June 14, 2016

On June 9, 2016, the Utah Department of Insurance (DOI) published Bulletin 2016-2(a). The new bulletin relates to the extension of renewals for non-PPACA-compliant policies. As background, the federal government previously announced a transition policy that allows insurers (if allowed by the state) to renew non-grandfathered non-PPACA-compliant plans, so long as the transitional coverage does not extend past Dec. 31, 2017. In prior bulletins, including Bulletins 2016-2 and 2015-5 (both covered in previous editions of Compliance Corner), the Utah DOI has allowed the transition policy for Utah insurers. Bulletin 2016-2(a) supersedes those bulletins.

According to Bulletin 2016-2(a), an insurer may early renew coverage or issue coverage for a period of less than 12 months, so long as the transitional policy terminates prior to Jan. 1, 2018. For any transitional policy renewed prior to Jan. 1, 2017, the policy may be renewed for a period of coverage through Dec. 31, 2017, with no increase of premium after such renewal.

The bulletin also explains certain aspects of cost sharing with respect to transitional plans on an accumulation period other than a calendar year. Specifically, an insurer may not apply accumulation periods consisting of fewer than 12 months, even though the policy period may be less than 12 months. The bulletin describes two options on accumulation periods with respect to non-calendar year deductibles and out-of-pocket maximums. Under the first option, only one accumulation period is applied, beginning at the renewal month and extending through Dec. 31, 2017. So, for example, a plan that is renewed on Oct. 1, 2016, would have a 15-month accumulation period (during which all claims would count towards the deductible and out-of-pocket maximum). Under the second option, there are two overlapping 12-month accumulation periods. So, for example, a transitional plan renewed Oct. 1, 2016, would have a 12-month accumulation period of Oct. 1, 2016, through Sept. 30, 2017, and an overlapping 12-month accumulation period of Jan. 1, 2017, through Dec. 31, 2017. Claims incurred during the overlapping months (January through September 2017) would be carried over and counted toward the deductible and out-of-pocket maximum for both accumulation periods.

Utah employers sponsoring fully insured plans should work with carriers with regard to the transition policy, in determining if early renewal is allowed and in better understanding the accumulation period rules with respect to their situation. Those employers can also work with their advisor to better understand the rules.

Bulletin 2016-2(a) »