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CMS Continues Extension of Transitional Coverage into 2018

In the third straight extension of non-grandfathered coverage, CMS aims to facilitate easy transition to ACA-compliant coverage for health insurance issuers.

CMS continues extended transitional coverage into 2018

Source: Thinkstock

By Thomas Beaton

- The Centers for Medicare & Medicaid Services (CMS) has again extended its policy enabling states to permit health plans additional time to bring coverage into compliance with the Affordable Care Act.

Jeff Wu, Acting Director of the Center for Consumer Information and Insurance Oversight, issued the extension in a recent insurance standards bulletin on February 23.

The division of CMS identified as the impetus for the extension the continued effort to provide coverage to several individuals and small groups that did not readily have ACA compliant options.

“We will work with issuers and States to implement this policy, including options such as allowing policy years that are shorter (but not longer) than 12 months or early renewals with a January 1, 2018 start date,” Wu wrote. “This approach will facilitate smooth transitions from transitional coverage to Affordable Care Act-compliant coverage, which requires a calendar year policy year in the individual market.”

Under the extended transition policy, individual and small group policyholders will not be considered non-compliant with provisions of the Public Health Service Act. The extended transitional policy covers policy years beginning on or before Oct. 1, 2018 so long as these policies end by Dec. 31, 2018.

According to the announcement, CMS will work with health plans and state officials to implement the policy. Under the policy, states can have the option to extend the transitional policy for shorter periods of time and to both individual and small markets or one or the other exclusively.

“Under the extended transitional policy, health insurance coverage in the individual or small group market that meets the criteria of the extended transitional policy and associated group health plans of small businesses, as applicable, will not be considered out of compliance with the market reforms as specified above,” Wu stated.

For each policy year, the health insurance issuer must provide a mandatory notice indicating whether the health plan will continue using transitional coverage.

If health insurance issuers choose the option to either continue or decline transitional coverage, the notice to individuals and small groups must provide a list of major disclaimers for keeping non-ACA-compliant coverage.

In notices attached to the CMS bulletin, the federal agency has detailed the potential effects of non-ACA-compliant coverage on policyholders.

The disclaimers state that keeping transitional coverage may fail to abide by fair health insurance premiums, where individuals can be charged more on their premiums for factors (e.g., gender, pre-existing conditions).

Additionally, transitional coverage may fail to comply with standards to guarantee availability based on factors like pre-existing medical conditions. Adults who experience chronic conditions such as diabetes or cancer may not receive treatment because their transitional coverage may not meet the current market standards for pre-existing conditions.  

These notices also say that transitional coverage may not cover various out-of-pocket expenses such as medication and maternity care.

Individuals and small groups who keep transitional coverage may not meet standards for participation in clinical trials, so individuals on this coverage may not have be able to receive services related to clinical trial for a serious or life-threatening disease.

CMS has provided steps for individuals and small groups for choosing a different policy and suggested that new policyholders shop the Health Insurance Marketplace to find a private policy that is affordable, meets new care standards, and is effective for them. Certain individuals may be eligible for tax credits or federal assistance to purchase coverage through the Marketplace.

Individuals can also get new coverage outside of the Marketplace, where policies are up to current standards and can be purchased even with a pre-existing medical condition.

Since 2013, CMS has extended the length of transitional policies with a continuing effort to bring compliant, affordable coverage to high-risk individuals and small groups.

“We are committed to smoothly bringing all non-grandfathered coverage in the individual and small group markets into compliance with all applicable PHS Act sections, including those relating to single risk pools,” the agency said.

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