On March 25, 2019, the Centers for Medicare and Medicaid Services (CMS) announced that states may allow grandmothered health plans to continue until Dec. 31, 2020.
What’s the history here?
Certain health plans that were already in existence when the Affordable Care Act was passed on March 23, 2010, are permitted to stay in force without having to conform to many of the ACA’s requirements. These plans were “grandfathered” in — and can remain exempt from many of the ACA’s rules, provided they do not make significant changes that increase costs or reduce benefits for participants.
By contrast, grandmothered plans are small-group and individual market health plans issued after March 23, 2010, but prior to Jan. 1, 2014. These plans must comply with the ACA’s early market reforms but are exempt from most of the act’s major reforms that took effect on Jan. 1, 2014.
Grandmothered plans were supposed to be discontinued in 2014 for failing to meet all of the ACA’s market reforms. However, on Nov. 14, 2013, the Obama administration issued a transition relief policy for 2014, enabling grandmothered plans to continue to exist.
Relief that keeps going and going and going
Here’s how these extensions have played out:
- On March 5, 2014, CMS extended the transition relief for two additional years, allowing policy renewals through Oct. 1, 2016.
- On Feb. 29, 2016, another extension was granted, allowing renewals until Oct. 1, 2017.
- On Feb. 23, 2017, another extension was granted, allowing renewals until Oct. 1, 2018.
- On April 9, 2018, another extension was granted, allowing renewals until Oct. 1, 2019.
- On March 25, another extension was granted, allowing renewals until Oct. 1, 2020.
What the most recent extension means for your business
You have until Oct. 1, 2020, to accept policy renewals under your grandmothered plan. However, the plan must terminate by Dec. 31, 2020, or be in full compliance with the ACA by Jan. 1, 2021. These two stipulations will not apply if CMS grants another extension.
Note that your state and insurance carrier must consent to the extension, as CMS guidance is an option (not a mandate) for states and carriers. According to SHRM, 32 states currently allow renewals of grandmothered plans. But even if the state allows grandmothering, the insurance carrier doesn’t have to. The carrier can choose to not renew non-ACA policies.
CMS’ guidance on transition relief does not impact grandfathered plans; these plans can continue indefinitely without having to abide by all of the ACA’s market reforms.
To renew or not to renew
If your grandmothered plan is approaching renewal, you may want to consult with your insurance advisor. He or she can help you understand your state’s health insurance provisions and your renewal options. Also important is comparing the cost of your grandmothered plan to an ACA-compliant policy and choosing the best fit for your business.