CMS issues guaranteed issue and renewal final rule
June 24, 2013
On February 22, CMS issued its final rule on guaranteed issue and renewal. In general, subject to certain exceptions, issuers are required to accept any individual or employer that applies for any of its products.
Open enrollment – group market
The rule requires that issuers offering coverage in a small or large group market generally must offer coverage to groups in that market all year1.
Participation and contribution rules are not permitted in the large group market with respect to guaranteed availability.
Open enrollment – individual market
The final rule establishes individual market initial and annual open enrollment periods that are identical to the initial and annual open enrollment periods established for the individual Marketplace.
Initial open enrollment: October 1, 2013 to March 31, 2014.
|Initial open enrollment:
||Coverage effective dates:
|If enroll on or before Dec. 15||coverage effective Jan. 1|
|If enrolled Dec. 16 – Jan. 15||coverage effective Feb. 1|
|If enrolled Jan. 16 – Feb. 15||coverage effective March 1|
|If enrolled Feb. 16 – March 15||coverage effective April 1|
|If enrolled March 16 – March 31||coverage effective May 1|
The annual open enrollment period in subsequent years is October 15 to December 7, with a January 1 effective date.
Limited open enrollment periods – individual market
While the final rule still enforces new individual market requirements beginning with policy years starting on or after January 1, 2014 (instead of a uniform January 1, 2014 effective date), the final rule also includes a limited open enrollment period specifically for individuals enrolled in non-calendar year individual market policies.
For those individuals in a non-calendar year individual health insurance policy, all issuers must permit a limited open enrollment period beginning 30 calendar days prior to the date the policy year ends in 2014.
The final rule clarifies that, with certain exceptions, the individual Marketplace special enrollment periods also apply off Marketplace, and are referred to as "limited open enrollment periods." Individuals who qualify for an individual market limited open enrollment period must receive 60 calendar days after the date of the event to elect coverage.
Special enrollment periods
For the on and off Marketplace individual and group markets, issuers are required to offer special enrollment periods for the following:
- For spouses and dependents, loss of coverage due to death of covered employee or individual contract holder
- For employees, spouses and dependents, loss of coverage due to termination (other than by reason of such employee's gross misconduct), or reduction of hours, of the covered employee's employment.
- For spouses and dependents, loss of coverage due to divorce or legal separation of the covered employee from the employee's spouse.
- For spouses and dependents, loss of coverage due to employee becoming eligible for Medicare
- Loss of coverage for a dependent child ceasing to be a dependent child under the generally applicable requirements of the plan.
- Loss of Medicaid or CHIP coverage
- Newly eligible for Medicaid or CHIP employment assistance
- Loss of retiree coverage due to former employer filing for bankruptcy protection
- Loss of employer sponsored coverage or termination of employer contributions to coverage (for example, this applies in cases where coverage was previously received through another employer or spouse's employer)
Special enrollment periods in the group market must last 30 calendar days after the qualifying event. Special enrollment periods in the individual market must last 60 calendar days after the date of the event.
In general, guaranteed renewal requires that issuers in the individual and group markets renew or continue in force coverage at the option of the individual or the plan sponsor, as applicable. However, as described below, there are myriad exceptions to this general rule.
- Discontinuation of a product
- Option for uniform modification
- Participation rules2
Special rules for student health insurance
This rule amends the student health insurance final rule to specify that guaranteed issue and guaranteed renewal do not apply for persons who are not students or dependents of students.
Where can I find more information?
More information can be found in the Federal Register.
1 In the off-Marketplace small group market, the rule permits issuers to decline coverage to groups that do not meet state-permitted contribution or participation standards, except that no participation or contribution standards may apply during an annual enrollment period from November 15 to December 15 each year.
2 The final rule maintains that issuers may deny guaranteed renewability to a group if the plan sponsor fails to meet participation or contribution rules, if participation and contribution requirements are permitted under state law.
The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.