year increments, except for ages 0 through 20 and 64 and older. The member’s age on the renewal date (or entry date if a new member) will apply for the full year. Unless the state prohibits the age and tobacco surcharge, each family member must be rated individually, with their costs then aggregated. (If a family has more than three children, only the premiums of the three oldest children who are under age 21 will be considered.)
Insurers in the small group market must calculate per member rates, although states may require and/or employers may elect to use composite rates.
Tobacco use is defined as using any tobacco product an average of four or more times per week within the prior six (or fewer) months. Small group plans must offer smoking cessation wellness programs to provide a way to offset the surcharge. Insurers may not rescind coverage based on a misrepresentation of non-use of tobacco, but they can collect back premiums.
The text of the final rule on health insurance market reforms is here: http://www.ofr.gov/OFRUpload/OFRData/2013-04335_PI.pdf
