What’s next after non-ACA compliant plans get extension?

Written on Mar 02, 2017

The Trump administration is allowing insurers and consumers to extend for an additional year individual and small-group health plans that do not comply with the Affordable Care Act's (ACA) coverage rules.

The insurance industry lobbied for the extension. But some experts say it will hurt efforts to stabilize the individual market and moderate rate hikes by letting healthier people stay in plans outside the ACA-regulated insurance pool.

The new guidance allows grandmothered plans to operate until Dec. 31, 2018, at which time they must end.

It's estimated that fewer than one million people currently remain in grandmothered individual-market plans in the three dozen or so states that still allow them. The rest of the states, including California and New York, already halted the sale of non-ACA compliant plans to strengthen their ACA-regulated markets.

Under the Obama administration's last extension, grandmothered plans would have ended Dec. 31, 2017.

The health care industry has urged the Trump administration to take steps to stabilize the individual insurance market while it and Congress work on repealing and replacing the ACA. Since last month, however, the administration has sent mixed messages on whether it wants to steady the ACA markets or dismantle them.

Earlier this month, HHS issued a proposed rule intended to make the individual market more financially viable for insurers by tightening enrollment eligibility and easing some administrative burdens on insurers. That was in response to warnings by plans that they might exit the market at the end of this year, potentially causing millions of Americans to lose coverage.

Premiums for non-ACA compliant plans may be cheaper than for compliant plans because they presumably have healthier members who signed up when insurers were still allowed to screen people for pre-existing medical conditions.

Non-compliant plans, according to the new guidance, are allowed to:

  • Charge more based on gender or pre-existing condition.

  • Not meet standards for guaranteed renewability.

  • Not cover essential health benefits such as prescription drugs or maternity care.

  • Not limit annual out-of-pocket spending.

  • Not meet standards for participation in clinical trials.

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