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News Flash November 15, 2013—Temporary Exemption from 2014 PPACA Requirements for Certain Insurance Renewals

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  • 1. News Flash: November 15, 2013—Temporary Exemption from 2014 PPACA Requirements for Certain Insurance Renewals The Department of Health and Human Services (HHS) has announced a “transitional policy” under which insurance companies may choose to continue health insurance coverage that would otherwise be cancelled for plan or policy years starting between January 1, 2014 and October 1, 2014. The transitional policy permits insurers to delay implementation of certain market reform requirements – and the delay allows individuals the opportunity to maintain the benefits that were in place in 2013. This announcement is intended to address the growing concern about insurer cancellation of insurance policies, because they do not comply with the PPACA requirements that are becoming effective in 2014. This transitional program only applies to individual or small group market insurance policies and only to nongrandfathered plans—HHS indicated that, in light of the limited application of the PPACA market reforms, no transitional relief was needed for grandfathered plans. The term “small group market” generally refers to employers with 100 or fewer employees, although prior to 2016 states may elect to define small group market as employers with 50 or fewer employees. Exempted PPACA Market Reform Requirements Under this program insurers have the option (but are not required) to renew their individual or small group market health insurance policies (and associated group health plans of small businesses) for policy years starting between January 1, 2014 and October 1, 2014, without having to amend those polices to incorporate the following PPACA market reform requirements: • Section 2701 (fair health insurance premiums) — until the transition period is over, rates are not limited to age, tobacco use, geographic area or family size factors; • Section 2702 (guaranteed availability of coverage) — until the transition period is over, insurers are not required to accept every individual and employer that applies for coverage; • Section 2703 (guaranteed renewability of coverage) — until the transition period is over, insurers are not required to guarantee coverage renewal; • Section 2704 (prohibition of pre-existing condition exclusions or other discrimination based on health status with respect to adults, except with respect to group coverage) — until the transition period is over, insurers can continue to apply pre-existing condition exclusions; • Section 2705 (prohibition of discrimination against individual participants and beneficiaries based on health status) except with respect to group coverage— until the transition period is over, insurers can discriminate based on health status;
  • 2. • Section 2706 (non-discrimination in health care, prohibiting discrimination against health care providers practicing within their scope of practice or against employees for exercising their rights under PPACA) — until the transition period is over, insurers can discriminate as to the health care providers for which they will provide coverage; • Section 2707 (comprehensive health insurance coverage, requiring coverage of essential health benefits and limits on cost-sharing) — until the transition period is over, insurers are not required to provide coverage for essential health benefits or limit cost-sharing for those benefits; • Section 2709, as codified at 42 U.S.C. § 300gg-8 (coverage for individuals participating in approved clinical trials) — until the transition period is over, insurers are not required to provide for coverage in connection with clinical trials. Notice to Affected Individuals and Small Businesses In order for the individual or small group market coverage to qualify for the temporary exemption from these Health Care Reform requirements, the coverage must have been in effect on October 1, 2013, and the health insurer must send an informational notice to all individuals and small businesses that have received or would otherwise receive a cancellation notice informing them of: • Any changes in the options that are available to them; • The specified PPACA market reforms (per the above list) that will not apply to the coverage that is being continued; • Their potential right to enroll in a qualified health plan offered through one of the Exchanges and the possibility that they may qualify for financial assistance (i.e., the premium tax credit); • How to access coverage through the Exchanges; and • Their right to enroll in health insurance coverage outside of the Exchanges that complies with the specified PPACA market reforms. For individuals or small businesses that have already received a cancellation notice, the informational notice must be sent as soon as reasonably possible. If the insurer anticipates, but has not yet sent a cancellation notice, the informational notice must be sent by the time the insurer would otherwise send the cancellation notice. HHS also left open the possibility of further extensions beyond the one granted in the November 14, 2014 announcement.
  • 3. Willis’ National Legal & Research Group will continue to review and provide timely updates on these and other related changes in health and welfare benefit law that affect employers. The information in this publication is not intended as legal or tax advice and has been prepared solely for informational purposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.

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