HHS Extends Transitional Insurance Period for Two Years

News Updates

In another delay of Patient Protection and Affordable Care Act (PPACA) requirements, the U.S. Health and Human Services Department (HHS) extended for two years a transitional policy that provides insurers the option, if allowed by their states, to renew their policies for current enrollees without adopting all of the 2014 market rule changes.

“Today’s bulletin extends this transitional policy for two years: to policy years beginning on or before Oct. 1, 2016,” the HHS explained in a fact sheet. “This gives consumers in the individual and small group markets the choice of staying in their plan or joining a new marketplace plan as the new system is fully implemented.”

Announced March 5, 2014, the two-year extension also applies to large businesses purchasing in the large-group market but that, as of Jan. 1, 2016, will be redefined by the PPACA as small businesses purchasing insurance in the small-group market.

Insurers offering such renewals will have to provide notices to consumers telling them of their options and new consumer protections available in other plans. “Specifically, issuers must inform consumers about the protections their renewed plan will not include and how they can learn about the new options and financial assistance available to them through the marketplaces,” the HHS said.

The department also noted that “we will consider the impact of the two-year extension of the transitional policy in assessing whether an additional one-year extension is appropriate.”

Hill Critiques

Senate Minority Leader Mitch McConnell, R-Ky., blasted the agency for the delay.

“The Obama administration’s announcement today that it will continue to allow insurers to sell health care plans that don’t meet Obamacare minimum-coverage requirements is not only another reminder of the president’s broken promise that you can keep your plan if you like it but represents a desperate move to protect vulnerable Democrats in national elections later this year,” he said.

McConnell elaborated on his belief that the holdup was just election-year politics: “By announcing a new delay in requiring that policies meet minimum-coverage standards, the administration avoids a new round of health-policy cancellations set to hit shortly before the November elections.” He called for full repeal of the PPACA.

Sen. John Thune, R-S.D., echoed McConnell’s remarks, asking, “If Obamacare is as great as Democrats say it is, why are they constantly having to delay parts of it?”

Insurers’ Concerns

National Association of Insurance Commissioners President Adam Hamm had concerns, as well. “While we appreciate that this delay only applies to renewals and not new sales, thus limiting its adverse impact on the marketplace, it still has the potential to create confusion surrounding available options for health insurance and uncertainty in the restructured marketplace.”

He pointed out that the original delay, in November 2013, “met a mixed response from state insurance regulators last fall when we saw about half of the states across the country allow an extension. Our concerns about the impact of this proposal are not a reflection of state insurance regulators’ support or opposition to the ACA but, rather, the practical and legal implications facing each state. This decision allows different rules for different policies, which threaten to undermine the new marketplace.”

Hamm cautioned: “Creating two tiers of plans—the compliant and noncompliant—could result in higher premiums overall and market disruptions in 2015 and beyond. Last November each state had to make a decision on whether to allow plan extensions. Once again, state insurance commissioners will need to consider carefully how this will impact rates, consumer options and the overall marketplace. Even if the regulator decides to allow the plans to continue without coming into compliance, carriers may still cancel plans, as we saw in several states after the November announcement.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.


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