Recently, the Centers for Medicare and Medicaid Services (“CMS”) announced further extension of its transitional policy allowing insurers in the small group market to renew health insurance policies that they would otherwise have had to cancel due to noncompliance with the Affordable Care Act (the “ACA”).
By way of background, the ACA includes market reforms that created new coverage standards for health insurance policies such as: premium rating rules, guaranteed availability and renewability, and the requirement to provide essential health benefits. Under the ACA the market reforms were to be effective for plan years beginning on or after January 1, 2014. However, prior to the effective date, CMS implemented a transitional relief policy that, if permitted by the states, would allow insurers offering coverage in the individual and small group markets the option of renewing current policies for current enrollees without adopting all of the ACA market reforms. The transitional relief policy was extended several times, but was set to expire in 2018.
The CMS guidance extends the transitional relief policy through 2019. Under the CMS guidance, states can permit insurers that have continually renewed health insurance coverage for small groups since 2014 under the transitional relief policy to again renew such coverage for a policy year beginning on or before October 1, 2019. However, any policy renewed under the transitional relief cannot extend beyond December 31, 2019. Also, states have the option to adopt the transitional relief policy for a shorter period of time and can choose whether to apply the transitional relief to the individual or small group market or both.
An insurer that renews coverage under the extended transitional relief must provide notice to affected individuals and small groups. CMS has stated that it will work with insurers to implement the extended transitional relief policy by allowing options such as: 1) policy years that are shorter (but not longer) than 12 months; or 2) early renews with a start date of January 1, 2019 to comply with the December 31, 2019 policy end date.