If You Like Your Insurance, You Can Keep Your Insurance… At Least For Another Year (Posted on November 14, 2013 by )


HealthInsuranceIn the wake of negative publicity about individuals and small businesses losing their existing health insurance due to the Affordable Care Act, the Department of Health & Human Services, in consultation with the Treasury Department and the Department of Labor, has provided transitional relief. The transitional relief applies only if certain conditions are met, as follows:

  • The coverage must be individual or small group (1 to 100 employee) coverage.
  • The policy must have been in effect on October 1, 2013.
  • The policy must be renewed for a policy year starting between January 1, 2013 and October 1, 2013.
  • The plan must not be a grandfathered health plan.
  • The health insurance issuer must send a notice to all individuals and small businesses that received a cancellation or termination notice with respect to the coverage, or sends a notice to all individuals and small businesses that would otherwise receive a cancellation or termination notice with respect to the coverage, that informs them of
    1. any changes in the options that are available to them;
    2. which of the specified market reforms would not be reflected in any coverage that continues;
    3. their potential right to enroll in a qualified health plan offered through a Health Insurance Marketplace and possibly qualify for financial assistance;
    4. how to access such coverage through a Marketplace; and
    5. their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms. Where individuals or small businesses have already received a cancellation or termination notice, the issuer must send this notice as soon as reasonably possible. Where individuals or small business would otherwise receive a cancellation or termination notice, the issuer must send this notice by the time that it would otherwise send the cancellation or termination notice.

If the transitional rule applies, the individual will be exempted from the following provisions of the Public Health Service Act, and the corresponding provisions of the Internal Revenue Code (“Code”) and the Employee Retirement Income Security Act of 1974 (“ERISA”):

  • Section 2701 (relating to fair health insurance premiums);
  • Section 2702 (relating to guaranteed availability of coverage);
  • Section 2703 (relating to guaranteed renewability of coverage);
  • Section 2704 (relating to the prohibition of pre-existing condition exclusions orother discrimination based on health status), with respect to adults, except with respect to group coverage;
  • Section 2705 (relating to the prohibition of discrimination against individual participants and beneficiaries based on health status), except with respect to group coverage;
  • Section 2706 (relating to non-discrimination in health care);
  • Section 2707 (relating to comprehensive health insurance coverage);
  • Section 2709, as codified at 42 U.S.C. ยง 300gg-8 (relating to coverage for individuals participating in approved clinical trials)

Section 702 of ERISA, 29 USC 1182, and section 9802 of the Code (prohibiting discrimination against individual participants and beneficiaries based on health status) remain applicable to group health plans, but not to individually purchased health insurance. Moreover, state agencies responsible for enforcing the specified market reforms are encouraged, but not required, to adopt the same transitional policy with respect to this coverage.

The relief is being granted only on a transitional basis. However, the Department of Health & Human Services has stated that it will consider the impact of this transitional policy in assessing whether to extend it beyond the specified timeframe. It has also stated that it intends to explore ways to modify the risk corridor program final rules to provide additional assistance.