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Thursday, 13 August 2020 11:20

What will 2021 Renewals Look Like After COVID?

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The COVID-19 pandemic has created uncertainty for many employers who worry that expensive Coronavirus testing and treatment could lead to a spike in premiums in 2021. But is it a foregone conclusion that we’ll see large renewals, or a myth?

The Concern

Early in the pandemic, some news outlets were publishing cautionary predictions of potentially excessive premium increases in 2021 due to Coronavirus healthcare costs. This concern has been fueled by stories of high costs related to Coronavirus treatment and the additional regulations on coverage requirements introduced by the Families First Coronavirus Response Act.

A 2021 Premium Spike is Becoming Increasingly Unlikely

Testing and treatment for the Coronavirus is expensive for insurers and employer plans, but our in-house actuarial analysis of claims data suggests that, overall, 2020 claims costs may actually decrease due to the deferral of elective procedures.

  • The American Academy of Actuaries argued in June that claims in the first half of 2020 for COVID-related expenses were “more than offset by” reductions in non-COVID claims

  • Claims for many of our employer groups are down compared to expected levels, partially because of state-mandated restrictions temporarily halting elective procedures (procedures not related to an emergency, but which may still be medically necessary)

  • Claims are also down for general and preventive care, as patients who are fearful or unable to access healthcare continue to delay many or all non-emergency visits

  • Since the pandemic is ongoing and claims submittal can be delayed, many insurers and employer plans simply will not have enough reliable claims data to rely on, in time to apply a large increase for early 2021 renewals

  • The 2021 renewals we have already begun to receive for our employer groups do not suggest a spike in premiums due to COVID-19. 

  • Rate filings submitted to the Colorado DOI by insurance carriers for small group fully insured and individual plans are also not suggesting a spike. Insurers in the small group fully insured market are requesting, on average, just a 5.7% overall increase in rates for the first quarter of 2021, though the rate changes range from a 4.6% decrease to a 15.2% increase between carriers.

  • Other states have shown similar trends.

Fall River is Watching Later 2021 and 2022 Renewals Cautiously

Here at Fall River, while we do not anticipate large health insurance premium increases for early 2021 renewals, the pandemic has created massive significant uncertainty looking forward to mid- and late-2021 renewals and beyond. We will be watching for potential COVID-related trends, such as:

  • Continuing to postpone non-emergency care, including elective and preventive procedures, could lead to future complications which cost more to treat

  • Once providers are able to work through the elective procedure backlog, employer groups may see a wave of catch-up claims as employees receive their necessary procedures

  • If an additional wave of COVID-19 cases is seen this fall and winter, combined with the flu season, employer groups could see additional claims costs late in 2020 and early 2021 related to COVID-19

What can you do now?

Although uncertainty will be the name of the game for the foreseeable future, there are some things you can do now to enhance your benefits options and mitigate potential future insurance increases:

  • Offer standalone telemedicine benefits which allow your employees to access virtual care safely, often with no cost sharing, while not impacting your medical plan claims

  • COVID-19 has impacted employees’ mental health, too. Address your employees’ concerns and ensure that your benefits offer exceptional mental health resources through an EAP, telemedicine, or your medical carrier

  • Identify proactive strategies for cost containment so your employer plan is prepared for a possible large premium increase

As always, please contact your Fall River Account Manager for further guidance on the potential COVID-19 impact to your group plan and ways you can mitigate those increases.

Read 276 times Last modified on Friday, 11 September 2020 09:47