CMS Extends Nonenforcement Policy for ACA Noncompliant “Grandmothered Plans” Through 2022

CMS has announced another extension of the limited nonenforcement policy allowing states to permit insurers in the individual and small group markets to renew health insurance policies they would otherwise have to cancel due to noncompliance with certain Affordable Care Act (ACA) insurance market reforms. This latest extension of the transitional policy, first announced in 2013, continues the terms and conditions of the previous extensions (see our Checkpoint article).

States may now permit insurers that have continually renewed eligible non-grandfathered individual and small group policies since January 1, 2014, to again renew that coverage for a policy year beginning on or before October 1, 2022, provided that the policies end or come into compliance with the applicable market reforms by January 1, 2023. Health insurers relying on this nonenforcement policy must send an informational notice to affected individuals and employers. The bulletin includes a model notice for this purpose.

EBIA Comment: The individual and small group market plans under this transitional policy are commonly known as “grandmothered plans.” Grandmothered plans are distinct under the ACA from “grandfathered plans,” which are plans that were in existence on March 23, 2010, and have not undergone certain prohibited changes (see our Checkpoint Question of the Week). While both types of plans are exempt from many ACA requirements, it’s important to accurately determine which exemption applies to identify the applicable requirements. It will be interesting to see the Biden administration’s approach to this nonenforcement policy and these plans. For more information, see EBIA’s Health Care Reform manual at Sections VI.B (“What Is the Significance of Grandfathered Plan Status?”) and XIV.A (“Introduction and Understanding Small and Large Group Markets”).

Contributing Editors: EBIA Staff.