11/17/2009
Mental Health Parity Act impacts underwriting assumptions
The Mental Health Parity Act makes it important that group size be correctly applied to groups that have 51+ employees. It used to be acceptable for groups whose new-hires pushed them past 51 employees to remain in the Community rating pool. Now, however, these groups must be moved into the correct rating pool so that the Mental Health Parity Act can be correctly applied.
Starting with January 2010 proposals, the Underwriting Assumptions section will include the following language:
Employers who averaged 50 or fewer employees, as defined by ERISA, in the prior calendar year are not subject to the Mental Health Parity Act and may be covered within our small group pool. However, if an employer meets the federal ERISA definition of an employer with 51 or more employees, and is currently covered by a small group contract, we must change the group's pool classification at renewal and issue a group contract that complies with the provisions of this Act. This may also result in a change to the rates contained within this proposal.
Also, starting with January 2010, renewals (2-50) for Innova®, Engage®, ActivateSM and Regence HSA Healthplan 2.0SM will include an opportunity for groups to complete a simple "Renewal Confirmation" form rather than an entire GMA if they are renewing on these products "as is." The Renewal Confirmation form appears right after the Underwriting Assumptions section and will include the following paragraph:
Employee count: The average number of employees that were employed during the previous calendar year January-December. Your employee count should include: employees from any affiliated company, business owners, corporate officers, full-time, part-time, partners, seasonal, union employees and employees that work outside the state of Washington. Your employee count should not include contracted (1099) employees.
Our Group Master Application (GMA) forms request the average number of employees that were employed during the previous calendar year (January-December).
How do you determine the correct group size for renewals on groups 2 to 99 and renewals for groups of 100+ for 2009 when the year-end stats are not available? Calculate the average number of employees from the first, second and third quarters of 2009. Do not use 2008 data! Failure to comply with this act may result in fines to the employer, producer and/or carrier. Employers that are unsure of their status in regards to this federal act and/or group size based on ERISA guidelines should consult their own legal counsel for advice. The employee count total will determine if the group must be moved out of the Community pool.
If you have any questions, please talk to your Regence Sales contact.
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