Impact of President Obama's Announcement on the Affordable Care Act
Responding to pressure from consumers and Congress, President Obama announced a new transition policy for 2014. The announcement has lead to numerous questions, many of which, cannot be answered yet.
Under the new policy, individuals and small businesses whose coverage has been canceled (or would be canceled) because it does not meet the ACA’s standards may be able to re-enroll or stay on their coverage for an additional year.
However, this one-year reprieve may not be available to all consumers. Because the insurance market is primarily regulated at the state level, state governors or insurance commissioners will have to allow for the transition relief. Also, health insurance issuers are not required to follow the transition relief and renew plans, and have expressed concern that the change could disrupt the new risk pool under the federal and state Health Insurance Marketplaces.
For 2014, health insurance issuers may choose to continue coverage that would otherwise be terminated or canceled due to the ACA’s reforms, and affected individuals and small business may choose to re-enroll in the coverage.
Under this transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between Jan. 1, 2014, and Oct. 1, 2014 (and associated group health plans of small businesses), will not be considered to be out of compliance with specified ACA reforms if certain conditions are met.
According to HHS, it will consider the impact of the transition relief in assessing whether to extend it beyond the specified time-frame.
The transitional relief is not available to grandfathered plans because these plans are not subject to most of the ACA’s market reforms. According to President Obama, the transition relief is an extension of the grandfathered plan rules to additional health insurance policies.
The transition relief only applies with respect to individuals and small businesses with coverage that was in effect on Oct. 1, 2013. It does not apply with respect to individuals and small businesses that obtain new coverage after Oct. 1, 2013. All new plans must comply with the full set of ACA reforms.
Also, 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 to all individuals and small businesses that would otherwise receive a cancelation or termination notice with respect to the coverage).
Notice Requirements
The notice to individuals and small businesses must provide the following information:
- Any changes in the options that are available to them;
- Which of the specified ACA reforms would not be reflected in any coverage that continues;
- Their potential right to enroll in a qualified health plan offered through a Marketplace and possibly qualify for financial assistance;
- How to access such coverage through a Marketplace; and
- 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.
Please feel free to contact Clark-Mortenson Insurance at 877-352-2121, or via e-mail at service@clark-mortenson.com, with any questions today.
