Insurance Standards Bulletin Series — INFORMATION – Extension of Transitional Policy through Calendar Year 2017 (Feb. 29, 2016)
CMS has announced another extension of the transition policy allowing states to permit insurers in the individual and small group markets to renew health insurance policies they would otherwise have had to cancel due to noncompliance with certain insurance market reforms (see our Checkpoint article). Where permitted by a state, insurers that have continually renewed eligible non-grandfathered 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 October 1, 2016). Any policies renewed under this transition policy will not be considered to be out of compliance with listed reforms; however, they must not extend past December 31, 2017.
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 preexisting condition exclusions for adults and 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 transition 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.
EBIA Comment: Transitional policies satisfy the individual mandate requirement to maintain minimum essential coverage, so individuals covered under them are exempt from individual shared responsibility penalties (see our Checkpoint article). These individuals are not, however, eligible for premium tax credits since credits are only available for coverage purchased through an Exchange. Thus, these policies should not directly impact employer shared responsibility penalties, which are only triggered by full-time employees who receive tax credits when enrolling in Exchange coverage. For more information, see EBIA’s Health Care Reform manual at Sections XIV (“Insurance Mandates”), XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”), and XXIX (“Shared Responsibility for Individuals (Individual Mandate)”).
Contributing Editors: EBIA Staff.