At a press briefing this week announcing his administration will allow individual and small group health plan issuers to temporarily continue offering plans that don’t meet new Affordable Care Act standards effective January 1, 2014, President Obama blamed a shortcoming in the law for the confusion and angst arising from cancellation notices plan issuers recently sent out informing policyholders their current coverage is being cancelled. That coverage will no longer be ACA compliant effective January 1, the notices explained, thereby requiring policyholders to get into new plans that meet ACA coverage standards that take effect that year. Here’s what the president said, according to a White House transcript of the briefing:
With respect to the pledge I made that if you like your plan, you can keep it, I think — and I’ve said in interviews — that there is no doubt that the way I put that forward unequivocally ended up not being accurate. It was not because of my intention not to deliver on that commitment and that promise. We put a grandfather clause into the law, but it was insufficient.
What is the “insufficient” ACA grandfather clause referred to by the president? It’s at Section 1251(a)(2) of the law:
(2) CONTINUATION OF COVERAGE.—As revised by section 10103(d)(1). Except as provided in paragraph (3), with respect to a group health plan or health insurance coverage in which an individual was enrolled on the date of enactment of this Act, this subtitle and subtitle A (and the amendments made by such subtitles) shall not apply to such plan or coverage, regardless of whether the individual renews such coverage after such date of enactment.
That means those enrolled in individual and small group plans as of the March 23, 2010 ACA enactment date can remain in them. But that’s’ where the insufficiency comes in. It doesn’t apply to plans that came about after the March 23, 2010 ACA enactment date. Those plans aren’t grandfathered and become legally obsolete for plan years starting January 1, 2014 and later. Rather than letting them fall through the cracks and to tamp down outrage over the cancellation notices, the administration is asking plan issuers and state regulators to take it up on a voluntary waiver offer to extend these plans out as far as September 30, 2015.
Congress is also acting to amend Section 1251(a)(2) to bring the orphan plans within the scope of the grandfather clause.
(2) CONTINUATION OF COVERAGE- With respect to a group health plan or health insurance coverage in which an individual was enrolled during any part of the period beginning on the date of enactment of this Act and ending on December 31, 2013, this subtitle and subtitle A (and the amendments made by such subtitles) shall not apply to such plan or coverage, regardless of whether the individual renews such coverage. (New text shown in italics).
Passed this week by the House, H.R. 3350 does not amend the ACA but rather enacts new law that allows health plan issuers with individual plans in effect as of January 1, 2013 to continue to sell the plans outside of the state health benefit exchange marketplace in 2014 and deems these plans grandfathered for the purposes of meeting minimum plan benefit standards effective that year.
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