Since 2014, the Department of Health and Human Services (HHS) has continuously extended a transition policy for certain health plans that do not comply with the Affordable Care Act (ACA).
On January 19, 2021, the HHS continued this tradition by extending an existing transition policy for certain health plans that do not comply with the ACA for an additional year. Health insurance issuers have the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms. If the state allows it, issuers can renew noncompliant coverage for policy years beginning on or before October 1, 2022.
It is important to keep in mind that these noncompliant plans renewed under the extended transition policy must come into compliance with the ACA’s requirements by January 1, 2023.
The Latest Extension
The insurance market is primarily regulated at the state level; therefore, state governors or insurance commissioners must allow for transition relief in their state. The department stated that it will work with issuers and states to implement this extended policy, including options such as:
- Policy years that are shorter (but not longer) than 12 months; or
- Early renewals with a coverage start date of January 1, 2022.
According to the HHS, this approach will facilitate smooth transitions from transitional coverage to ACA-compliant coverage, which requires a calendar year policy in the individual market.
Impact on Employers
Individuals and small businesses may be able to keep their non-ACA compliant coverage through 2022, depending on the plan or policy year.
This latest extension may also mean that ACA compliance is never required for these transitional plans, if the ACA is repealed, replaced or amended, the market reforms may no longer apply to these plans.
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