Kilpatrick

Industry News

CMS Extends Small Group Transitional Relief Policies through 2018

On Feb 23, 2017, CMS issued a new one year extension of its transitional policy for non-grandfathered plans that are not compliant with the ACA.

Policyholders will be allowed to renew their transitional plan coverage through Oct 1, 2018 as long as the coverage does not extend beyond Dec 31, 2018. Assuming CMS does not issue another extension next year, all non-compliant policies must become compliant by Jan 1, 2019. Any policy renewed during the 2018 calendar year after Jan 1 must have a short plan year in order to terminate by Dec 31. CMS believes that requiring the transitional policies terminate immediately before Jan 1, 2019 will “facilitate smooth transitions from transitional coverage to Affordable Care Act-compliant coverage, which requires a calendar year policy year in the individual market.”

We expect TDI to allow the extension in Texas as outlined by CMS. Carriers will have discretion to allow policyholders to change their anniversary dates or obtain short plan years within the CMS guidelines.

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. The most recent announcement is the third extension of the transitional relief policy and the first under the Trump administration. 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.
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