TO: All Insurance Carriers Writing Health Coverage in the State of Iowa
FROM: Nick Gerhart, Insurance Commissioner
DATE: April 16, 2014
RE: Guidance on Transitioning to ACA-Compliant Plans/Extension of Policies
The Iowa Insurance Division (IID) examined the implications to Iowa’s Health Insurance Market from the March 5, 2014 Centers for Medicare and Medicaid Services (CMS) announcement concerning a multi-year extension of health insurance policies that do not comply with the Affordable Care Act (ACA). IID has reached a conclusion on this matter following direct meetings with insurers, the receipt of hundreds of communications from individuals expressing their opinions on the matter and, most recently, the receipt of the results of a study the IID commissioned to independently determine the potential impact of the federal decision. The study notes a small price increase may result because of the continuation of existing plans, due to the resulting sustained absence of a single experience rate pool. However, the study also validates the value of allowing people to choose their personally preferred options, as permitted under the most recent federal announcement.
We have concerns about policy cancellations and the anxiety Iowans face when they receive cancellation notices. This guidance seeks to address those issues for Iowans and the companies that insure them.
IID’s goal is to assure that Iowa consumers have access to health care coverage in a stable, competitive health insurance market. While we have concerns about the unsettling impact of a two-track marketplace, the IID will not stand in the way of any insurance company that chooses to extend non-ACA-compliant policies in accord with the most recent federal announcement.
Carriers may extend or renew existing non-ACA-compliant health insurance policies to provide coverage and continue servicing those policies until October 1, 2016. This policy also applies to large businesses that currently purchase insurance in the large group market but will, as of January 1, 2016, will be redefined by section 1304(b) of the Affordable Care Act as small businesses purchasing insurance in the small group market. IID understands that further guidance may be coming from CMS/CCIIO regarding the URRT instructions on how to handle transitional policy experience and members. The revised guidance may not be ready until after May 1.
Carriers shall not:
· Offer non-ACA-compliant policies to consumers who did not have existing coverage under those policies.
· Offer non-ACA-compliant policies to consumers who have already enrolled in ACA-compliant policies.
· Sell new non-ACA-complaint policies to consumers who currently have non-ACA-compliant policies.
· Extend or renew non-ACA-compliant policies for a term extending beyond October 1, 2016.
IID will work with insurance carriers whether they decide not to extend their policies due to various operational challenges, including the potential for significant expense, additional costs and the risk of further confusing consumers or if they elect to extend policies to make sure consumers are given clear and understandable options. Carriers must notify the Division in writing of the carrier’s strategy for a transition process regarding non-ACA compliant policies and also provide appropriate consumer notifications as noted by the March 5 CMS memo http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/transition-to-compliant-policies-03-06-2015.pdf.
Carriers are also reminded of the health insurance rate increase application provisions as set out in Iowa Code section 505.19 and Iowa Administrative Code 191-36.20. Carriers seeking to increase rates over 6.1 % must abide by the statute in order to ensure appropriate time for notice and a public hearing.
Iowa consumers looking for specific information on their insurance policies should call their insurance agents or companies directly. Consumers looking for general information or guidance can call the IID toll-free number at 1-877-955-1212.