On April 9, 2018, the Centers for Medicare & Medicaid Services’ (CMS) published a bulletin which extended the transitional policy to policy years beginning on or before October 1, 2019, provided that all such policies end by December 31, 2019. This pertains to small employers (less than 50 full-time employee equivalents) who maintain group health plans.
As background, this is a continuation of the policy initially issued by CMS on November 14, 2013. At that time, CMS issued a letter to the State Insurance Commissioners outlining a transitional policy for non-grandfathered coverage in the small group and individual health insurance markets which allowed health insurance issuers the option to continue certain coverage that would otherwise be cancelled under the ACA, and affected individuals and small businesses may choose to re-enroll in such coverage. This initial extension was then extended by the CMS each subsequent year thereafter.
As provided in previously issued guidance, policies subject to the transitional relief are not considered to be out of compliance with several key provisions of the Public Health Service Act (PHS Act). Additionally, policies subject to the transitional relief are not considered to be out of compliance with §1312(c) of the ACA (relating to the single risk pool requirement). Issuers can choose to adopt some or all of these provisions in their renewed policies. What this means is that if you choose to renew your current group health plan policy, your coverage:
- May not meet standards for fair health insurance premiums, so you might be charged more based on factors such as gender or a pre-existing medical condition, and it might not comply with rules limiting the ability to charge older people more than younger people (PHS Act 2701).
- May not meet standards for guaranteed availability, so it might exclude consumers based on factors such as a pre-existing medical condition (PHS Act 2702).
- May not meet standards for guaranteed renewability (PHS Act 2703).
- May not meet standards for non-discrimination with respect to health care providers (PHS Act 2706).
- May not cover essential health benefits or limit annual out-of-pocket spending, so it might not cover benefits such as prescription drugs or maternity care, or might have unlimited cost sharing (PHS Act 2707).
- May not meet standards for participation in clinical trials, so you might not have coverage for services related to a clinical trial for a life-threatening or other serious disease (PHS Act 2709).
The take away is that it’s business as usual for small employers in the group health plan market. Every year the CMS suggests that this transitional relief will be ending yet extensions continue every subsequent spring. Thus, group health plans of small businesses will still not be considered to be out of compliance with certain market reforms under the PHS Act and the ACA.
As a reminder, health insurance issuers that renew coverage under this extended transitional policy, must, for each policy year, continue to provide the notice to affected individuals and small businesses as specified in previously issued guidance and in a similar format as in prior years. There are two types of template notices depending on whether the insurance company previously issued a notice of cancellation.
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