Important ACA Dependent-Rating-Structure Change For Plans Sold or Renewing in 2018

Beginning in 2014, the Affordable Care Act (ACA) implemented a member-level rating structure that requires or mandates non-grandfathered Small Group and Individual & Family Plan (IFP) carriers to charge one dependent rate for children ages 0 to 20 and unique rates by age for every dependent beginning with age 21. This component of the member-level rating structure changes for non-grandfathered Small Group and IFP carriers with plans selling or renewing in 2018.

The Centers for Medicare & Medicaid Services (CMS) released regulations in late 2016 that change the member-level rating structure for dependents under the age of 21 for plans sold or renewing January 1, 2018 and later.

Under the new rules, carriers may charge one single rate for dependent children ages 0-14, and unique rates by age for dependents ages 15, 16, 17, 18, 19, and 20. Under the amended rules, carriers may still only charge for the three oldest dependent “children” under the age of 21.

All Word & Brown-partnered Small Group health insurance carriers are enacting this rating-structure change for their 2018 plans, beginning with the January 1st effective date.

This new rating change will be especially impactful for employee policyholders who hold family coverage with dependent children ages 15 to 20 on their plans.

While this will reduce the rate spike from age 20 to 21 in the future, it will substantially increase costs for employees with dependents turning ages 15-20 in 2018. Starting in 2019, the rate increase between ages 15-20 will be much more gradual (than in 2018), but the 2018 rating structure change will significantly affect employees with dependent coverage.

The WBCompliance team has created a sample reference chart to illustrate the impact this rating-structure change will have on 2017 plans renewing in 2018.

This new rate change makes it imperative for a broker to capture the correct dates of birth (DOBs) for all dependents of every age. If you have a new employer client shopping for business now, it may be in the employer’s best interest to purchase a plan in 2017 in order to delay these rating structure changes until the employer’s renewal in late 2018.

This change is sure to give a sticker-shock to employees with dependents ages 15-20, and to employers contributing a percentage to dependent premiums. Brokers are wise to review this rating structure change with clients prior to discussing a renewal, and should carefully explain the changes to employees during Open Enrollment meetings for plans renewing or sold in 2018.

The Word & Brown Sales, Enrollment, and Compliance teams are here to help you and your clients understand these changes – and then some – in your business endeavors. For more information, or for assistance, please contact your Word & Brown Sales representative or your WBCompliance team; they can be reached via email at or by calling 1-866-375-2039.

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