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CMS Extends Small Group Transitional Relief Policies through 2020

CMS Extends Small Group Transitional Relief Policies through 2020

On Mar 25, 2019, CMS issued a new one year extension of its transitional policy for non-grandfathered small group plans that are not compliant with the ACA.

Policyholders will be allowed to renew their transitional plan coverage (commonly referred to as ‘grandmothered plans’) through Oct 1, 2020 as long as the coverage does not extend beyond Dec 31, 2020. If CMS does not issue another extension next year, all non-compliant policies must become compliant by Jan 1, 2021. Any policy renewed during the 2020 calendar year after Jan 1 must have a short plan year in order to terminate by Dec 31. CMS believes that requiring transitional policies terminate immediately before Jan 1, 2021 will “facilitate changing from non-compliant coverage to Affordable Care Act-compliant coverage, which requires a calendar year policy year in the individual market.”

As specified in prior extensions, carriers that renew coverage under the extended transitional relief policy must provide a notice to affected individuals and small businesses about the limitations of non-compliant coverage for each policy year.

We have confirmed with most of the state DOL’s and Departments of Insurance that they will allow grand”mothered” plans to continue, provide policyholders the freedom to change their anniversary dates, and allow carriers to offer short plan renewal options within CMS guidelines.

This is the fifth extension of the transitional relief policy and third under the Trump Administration. While the scope of this extension is again limited to one year, the context of the announcement indicates a longer term commitment to relief continuation. CMS Administrator Seema Verma explains: “Not extending the grandmothered plan policy would cancel plans that are meeting people’s needs today and, as a result, force people to decide between buying coverage they cannot afford on the individual market or going uninsured. By extending the grandmothered plan policy, we are following through on our commitment to protect those left behind by Obamacare.” The CMS press release cites this transitional relief extension and recent actions to expand access to association health plans and short-term health plans as examples of the Trump Administration’s commitment to providing more affordable coverage options to Americans “left behind by the PPACA.”

Background

In response to public pressure, CMS first announced transitional relief for small groups and individuals allowing them renew the coverage they had in place on Oct 1, 2013 even though that coverage did not comply with various ACA market reforms including community rating, essential health benefits, and metallic benefit levels. Timeline of related guidance:

  • Nov 14, 2013 – The original transitional policy. Available to policy years beginning Jan 1 – Oct 1, 2014. All non-compliant policies would terminate by Sep 30, 2015.
  • Mar 5, 2014 – Extension 1. Available to policy years beginning Jan 1, 2014 – Oct 1, 2016. All non-compliant policies would terminate by Sep 30, 2017.
  • Feb 29, 2016 – Extension 2. Available to policy years beginning Jan 1, 2014 – Oct 1, 2017. All non-compliant policies must terminate by Dec 31, 2017.
  • Feb 23, 2017 – Extension 3. Available to policy years beginning Jan 1, 2014 – Oct 1, 2018. All non-compliant policies must terminate by Dec 31, 2018.
  • Apr 9, 2018 – Extension 4. Available to policy years beginning Jan 1, 2014 – Oct 1, 2019. All non-compliant policies must terminate by Dec 31, 2019.
  • Mar 25, 2019 – Extension 5. Available to policy years beginning Jan 1 2015 – Oct 1, 2020. All non-compliant policies must terminate by Dec 31, 2020.

About the author, Rhamy

Rhamy grew up watching and working with his mother and grandmother in the seniors insurance market. This familiarity with the struggles faced by people trying to navigate the incredibly complicated and heavily regulated healthcare market led him to start Poplar Financial while working on his degree at the University of Memphis. After completing his MBA and Bachelors in Finance and Economics, Rhamy guided Poplar Financial through the disruptive opportunity that is the Affordable Care Act. Since then Poplar Financial has received numerous awards from major insurance carriers, and has completed its fourth year in a row of doubling in size. Now his team focuses on the processes around human resources, and specializes in providing companies with between 20 and 1000 employees with the payroll, benefits, and HR needs.

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