Here we go again. Adding to a succession of delays and extensions that has by now become almost comical, the Department of Health and Human Services announced on March 5 yet another significant reprieve for individuals and small businesses struggling to comply with the requirements of the Affordable Care Act.
If you have a group health plan that doesn't meet all the requirements of the Affordable Care Act--a "noncompliant" plan, in industry-speak--you can now keep it for an additional two years. This follows an announcement last November that allowed a one-year extension of such plans, which means that you can keep renewing your noncompliant group coverage up until October 1, 2016, with coverage effective through 2017. That is, if there are no additional delays--yesterday's announcement left the door open for an additional one-year extension.
Because of different coverage and underwriting requirements, older, noncompliant plans are often cheaper than the new Obamacare plans. They don't have to offer coverage in all 10 "essential" benefit categories, for one thing. And they don't have to comply with modified community rating rules. This is significant for small groups with young, healthy employees, who would probably see their premiums soar under community rating, which prohibits underwriting based on health status and limits adjustments for age. On the other hand, companies with less-healthy employees could see greater benefits from the new plans.
What this all means to individual businesses depends largely on location. Regardless of the federal ruling, it's still up to state insurance regulators to decide whether they will allow insurers to continue issuing noncompliant policies. About half of the states--including big ones like New York and California--have decided that they won't. However, the administration's latest notice allows those states to change their minds and reinstate canceled policies for anyone who held them in 2013.
Click here to read the full HHS bulletin, and call your insurance broker or benefits provider for clarification on how these changes might impact your company.