This transitional relief, which was only supposed to be for policies renewing for policy years between January 1, 2014 and October 1, 2014, has now been extended to policy years beginning on or before October 1, 2016. The CMS further states that it will consider the impact of this latest extension when deciding whether or not to add an additional year on top of that.
The CMS transitional policy provides a lot of options for states that wish to take advantage of just some of its choices. For example, a state that decided not to take advantage of the first delay issued in November 2013 can implement the transitional policy for any remaining portion of 2014, or it could extend the transitional policy for any period beyond that time up to October 1, 2016.
Also, a state could decide to adopt the transitional policy for either one or both of the individual and small group markets. It could also decide to just adopt the transitional policy for large businesses that will be redefined as small businesses purchasing insurance in the small group market on or after January 1, 2016. (“Small employer” is defined by the ACA Sec. 1304(b)(2) as averaging between one and 100 employees, but under ACA Sec. 103(b)(3) states have been allowed to define them as averaging between one and 50 employees up until January 1, 2016. In states choosing to do that, employers with more than 50 workers have been treated as large employers. Therefore, as of January 1, 2016, employers with between 50 and 100 employees in those states will instead be considered small employers for purposes of the ACA rules.
Whatever the transitional policy adopted, the CMS guidance cautions that, if a transitional policy involves rate increases subject to review under PHS Act 2794, it should still comply with the necessary rules and processes for submitting information to the state and to the CMS. PHS Act 2794 required the Secretary of the HHS to establish an annual review process, in conjunction with the states, whereby insurers would have to submit a justification for “unreasonable” upcoming increases in their premiums and prominently post the increase information on their websites. States have to give the Secretary of the HHS information about trends in premium increases and recommend whether or not to let certain health insurance issuers participate in the state’s exchange based on a pattern of excessive or unjustified price hikes.
The CMS also advises that health insurance issuers taking advantage of the transitional relief must, for each policy year, provide a standard, non-modifiable notice to affected individuals and small businesses. There are two notices provided by the CMS as an attachment to its latest announcement of transitional guidance. One is to be used if a cancellation notice has already been sent out, and the other is to be used if a cancellation notice was not yet sent.
In the same guidance an extension to October 1, 2016 was also provided for individuals whose policies were cancelled and who find their options in their state’s exchanges to be prohibitively expensive. Those individuals may qualify for relatively cheap catastrophic coverage, but they have to complete and submit a hardship exemption form along with supporting documentation.