On November 14, 2013, the Department of Health and Human Services (HHS) effectuated a transitional relief policy, allowing non-grandfathered health insurance plans to remain in compliance with new Affordable Care Act (ACA) market reforms through October 1, 2014. A letter addressed to insurance commissioners by the Director of the Center for Consumer Information and Insurance Oversight, along with a Fact Sheet from the White House and a Statement from the President, explained the new policy, which is designed to allow individuals and small businesses to retain existing health insurance plans during the transition period.
Although the policy allows insurers to continue coverage that otherwise would be terminated or cancelled because it does not conform to the minimum coverage requirements of ACA, the effectiveness of the policy will depend, in large measure, on what insurers decide to do with those non-conforming policies. The transitional relief is applicable to a health plan or policy only if the coverage was in effect on October 1, 2013. To take advantage of the transitional relief, health insurance issuers must send a notice to all affected individuals and small businesses that informs them of: (1) any changes in the options that are available to them; (2) which of thespecified market reforms would not be reflected in any coverage that continues;(3) their potential right to enroll in a qualified health plan offered through aHealth Insurance Marketplace (also known as an "exchange") and possibly qualify for financial assistance; (4)how to access such coverage through a Marketplace; and (5) their right to enrollin health insurance coverage outside of a Marketplace that complies with thespecified market reforms.
Health insurance issuers must provide this notice as soon as reasonably possible to those individuals or small businesses to whom cancellation or termination notices already have been sent. Otherwise, insurers must send thisnotice by the time they otherwise would send the cancellation or terminationnotice. HHS and the White House have stated that they will consider the impact of the transitional policy when assessing whether to extend it beyond 2014.
On November 15, the U.S. House of Representatives passed the "Keep Your Health Plan Act of 2013" (H.R. 3350), which is based on the same underlying concept of the transitional policy, but seeks to expand the scope of that policy. Specifically, H.R. 3350 would permit an insurer that offered health insurance coverage in the individual market as of January 1, 2013, to continue offering such coverage for sale during 2014 outside of a health care exchange established under the ACA and would treat such coverage as a grandfathered health plan for purposes of satisfying the minimum essential health coverage requirements of ACA.
We will continue to monitor developments in this area.
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