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Transition Policy for Non-ACA Compliant Plans Extended Indefinitely

The Department of Health and Human Services (HHS) extended an existing transition policy indefinitely for health plans that do not comply with the Affordable Care Act (ACA). This extension applies to policy years beginning after October 1, 2022. Until the HHS announces that the coverage must come into compliance with the specified ACA requirements, the transition policy will remain in place.

The transition policy has been continuously extended since its original announcement in 2013. As of 2014, when the ACA’s market reforms took effect, participating states may give health insurance issuers the option of renewing current policies for current enrollees without adopting the ACA’s reforms. The plans that are renewed under the transition policy are called “grandmothered” plans.

The extended transition relief applies only to small businesses and individuals with continually renewed coverage since 2014. Those who obtained new coverage in or after 2014 must comply with the full set of ACA reforms.

Extended Policy Implementation

States can choose to adopt the extended transition policy for both individual and small group markets, or for either the individual or small group market only. States may also choose to extend the transition policy for shorter periods of time. Transitional policies containing rate increases that are subject to review under the ACA should follow specific guidelines to ensure ACA compliance.

States also have the option to expand their small group markets to businesses with up to 100 employees. States that choose to expand the definition of “small employer” to up to 100 employees can provide transition relief to employers.

California, Connecticut, Washington, Minnesota, New York, Rhode Island, and Vermont all prevent insurers from using the original transition policy. Maryland allows renewal under specific provisions.

Effect on Employers

Until the HHS announces that plans must comply with the ACA reforms, small businesses and individuals may keep their non-ACA compliant coverage. As the transition policy has been extended continuously since 2014, there is a possibility that the HHS will never call for the health plans renewed under the transition policy to come into ACA compliance.

For any questions, please contact your dedicated Creative Benefits, Inc. team member.