In the fall of 2013, the Department of Health and Human Services (HHS) announced a transitional relief program that allowed state insurance departments to permit early renewal at the end of 2013 of individual and small group policies that do not meet the “market reform” requirements of the Patient Protection and Affordable Care Act (ACA) and for the policies to remain in force until their new renewal date in late 2014.
Since the initial announcement, HHS has extended transitional relief five times. On January 31, 2020, HHS released a Bulletin in which it again extended its transitional policy to permit renewals with a termination date no later than December 31, 2021, provided that all such coverage comes into compliance with the specified requirements by January 1, 2022.
The primary market reforms are the requirements that policies include the 10 essential health benefits, be valued at the “metal levels” (platinum 90%, gold 80%, silver 70%, or bronze 60%), and be community rated (which means that rates may only be based on age with a 3:1 limit, smoking status with a 1.5:1 limit, rating area and whether dependents are covered). Under the ACA, all non-grandfathered group health plans must ensure that annual out-of-pocket cost sharing (for example, deductibles, coinsurance and copayments) for in-network essential health benefits does not exceed certain limits; in February 2015, HHS clarified that the out-of-pocket limits apply to each individual, even those enrolled in family coverage.
Not all existing policies automatically may or will be renewed. In addition to permission from the federal government, both the state insurance department and the insurance company must agree to renew these non-compliant policies.
Download the full ACA Advisor to read more about the requirements that apply to plans renewed under this exception.