| On November 14, 2013, President Obama announced a new transition policy in response to pressure from both consumers and Congress over the cancellation of millions of individual and small group insurance policies that did not comply with the Affordable Care Act (ACA)'s reforms set to take effect beginning on January 1, 2014. |
Under the new policy, individuals and small businesses whose coverage had been canceled (or would be canceled) because it will not meet the ACA's standards may be able to re-enroll or stay on their coverage for an additional year. This one-year reprieve may not be available to all consumers because the insurance market is primarily regulated at the state level, and thus, state governors or insurance commissioners will have to allow for the transition relief. Also, health insurance issuers are not required to follow the transition relief and renew plans, and have expressed concern that the change could disrupt the new risk pool under the federal and state health insurance marketplaces (Marketplace).
TRANSITION RELIEF POLICY
The Department of Health and Human Services (HHS) outlined the transition policy in a letter to state insurance commissioners. Under this transitional policy, for 2014, health insurance issuers may choose to continue coverage that would otherwise be terminated or canceled due to the ACA's reforms, and affected individuals and small business may choose to re-enroll in that coverage.
Health insurance coverage in the individual or small group market that is renewed for a policy year starting between January 1, 2014, and October 1, 2014 (and associated group health plans of small businesses), will not be considered to be out of compliance with specified ACA reforms as long as certain conditions are met.
Requirements for Transition Relief
The transition relief only applies with respect to individuals and small businesses with coverage that was in effect on October 1, 2013. The transitional relief is not available to grandfathered plans because these plans are not subject to most of the ACA's market reforms. It also does not apply with respect to individuals and small businesses that obtain new coverage after October 1, 2013. All new plans must comply with the full set of ACA reforms. Furthermore, the health insurance issuer must send a notice to all individuals and small businesses that received a cancelation or termination notice with respect to the coverage (or to all individuals and small businesses that would otherwise receive a cancelation or termination notice with respect to the coverage).
Notice Requirements
The notice to individuals and small businesses must provide the following information:
Any changes in the options that are available to them;
Which of the specified ACA reforms would not be reflected in any coverage that continues;
Their potential right to enroll in a qualified health plan offered through a Marketplace and possibly qualify for financial assistance;
How to access such coverage through a Marketplace; and
Their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms.
Where individuals or small businesses have already received a cancelation or termination notice, the issuer must send this notice as soon as reasonably possible. Where individuals or small business would otherwise receive a cancelation or termination notice, the issuer must send this notice by the time that it would otherwise send the cancelation or termination notice.
According to HHS, it will consider the impact of the transition relief in assessing whether to extend it beyond the specified timeframe.
By Burnham Benefits
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