"Small Employer" Redefined and Extension of Renewal for Non-ACA Compliant Plans

On April 19, 2018, the Utah Insurance Department published Bulletin 2018-2, which provides guidance to insurers that offer a health benefit plan or certified stand-alone dental plan in the individual or small employer market for the 2019 plan year. Among other things, this bulletin includes a new definition of “small employer” and an extension of renewal for non-ACA-compliant plans (also known as “grandmothered plans”).

Small Employer Redefined. 2018 HB 39 updated the definition of “small employer.” Under the new definition, a small employer is one who, with respect to a calendar year and to a plan year, employed at least one but not more than an average of 50 eligible employees on business days during the preceding calendar year. If the employer didn’t exist for the entirety of the previous calendar year, reasonably expects to employ on average of at least one but not more than 50 eligible employees on business days during the current calendar year, employs at least one employee on the first day of the plan year, or has has common ownership with one or more other employers, the employer is treated as a single employer under 26 U.S.C. Sec. 414(b), (c), (m) or (o).

Transitional/Grandmothered Plan Extension. Bulletin 2018-2 allows an individual or small employer health insurer to renew and continue any grandmothered plans through 2019. The extension for 2019 mirrors the previous extensions by the commissioner in response to CMS guidance.

As background, on April 9, 2018, CMS issued guidance that allows the extension of grandmothered policies (i.e., non-ACA-compliant plans that have been continued since 2013), subject to state and carrier approval. Bulletin 2018-2 represents Utah’s approval for such an extension of the transitional small group and individual policies for policy years beginning on or before Oct. 1, 2019, provided all policies end by Dec. 31, 2019. The grandmothered plans had to be in place prior to 2014.

An insurer may early renew coverage or issue coverage for a period other than 12 months if the transition policy terminates prior to Jan. 1, 2018. For any transitional policy renewed prior to Jan. 1, 2018, the policy may be renewed for a period through Dec. 31, 2019, with no increase of premium after such renewal.

For transitional plans with deductibles and out-of-pocket maximums on an accumulation period other than a calendar year, an insurer may not apply accumulation periods consisting of fewer than 12 months, even though the policy period may be less than 12 months. An accumulation period for a policy with non-calendar year deductibles and out-of-pocket maximums can be either:

  • One accumulation period beginning at renewal month and extending through Dec. 31, 2019. For example, a transitional plan renewed Oct. 1, 2018, would have a 15-month accumulation period during which all claims would count toward the deductible and out-of-pocket maximum; or
  • Two overlapping 12-month accumulation periods. For example, a transitional plan renewed Oct. 1, 2018, would have a 12-month accumulation period of Oct. 1, 2018, through Sept. 30, 2018, and an overlapping 12-month accumulation period of Jan. 1, 2019, through Dec. 31, 2019. Claims incurred during January through September would be carried over and counted toward the deductible and out-of-pocket maximum for both accumulation periods.

Utah employers that have grandmothered plans are are interested in renewing should work with their advisors and insurers.

Bulletin 2018-2 »
2018 HB 39 »