On November 14, 2013, the Obama Administration announced a transitional policy, whereby insurers may, but are not required to, renew existing health plans in the individual and small-group markets in 2014, even if those plans do not meet the market reforms and plan design requirements of the Affordable Care Act.
Executive Summary: On November 14, 2013, the Obama Administration announced a transitional policy, whereby insurers may, but are not required to, renew existing health plans in the individual and small-group markets in 2014, even if those plans do not meet the market reforms and plan design requirements of the Affordable Care Act.
Under the transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between January 1, 2014, and October 1, 2014, will not be considered to be out of compliance with the Affordable Care Act's market reforms and plan design requirements, so long as insurers meet certain notice requirements.
The transitional policy only applies to coverage that was in effect on October 1, 2013.
Notice Requirements. To take advantage of the transitional policy, the health insurance issuer must send a notice to all individuals and small businesses that have received a cancellation or termination notice with respect to the coverage, or send a notice to all individuals and small businesses that would otherwise receive a cancellation or termination notice with respect to the coverage, that informs them of the following:
- any changes in the options that are available to them;
- which of the specified market reforms and plan design requirements would not be reflected in any coverage that continues;
- their potential right to enroll in a qualified health plan offered through a Health Insurance Marketplace and possibly qualify for financial assistance;
- how to access such coverage through a Marketplace; and
- their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms and plan design requirements.
Timing. Where individuals or small businesses have already received a cancellation or termination notice, the issuer must send this notice as soon as reasonably possible. Where individuals or small businesses would otherwise receive a cancellation or termination notice, the issuer must send this notice by the time that it would otherwise send the cancellation or termination notice.
Transition Relief. The Affordable Care Act imposes several market reforms and plan design requirements for small and individual plans. These reforms had been scheduled to go into effect on January 1, 2014.
This transitional policy affects the following market reforms and design requirements. So long as the conditions for transitional relief are met, plans in the individual and small group market will not need to comply with the following if the plan renews effective January 1, 2014 to October 1, 2014:
- PHSA Section 2701 (relating to fair health insurance premiums);
- PHSA Section 2702 (relating to guaranteed availability of coverage);
- PHSA Section 2703 (relating to guaranteed renewability of coverage);
- PHSA Section 2704 (relating to the prohibition of pre-existing condition exclusions or other discrimination based on health status), with respect to adults, except with respect to group coverage;
- PHSA Section 2705 (relating to the prohibition of discrimination against individual participants and beneficiaries based on health status), except with respect to group coverage;
- PHSA Section 2706 (relating to non-discrimination in health care);
- PHSA Section 2707 (relating to comprehensive health insurance coverage and essential health benefits);
- PHSA Section 2709 (relating to coverage for individuals participating in approved clinical trials).
State Insurance Regulations Continue to Apply. State-based insurance regulations will continue to apply to insurance policies in 2014, even if those state policies require standards similar to the Affordable Care Act's market reforms and design requirements. The Obama Administration has encouraged states to adopt additional guidance and regulations about the minimum required market reforms and plan design requirements at the state level.
If you have any questions about this Alert or other employee benefits issues, please contact the author of this Alert, Scott Wagner, swagner@fordharrison.com, who is an attorney in our Atlanta office, any member of FordHarrison's Employee Benefits practice group, or the FordHarrison attorney with whom you usually work.