CMS has issued a bulletin announcing another extension of the transition policy allowing states to permit insurers in the individual and small group markets to renew health insurance policies they would otherwise have to cancel due to noncompliance with certain insurance market reforms under the Affordable Care Act. The bulletin generally continues previous extensions announced in 2014 and 2016 of the transition policy first announced in 2013. Under the latest guidance, states may permit insurers that have continually renewed eligible non-grandfathered individual and small group policies since January 1, 2014 to again renew such coverage for a policy year beginning on or before October 1, 2018. However, the policies may not extend past December 31, 2018. States may elect to extend the transition policy for shorter periods and may apply it to just the individual market, just the small group market, or to both markets. CMS will work with insurers 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.

Any policies renewed under this transition policy will not be considered to be out of compliance with the statutory reforms listed in the guidance—which are the same reforms listed in the prior guidance. For individual and small group policies, they include premium rating rules, guaranteed availability and renewability, and the requirement to provide essential health benefits. For individual policies only, the list also includes prohibitions on preexisting condition exclusions for adults and discrimination based on a health factor; small group policies covered by the transition policy must comply with these two reforms. Insurers can choose to adopt some or all of the reforms in their renewed policies, but those that opt to renew coverage under this extended transition policy are still required to provide an annual notice of the right to retain existing coverage, using one of the two versions attached to the bulletin.

Comment: Prior FAQ guidance indicated that transitional policies satisfy the individual mandate requirement to maintain minimum essential coverage (exempting covered individuals from individual shared responsibility penalties). The bulletin does not address this issue, so presumably the FAQ guidance continues to apply. While the bulletin represents a continuation of past policy, it takes on additional significance this year in light of expected changes to the Affordable Care Act.