Reform Alert - News from the Blues' Office of National Health Reform

CMS Issues Proposed Rule: Guaranteed Issue and Renewal

Update: June 25, 2013 — CMS issues guaranteed issue and renewal final rule

December 27, 2012

On November 20, 2012, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule regarding guaranteed issue and renewal. Comments due December 26. 

What is guaranteed issue?

Guaranteed issue requires that an insurance policy be offered to any eligible applicant without regard to health status, age, gender or pre-existing condition.  The proposed rule requires that issuers make all products sold in a market available to all employers or individuals in those respective markets who apply for those products.

What is the open-enrollment period for coverage to become effective?

Open enrollment is the annual period in which employees can choose from a selection of benefits or individuals can apply for coverage in the individual market. The effective date refers to the date the insurance policy goes into effect.  The proposed rule establishes initial and annual open enrollment periods and effective dates identical to initial and open enrollment periods previously established for the health insurance Exchanges, for the individual market. The chart below represents the effective dates for selections made during the initial enrollment period from October 1, 2013 to March 31, 2014.  

If enrolled on or before: Coverage effective:
December 15 January 1
December 16-January 15 February 1
January 16-February 15 March 1
February 16-March 15 April 1
March 16-March 31 May 1

In subsequent years, the annual open enrollment period will be from October 15 to December 7 each year, with coverage effective January 1.

The proposed rule requires that issuers offering coverage in a group market, must offer to groups in that market all year. In the off-exchange small group market, however, issuers are permitted to decline coverage to groups that fail to satisfy the issuer’s participation or contribution requirements. On exchange a SHOP (small business health options program) may establish contribution and/or participation requirements at the level of the exchange (not at the issuer level). 

Will there be special enrollment periods?

Special enrollment allows an individual to enroll regardless of regular enrollment dates, provided that the individual request enrollment within 30 days (of the loss of coverage or triggering life event).  

Issuers are required to offer special enrollment periods.  Special enrollment periods include, but are not limited to, the following:

  • Loss of minimum essential coverage;
  • Marriage, birth, adoption;
  • Individual gains status as a citizen, national or lawfully present individual (only applies to individual market);
  • Individual is newly eligible or ineligible for subsidies (only applies to individual market);
  • Access to QHPs changes due to permanent move;
  • Loss of coverage due to termination or reduction of hours;
  • 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 Medicaid or CHIP coverage or newly eligible for Medicaid or CHIP employment assistance;
  • Loss of coverage for a dependent child ceasing to be a dependent child;
  • Loss of retiree coverage due to former employer filing for bankruptcy protection.

What is guaranteed renewal?

Guaranteed renewal requires that an existing policy be renewed as long premiums are paid.

Are there any exceptions where an issuer does not have to renew your policy?

Yes.  Some exceptions include, but not limited to:

  • Discontinuation of a product;
  • Option for uniform modification;
  • Contribution and participation standards for small groups;
  • Nonpayment of premiums;
  • Enrollee fraud;
  • Enrollees’ movement outside service area;
  • Membership in bona fide association ceases;
  • Issuer terminates all coverage in a market.

Are there 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?

For more information on guaranteed issue and renewal, please go to the Health Insurance Market Rules proposed rule (as published in Federal Register on November 26).

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 U.S. 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.