On March 5, 2014, after several days of speculation, the Obama Administration announced a two year extension of a policy designed to allow individuals and small employers to extend plans slated to be canceled due to noncompliance with certain Patient Protection and Affordable Care Act (PPACA) requirements. A one year reprieve for canceled plans was initially introduced in November of 2013.
Like the November 2013 policy, this transitional policy delegates the decision to implement the policy to the individual states and insurance carriers operating in the individual and small group markets within those states. If a state adopts the policy and an insurance carrier continues to sell these plans in the individual and small group markets, plans that are not compliant with certain PPACA requirements may survive into 2016. If such plans are renewed, they will not be considered out of compliance with PPACA’s adjusted community rating requirements, guaranteed availability and renewability requirements, prohibitions on pre-existing condition exclusions (individual market only), and the Essential Health Benefits and cost sharing requirements, among others.
Interestingly, the transitional policy issued on March 5, 2014 extends to employers with 51 to 100 full-time equivalent employees who are currently considered “large” by PPACA’s definition, but will be considered “small” when the definition of small employer expands to include employers with 100 or fewer full-time equivalent employees in 2016. Employers in this size segment may renew their large group plan beginning on or before October 1, 2016 without being considered out of compliance with the PPACA requirements specific to plans sold in the small group market. The transitional policy also contemplates an additional one year extension if appropriate.
Carriers that decide to renew policies in the individual or small group markets that are out of compliance with the PPACA requirements specified in the policy must provide a notice to each affected individual and small employer for each policy year through October 1, 2016. The relevant notices are included in the transitional policy, which may be found here.
The IRS, Treasury, Department of Labor, and Department of Health and Human Services also issued regulatory guidance in addition to this transitional policy. Those final regulations provide information on the transitional reinsurance and risk corridor programs, the open enrollment period for the Health Insurance Marketplaces in 2015, and the employer health insurance reporting requirements to individuals and the IRS. A number of news outlets reported on the regulatory push, including Kaiser Health News, The Hill’s HealthWatch Blog, and Politico. We plan to address the employer reporting requirements in a future post.
