Blues will continue to transition small group customers into ACA-compliant health plans; will not extend legacy plans

April 29, 2014 – Blue Cross Blue Shield of Michigan and Blue Care Network are moving forward with offering ACA-compliant plans in the small group market and will not be extending legacy plans.

Small Group Market
Throughout 2014, Blue Cross will continue to work with small groups to move them into ACA- compliant products on their renewal date. We will not offer small groups an option to retain their 2013 plans beyond their renewal date in 2014. 

We are deferring our decision on extending the legacy plans for the 50-99 market for 2016 until later this year.

The decision to continue the transition to ACA-compliant plans for small groups was based on several factors:

1. The framework and timing of the extension would not allow all group customers to extend their plan options, which we feel would not be a fair approach to our customer base.

Roughly 50 percent of our small group customers already have transitioned into ACA compliant plans, and these customers wouldn’t have the option to return to their pre-ACA plans.

2. Keeping legacy plans as options would increase rates in a time where customers are more cost-conscious than ever.

As an example, one negative by-product would be additional rate increases on ACA and legacy plans of 3% to 5% above what the rate adjustments would otherwise be.

3. Continuing legacy plans adds additional complexity to our business.

Extending legacy plans would essentially create two small group markets (non-ACA products and ACA products) and would significantly compromise the stability of the risk pool.

 Significant servicing complexity and cost would be added if we extended legacy plans.

4. Extending legacy plans isn’t an effective solution for our customers to manage their ongoing costs. 

The ACA transition option does not allow any changes to benefit plans.  This therefore greatly limits the flexibility for groups looking to modify benefits each year to manage rate increases.

5. With the new law just enacted that removes the $2,000 deductible limit, the small group product portfolio will now include higher deductible plans. This will alleviate one key concern of previous ACA limitations for many customers.

Groups with 50-99 Employees
Currently, the ACA defines a small group as having one to 50 full-time equivalent employees while in 2016, the definition changes to one to 100.  

Blue Cross will continue to assess whether to allow the extension to employers with 50-99 employees in 2016.  We anticipate making that announcement later this year.