Option For Some To Renew Policies That Do Not Fully Meet ACA Standards

In the fall of 2013, the Department of Health and Human Services (HHS) announced a transitional relief program that allowed state insurance departments to permit early renewal at the end of 2013 of individual and small group policies that do not meet the “market reform” requirements of the Patient Protection and Affordable Care Act (ACA) and for the policies to remain in force until their new renewal date in late 2014.

On March 5, 2014, HHS released a Bulletin that extended transitional relief to permit renewals as late as October 1, 2016, allowing plans to remain in force until as late as September 30, 2017. On February 29, 2016, HHS released another Bulletin to permit renewals until October 1, 2017, with a termination date no later than December 31, 2017. On February 23, 2017, HHS released another Bulletin in which it re-extended its transitional policy to permit renewals with a termination date no later than December 31, 2018. On April 9, 2018, HHS released another Bulletin in which it re-extended its transitional policy to permit renewals with a termination date no later than December 31, 2019. On March 25, 2019, HHS released Bulletin in which it re-extended its transitional policy to permit renewals with a termination date no later than December 31, 2020.

On January 31, 2020, HHS released another Bulletin in which it re-extended its transitional policy to permit renewals with a termination date no later than December 31, 2021, provided that all such coverage comes into compliance with the specified requirements by January 1, 2022. On January 19, 2021, HHS released another Bulletin in which it re-extended its transitional policy to permit renewals on or before October 1, 2022, provided that all such coverage comes into compliance with the specified requirements by January 1, 2023.

The primary market reforms are the requirements that policies include the 10 essential health benefits, be valued at the “metal levels” (platinum 90%, gold 80%, silver 70%, or bronze 60%), and be community rated (which means that rates may only be based on age with a 3:1 limit, smoking status with a 1.5:1 limit, rating area and whether dependents are covered). Under the ACA, all non-grandfathered group health plans must ensure that annual out-of-pocket cost-sharing (for example, deductibles, coinsurance and copayments) for in-network essential health benefits does not exceed certain limits; in February 2015, HHS clarified that the out-of-pocket limits apply to each individual, even those enrolled in family coverage.

Not all existing policies automatically may or will be renewed. In addition to permission from the federal government, both the state insurance department and the insurance company must agree to renew these non-compliant policies. A list of state decisions as of January 2020 is available at healthinsurance.org.

States and insurers have the option to include some of the market reform requirements that the federal government says may be disregarded. States had the option to allow renewals of individual policies only, small group policies only, or both types of policies, and to allow this for 2015 only or for both 2015 and 2016. In 2016, these market reforms started to apply to mid-size employers (those with 50 to 100 employees) so states had the option to allow renewal of existing policies to those employers as well.