Health Reform - Extended Transition Relief

 Marc Altneu marc@mcmagency.com is a insurance broker/consultant specializing in Health Insurance, Life Insurance and all lines of benefits 

On Wednesday, March 5, 2014, the Obama administration

announced a further delay meant to allow certain non-ACA

compliant small group market and individual policies to

continue until the policy year beginning on or before October

1, 2016. This announcement effectively extends the November

14, 2013 transitional policy that allowed a one-year extension

for non-ACA compliant small group and individual plans. In

addition, the previously announced ACA individual mandate

hardship exemption will continue until October 1, 2016.

Background

On November 14, 2013, CMS announced that, if permitted

by applicable state authorities, health insurance issuers may

choose to continue certain coverage that would otherwise

be cancelled, and affected individuals and small businesses

may choose to re-enroll in such coverage. CMS further stated

that, under the transitional policy, non-grandfathered 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 certain market reforms if certain specific

conditions are met. To the extent an individual policy or small

group plan is permitted to renew for 2014 under this transition

rule, the following ACA mandated benefit requirement

provisions would not apply.

Extension of Relief

Specifically, the new policy allows states the option to allow

health insurance issuers that have issued or will issue

policies under the previously-announced transitional policy

to renew such policies through October 1, 2016, thereby

allowing individuals and small groups to re-enroll in such

coverage through October 1, 2016. If a state did not adopt

the transitional policy when it was released on November 14,

2013, it may choose to implement the transitional policy for

any remaining portion of the 2014 policy year (i.e., this policy

could apply to “early renewals” from late 2013). States can

elect to extend the transitional policy for a shorter period than

through October 1, 2016 (but may not extend it to policy years

beginning after October 1, 2016).

States may choose to adopt both the November 14, 2013

transitional policy as well as the new extended transitional

policy released on March 5, 2014 through October 1, 2016, or

adopt one but not the other, in the following manner:

•  For both the individual and the small group markets;

•  For the individual market only; or

•  For the small group market only.

A state may also choose to adopt the transitional relief policy

only for large businesses that currently purchase insurance

in the large group market but that, for policy years beginning

on or after January 1, 2016, will be redefined as small

businesses purchasing insurance in the small group market.

Health insurance issuers offering coverage under this

extended transitional rule must provide a notice to affected

individuals and small businesses.

At this time, it is unclear which states, if any, will allow health

insurance issuers to provide non-ACA compliant plans under

this extended transitional rule.

Hardship Exemption

On December 19, 2013, CMS issued guidance indicating

that individuals whose policies are cancelled because the

coverage is not compliant with the Affordable Care Act qualify

for a hardship exemption if they find other options to be more

expensive, and are able to purchase catastrophic coverage.

This hardship exemption will continue to be available until

October 1, 2016 for those individuals whose non-compliant

coverage is cancelled and who meet the requirements

specified in the guidance