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

Transition policy extended

March 13, 2014

On March 5, 2014 the Department of Health and Human Services (HHS) extended a previously issued transition policy for the individual and small group markets. Under this new transition policy, the federal government will now allow products to continue that otherwise would be discontinued due to ACA non-compliance. If permitted by a state’s insurance regulator, HHS will allow one-year renewals through plan or policy years starting on or after March 5, 2014 and on or before Oct. 1, 2016.

The guidance is an extension of the transition policy that President Barack Obama announced on Nov. 14, 2013. The original transition applied to plan or policy year renewals from Jan. 1, 2014 through Oct. 1, 2014.

Are large groups effected?

This transition also can apply to large groups that otherwise would be redefined as small groups for plan years beginning on or after Jan. 1, 2016, when the definition of a small employer for many ACA purposes shifts from 1-50 to 1-100. Groups in this situation can renew into their large group policies for an additional year for plan year renewals from Jan. 1, 2016 through Oct. 1, 2016.

What discretion do states and issuers have?

Like the November transition policy, states have discretion to permit issuers to extend policies. Additionally, if a state adopts the transition policy, issuers have the choice whether to maintain policies or discontinue policies as previously planned. States may also make decisions separately for each market segment (for example, individual; small group; large group).

Additionally, states have the discretion to adopt the transition policy for a shorter timeframe then what HHS is allowing.

What about new sales?

The transition does not permit new sales into non-ACA-compliant plans or policies. Like the original transition policy, a policy must have been in effect on Oct. 1, 2013 to be eligible for the new transition policy.

Are there notice requirements?

If an issuer renews a policy under the transition guidance, it must provide the relevant notice provided by HHS. These notices cannot be modified.

Is there a hardship exemption for cancelled policies?

HHS announced that it will be extending the individual mandate hardship exemption that a person may receive when their current health care coverage is discontinued. This hardship exemption policy, first announced Dec. 19, 2013, will now continue for policy discontinuations through Oct. 1, 2016.

What are the Blues doing?

Michigan's Department of Insurance and Financial Services is currently considering its options with respect to the transition policy HHS announced on March 5. The Blues will continue to monitor progress of this policy.

The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. 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. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.