Nonenforcement Policy for ACA Noncompliant “Grandmothered Plans” Is Extended Indefinitely

CMS has indefinitely extended the limited nonenforcement policy allowing states to permit insurers in the individual and small group markets to renew health insurance policies that would otherwise have to be canceled due to noncompliance with certain Affordable Care Act (ACA) insurance market reforms. The extended nonenforcement policy applies for policy years beginning after October 1, 2022, and remains in effect until CMS announces that such coverage must comply with the relevant ACA requirements. The policy was first announced in 2013; this latest extension continues the terms and conditions of previous extensions (see our Checkpoint article).

Under the nonenforcement policy, states may permit insurers that have continually renewed eligible non-grandfathered individual and small group market policies since January 1, 2014, to again renew that coverage for a policy year beginning after October 1, 2022. Health insurers relying on this nonenforcement policy must send an informational notice to affected individuals and employers. The bulletin includes a model notice that can be used for this purpose.

EBIA Comment: Previously, CMS extended this nonenforcement policy to eligible individual and small group market plans, commonly known as “grandmothered plans,” one year at a time. This year’s open-ended extension may reflect a policy shift—or simple pragmatism. Grandmothered plans are distinct under the ACA from “grandfathered plans,” which are plans that were in existence on March 23, 2010, and have not undergone certain prohibited changes (see our Checkpoint Question on of the Week). Both types of plans are exempt from certain ACA requirements, but the exemptions are different for each type of plan. For more information, see EBIA’s Health Care Reform manual at Sections VI.B (“What Is the Significance of Grandfathered Plan Status?”) and XIV.A (“Introduction and Understanding Small and Large Group Markets”).

Contributing Editors: EBIA Staff.

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