Transition Extended for Non-ACA Compliant Health Plans

Overview

On April 9, 2018, the Department of Health and Human Services (HHS) extended an existing transition policy for certain health plans that do not comply with the Affordable Care Act (ACA) for an additional year, to policy years beginning on or before Oct. 1, 2019.

In states that allow it, health insurance issuers have the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms that took effect in 2014. Originally announced in 2013, the transition policy has already been extended several times.

Important Dates

October 1, 2019

Certain non-ACA compliant plans may continue to be renewed for policy years beginning on or before Oct. 1, 2019.

December 31, 2019

All noncompliant plans renewed under this extended transition policy cannot extend past Dec. 31, 2019.

Background

The ACA includes key reforms that created new coverage standards for health insurance policies, beginning in 2014. For example, effective for 2014 plan years, the ACA imposes modified community rating standards and requires individual and small group policies to cover a comprehensive set of benefits.

Late in 2013, millions of Americans received notices informing them that their plans would be canceled because they did not comply with the ACA’s reforms. President Barack Obama received criticism that these cancellations went against his assurances that if consumers had a plan they liked, they could keep it.

Responding to pressure from consumers and Congress, on Nov. 14, 2013, President Obama announced a transition relief policy for 2014 for non-grandfathered coverage in the small group and individual health insurance markets. If permitted by their states, this transition policy gave health insurance issuers the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms for 2014. This transition policy was later extended several times.

The Latest Extension

On April 9, 2018, HHS extended this transitional policy for an additional year, to policy years beginning on or before Oct. 1, 2019, provided that all policies end by Dec. 31, 2019. Under the extended transitional policy, health coverage in the individual or small group market that meets certain criteria will not be considered to be out of compliance with the ACA’s market reforms.

Specifically, the extended transition relief policy provides that:

  • States may allow issuers that have continually renewed policies under the transitional policy since 2014 to renew that coverage for a policy year starting on or before Oct. 1, 2019; but
  • Any policies renewed under this transitional policy must not extend past Dec. 31, 2019.

According to HHS, the additional one-year extension is intended to smoothly bring all non-grandfathered coverage in the individual and small group markets into compliance with all applicable ACA requirements.

The extended transition relief only applies with respect to individuals and small businesses with coverage that has been continually renewed since 2014, under the previous transition guidance. It does not apply with respect to individuals and small businesses that obtained new coverage in 2014 or after. All new plans must comply with the full set of ACA reforms.

Also, as required under the previous transition policy guidance, health insurance issuers that renew coverage under this extended transitional policy must, for each policy year, provide a notice to affected individuals and small businesses.

For more details regarding the extension on Non-ACA plans - Download the complete ACA Compliance Bulletin