On January 31, 2020, CMS announced an additional one-year extension with respect to specific ACA compliance requirements for certain non-grandfathered individual and small group coverage known as “grandmothered” policies. Under the latest extension, states may permit insurers that have continually renewed eligible grandmothered policies since January 1, 2014, to again renew that coverage for a policy year beginning on or before October 1, 2021, provided that the policies end by January 1, 2022.
As background, on November 14, 2013, CMS issued a letter outlining a transitional policy with respect to the health care reform mandates for coverage in the individual and small group markets. Under the policy, state authorities could allow health insurance issuers to continue certain coverage that would otherwise have been cancelled for failure to comply with the ACA requirements. This initiative allowed individuals and small businesses to elect to re-enroll in such coverage. Specifically, the non-enforcement policy provided relief from the following market reforms:
- Community rating
- Guaranteed issue and renewability of coverage
- Prohibition of coverage exclusions based on pre-existing conditions
- Non-discrimination based on health status
- Non-discrimination regarding health care providers
- Comprehensive coverage (i.e., coverage of essential health benefits and the application of maximum out-of-pocket limits)
- Coverage for participation in clinical trials
The transitional policy has been continually extended since the initial announcement, thus permitting grandmothered policies to maintain an exemption from the above-mentioned requirements. However, although the CMS bulletin allows for the temporary continuation of these non-compliant plans at the federal level, the practice must still be approved by state regulators in order for policies to be available in a particular state. Insurers then also have a choice as to whether to keep offering the policies. The bulletin includes a notice to be used in the event a coverage cancellation notice was already sent and the insurer will now be providing an option to the policyholder to continue the coverage.
Accordingly, small employers who are currently covered by such grandmothered policies should be aware of the most recent non-enforcement extension. These employers should work with their advisors and insurers regarding possible renewal of the coverage.
CMS Bulletin »