Insurers will be permitted to extend coverage under certain Affordable Care Act (ACA) noncompliant individual and small group health insurance plans for an additional year, according to guidance released by the Centers for Medicare & Medicaid Services (CMS) on Feb. 23. Under this new guidance, noncompliant plans that are renewed on or before October 1, 2018, can continue to provide coverage until Dec. 31, 2018. Since November 2013, CMS has provided certain ACA-noncompliant health plans, known as "grandmothered" coverage, transitional relief from complying with certain ACA market reforms as a transition period for those who have such plans and want to keep them.
These grandmothered plans are distinct from "grandfathered" plans. Grandfathered plans, under the ACA, are policies that were already in place prior to the ACA's enactment on March 23, 2010, and are not subject to certain ACA market reforms and, further, may continue to offer coverage indefinitely, unless and until the plan makes certain changes that cause it to lose its grandfathered status. Specifically, under the ACA, grandfathered health insurance plans are not subject to the following ACA market reforms:
- premium underwriting rules;
- guaranteed availability of coverage;
- guaranteed renewability of coverage;
- the prohibition on pre-existing condition exclusions;
- the prohibition on discrimination on the basis of health status;
- rules prohibiting health plans from discriminating against health care provider participation;
- requirements related to the coverage of essential health benefits and limitations on cost-sharing; and
- coverage related to approved clinical trials.
Grandmothered plans, in contrast, are plans purchased after the ACA's enactment on March 23, 2010, but before the ACA's market reforms took effect on Jan. 1, 2014. In fall 2013, CMS established the transitional relief policy to accommodate certain individual and small group health plans that would have been terminated for noncompliance with certain ACA market reforms that went into effect on Jan. 1, 2014. CMS then extended the transitional relief policy for these plans in 2014 for two years and again in 2016 for an additional year. According to the most recent guidance, the transitional relief policy is now being extended yet again to "smoothly bring all non-grandfathered coverage in the individual and small group markets into compliance with applicable" ACA sections, "including those relating to single risk pools."
The Feb. 23 guidance clarifies that states are permitted to extend the transitional policy for a shorter period of time than outlined in the guidance but may not extend the relief period past December 31, 2018. Additionally, states can limit the transitional relief policy to the individual or small group market only, or can provide relief to issuers in both markets.
Issuers that extend noncompliant coverage under the transitional policy will not be considered out of compliance with ACA market reforms but are required to provide policyholders with relevant notices indicating the noncompliance and the required termination date.