Federal government expands ACA transitional relief for individual, small group plans

The U.S. Department of Health and Human Services issued guidance today affording states and health plan issuers more time to optionally keep in place health plans not compliant with Patient Protection and Affordable Care Act requirements relating to minimum benefit levels, modified community based rating and guaranteed issue to all applicants without medical underwriting.

The Center for Consumer Information and Insurance Oversight’s extended transitional policy provides transitional relief from these requirements for plans issued through October 1, 2016 as well as the ACA’s requirement that health plan issuers use single statewide risk pools for the individual and small group markets, respectively.

The newly issued guidance follows on similar guidance issued to state insurance commissioners in November 2013 that gave states the option of relieving individual and small group plans from these ACA provisions through September 2015. That guidance was issued in response to a consumer uproar when health plans issued cancellation notices for non-ACA compliant health plans — many of them falling into a time gap between grandfathered plans that were in place when the ACA was enacted in March 2010 and January 1, 2014 when all individual and small group plans must be ACA compliant. President Obama complained the ACA grandfather clause proved “insufficient” in allowing for this gap.

Today’s guidance also extends guidance issued December 19, 2013 permitting individuals whose non-ACA compliant policies were cancelled to qualify for a hardship exemption from the requirement all individuals have health coverage. That exemption allows them to purchase catastrophic coverage and is being extended to October 1, 2016.

Under today’s guidance, states may choose to adopt both the November 2013 transitional policy and the extended transitional policy through October 1, 2016, or adopt one but not the other. States also have the option to apply the relief to both the individual and the small group markets or just one market. Additionally, states can opt to apply the transitional relief solely to large employers if they choose to define the small group market as being employers of 100 or fewer employees for policy years beginning on or after January 1, 2016 as authorized by the ACA.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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Frederick Pilot

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