CMS Issues Non-ACA Compliant Plans Extension

February 2017 ~

CMS issued an insurance standards bulletin on February 23, granting another extension to non-Affordable Care Act (ACA)-compliant health plans to allow insurers and consumers to extend for an additional year.

According to the bulletin, CMS will allow states to extend the life of transitional plans (“grandfathered” plans that are exempt from most of the ACA’s insurance reform provisions) to policy years that begin on or before October 1, 2018, as long as the policies do not extend past December 31, 2018.

These plans will continue to be exempt from most of the ACA’s insurance reform provisions which otherwise became effective on January 1, 2014, including:

• the ban on health status underwriting;
• the guaranteed availability and renewability requirements;
• the essential health benefits, annual out-of-pocket limit and actuarial value requirements;
• the ban on preexisting condition exclusions; and
• the requirement that all individual and small group market plans of an insurer be part of a single individual or small group risk pool.

Though the insurance industry lobbied for the extension, some experts say it will hurt efforts to stabilize the individual market and moderate rate hikes by letting healthier people stay in plans outside the ACA-regulated insurance pool. It has been estimated that fewer than one million people currently remain in grandfathered individual-market plans in the three dozen or so states that currently allow them. The remaining states have already ceased the sale of non-ACA compliant plans to strengthen their ACA-regulated markets.

The latest extension will be the fourth CMS has given to non-ACA-compliant health plans. Regarding the most recent extension, CMS said, “This approach will facilitate smooth transitions from transitional coverage to Affordable Care Act-compliant coverage, which requires a calendar year policy year in the individual market.”

Source(s): CMS, February 2017; Modern Healthcare, February 2017; HealthcareDIVE, February 2017; Becker’s Hospital Review, February 2017; Kaiser Health News, February 2017; FierceHealthcare, February 2017; HealthAffairs, February 2017;