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Extended: Renewals of Noncompliant Small Employer Plans

05.06.2016

Insurance, filingThe Centers for Medicare and Medicaid Services has announced the extension of an important transitional policy. The policy in question allows states to permit insurers in the individual and small group markets to renew health insurance policies they would otherwise have had to cancel because of noncompliance with certain insurance market reforms under the Affordable Care Act (ACA).

Where permitted by a state, insurers that have continually renewed eligible nongrandfathered individual and small group policies since January 1, 2014, may now renew such coverage for a policy year beginning on or before October 1, 2017. (Previously, this deadline was October 1, 2016.) Any policies renewed under this transitional policy won’t be considered out of compliance with listed reforms — but they must not extend past December 31, 2017.

Listed reforms

The list of reforms covered by the transitional relief remains the same and includes:

  • Premium rating rules,
  • Guaranteed availability and renewability, and
  • The requirement to provide essential health benefits, provided that certain conditions are satisfied.

For individual policies only, the list also includes prohibitions on: 1) pre-existing condition exclusions for adults, and 2) discrimination based on a health factor. Small group policies covered by the transition policy must still comply with these two reforms.

Insurers that opt to renew coverage under this extended transitional policy are still required to provide an annual notice of the right to continue existing coverage, using one of the two versions attached to the bulletin.

Impact on shared responsibility

Transitional policies satisfy the ACA’s individual mandate requirement to maintain minimum essential coverage, so individuals covered under them are exempt from individual shared responsibility penalties. But these individuals aren’t eligible for premium tax credits because credits are available only for coverage bought through a Health Insurance Marketplace.

Therefore, these policies shouldn’t directly impact employer shared responsibility penalties, which are triggered only by full-time employees who receive tax credits when enrolling in coverage via a Health Insurance Marketplace. Consult your benefits advisor regarding whether and how the transitional policy might affect you.

Ron M. Present, CALA, CNHA, LNHADo you have questions about small employer plans? 

Contact Ron Present, Partner and Health Care Industry Group Leader, at 314.983.1358 or rpresent@bswllc.com

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