On April 9, 2018, the Department of Health and Human Services (HHS) extended an existing transition policy for certain health plans that do not comply with the Affordable Care Act (ACA) for an additional year, to policy years beginning on or before Oct. 1, 2019. In states that allow it, health insurance issuers have the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms that took effect in 2014. Originally announced in 2013, the transition policy has already been extended several times.
IMPACT ON EMPLOYERS
Individuals and small businesses may be able to keep their non-ACA compliant coverage through 2019, depending on the plan or policy year. This latest extension may also mean that ACA compliance is never required for these transitional plans. If the ACA is repealed, replaced or amended, the market reforms may no longer apply to these plans.
The ACA includes key reforms that created new coverage standards for health insurance policies, beginning in 2014. For example, effective for 2014 plan years, the ACA imposes modified community rating standards and requires individual and small group policies to cover a comprehensive set of benefits.
Late in 2013, millions of Americans received notices informing them that their plans would be canceled because they did not comply with the ACA’s reforms. President Barack Obama received criticism that these cancellations went against his assurances that if consumers had a plan they liked, they could keep it.
Responding to pressure from consumers and Congress, on Nov. 14, 2013, President Obama announced a transition relief policy for 2014 for non-grandfathered coverage in the small group and individual health insurance markets. If permitted by their states, this transition policy gave health insurance issuers the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms for 2014. This transition policy was later extended several times.
The Latest Extension
On April 9, 2018, HHS extended this transitional policy for an additional year, to policy years beginning on or before Oct. 1, 2019, provided that all policies end by Dec. 31, 2019. Under the extended transitional policy, health coverage in the individual or small group market that meets certain criteria will not be considered to be out of compliance with the ACA’s market reforms.
Specifically, the extended transition relief policy provides that:
- States may allow issuers that have continually renewed policies under the transitional policy since 2014 to renew that coverage for a policy year starting on or before Oct. 1, 2019; but
- Any policies renewed under this transitional policy must not extend past Dec. 31, 2019.
According to HHS, the additional one-year extension is intended to smoothly bring all non-grandfathered coverage in the individual and small group markets into compliance with all applicable ACA requirements.
The extended transition relief only applies with respect to individuals and small businesses with coverage that has been continually renewed since 2014, under the previous transition guidance. It does not apply with respect to individuals and small businesses that obtained new coverage in 2014 or after. All new plans must comply with the full set of ACA reforms.
Also, as required under the previous transition policy guidance, health insurance issuers that renew coverage under this extended transitional policy must, for each policy year, provide a notice to affected individuals and small businesses.
Implementing the Extended Transition Relief Policy HHS has stated that it will work with issuers and states to implement this extended transition policy, including options such as allowing:
- Policy years that are shorter (but not longer) than 12 months; or
- Early renewals with a start date of Jan. 1, 2019.
According to HHS, this approach will facilitate smooth transitions from transitional coverage to ACA-compliant coverage, which requires a calendar year policy year in the individual market. States can elect to extend the transitional policy for shorter periods than outlined above, but may not extend it beyond these periods. Also, states may choose to adopt the extended transitional policy:
- For both the individual and the small group markets;
- For the individual market only; or
- For the small group market only.
All transitional policies that have rate increases subject to review under the ACA should use the rules and processes for submission to states and HHS that were updated April 9, 2018, to ensure compliance with the ACA