“Grandmother” Rallies – Transition Relief Extended

As Mark Twain once wrote in a cable to a New York newspaper, “The report of my death was an exaggeration.” So, it is with “grandmothered” plans!

CMS gave “grandmother” new life in an announcement on April 9, 2018 extending the transition relief known as “grandmothered” plans.

Rather than terminating “grandmothered” policies at the end of 2018, this extension applies to policy years beginning “on or before October 1, 2019, provided that all such policies end by December 31, 2019.” The transitional relief applies to individual and small group markets.

The notice includes an attachment to be used if a cancellation notice has been sent to the policyholder and the carrier will now continue to policy. The notice provides guidance on differences between “grandmothered” plans and ACA-compliant plans. The notice also explains steps to take to choose a different policy.

As before, the extension of transitional relief allows states to decide whether and to what extent to  allow transitional relief. As such, brokers and consumers should look to their state’s insurance regulators for further guidance.

Grandmothered Plans — On Life Support?

Plans that are not fully in compliance with the Affordable Care Act (ACA) but are not “grandfathered” are referred to as “grandmothered” plans. “Grandfathered” plans had to be in effect prior to enactment of the ACA on March 23, 2010. “Grandmothered” plans could have been purchased subsequent to March 23, 2010 but before December 31, 2013. Both “grandfathered” and “grandmothered” plans have been able to be renewed depending on meeting regulatory or state requirements.

“Grandmothered” plans came about as the result of transitional relief offered by CMS in November 2013. The relief described in a letter allowed health insurance coverage in the individual and small group market that would be renewed between January 1, 2014 and October 1, 2014 to avoid certain insurance market reforms. The rationale for allowing the transition relief was that ACA compliant policies would have been significantly more expensive in many cases.

States could decide whether or not to allow these transitional policies. If a state allowed transitional policies, insurers could decide if they wanted to continue them or not. As many as 35 states allowed “grandmothered” policies.

There have been subsequent renewals of this transition relief. The most recent extension of “grandmothered” plans – and to date the last extension – was issued on February 23, 2017. This letter extended the period of transition relief to policy years beginning on or before October 1, 2018. The relief further limited the relief by noting that “provided all such policies end by December 31, 2018.”

The extension to the end of the 2018 calendar year was to align the end of the policies with the calendar year policy in the individual market.

States could elect to comply with this extension of the transitional relief or they could choose not to do so. They could also selectively elect shorter periods but were precluded from extending transition relief beyond the end of 2018.

Many small group employers and their insurance broker advisors are asking if “grandmothered” policies will survive to see 2019. Hope had flickered when a leaked version of a recent Republican reconciliation bill included an extension for these plans. This legislation never came to a vote.

As things currently stand, “grandmothered” plans will come to an end as of December 31, 2018. As has been the case with a number of ACA provisions, however, “grandmother” may make a miraculous recovery. Only time will tell.

Rule on Market Stabilization Finalizes Special Enrollment Documentation

Starting in June 2017, new consumers in all states served by the HealthCare.gov platform attempting to enroll through applicable special enrollment periods (SEPs) will have to undergo pre-enrollment verification of eligibility. Enrollees would have their enrollment delayed or “pended” until verification of eligibility is completed by the Exchange.

The goal of SEP documentation is to help stabilize the individual insurance market and limit a person’s ability to enroll in coverage only after they discover they need medical care.

A quick review of the final rule’s requirements finds the following regarding SEPs:

  • Pre-enrollment verification applies to federally facilitated and state based exchanges that use the HealthCare.gov platform
  • Enrollees claiming special enrollment period (SEP) eligibility must submit their application and select a Qualified Health Plan (QHP)
  • Enrollment is “pended” until verification of SEP eligibility
  • Start date of coverage is determined by date of QHP selection
  • Consumers have 30 days from date of QHP selection to provide documentation of their qualification for the SEP
  • The exchange will attempt to obtain eligibility through automated means such as verifying birth by “confirming baby’s existence” or electronically verifying that the consumer was denied Medicaid or CHIP
  • Enrollees have proof of previous year health coverage via tax statements which may be helpful in some circumstances
  • Letters from insurers, employers and government health programs are acceptable documentation
  • SEP verification will be phased in with emphasis on the highest volume situations
    • Loss of minimum essential coverage
    • Permanent move
    • Medicaid/CHIP denial
    • Marriage
    • Adoption.

State based exchanges not using the federal platform have the flexibility to determine whether and how to implement pre-enrollment verification of eligibility for SEPs. The final rule suggests that states that have difficulty implementing verification should consider allowing issuers to conduct verification.


New Rule Aimed at Market Stabilization

The Trump administration has published a new proposed rule aimed at stabilizing the individual insurance market. This coincides with NAHU’s emphasis on the critical need to stabilize the individual insurance market.

Critics will say that the rule doesn’t do enough. However, the rule advises that this first step is one of several that will be taken.

One of the provisions calls for individuals to verify that they qualify for a Special Enrollment Period (SEP). Anyone applying for new coverage will be required to provide verification of their SEP beginning in June 2017. Coverage will be pended awaiting verification.  The administration estimates that this may impact as many as 650,000 individuals.

The proposal would also require that SEP enrollment due to marriage would require that one of the spouses had minimum essential coverage prior to filing for coverage via SEP. The proposal would also limit changes in metal levels – the richness of the plan – for SEP-related changes.

Comments are due by March 7, 2017.

The rule can be reviewed here.