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Governor Brown has signed legislation that will allow small employers to keep group plans that don’t fully comply with the Affordable Care Act’s coverage provisions.

The legislation, which took effect immediately after the governor signed it, allows small group, non-grandfathered health plans which were in effect on Dec. 31, 2013 (and still are today) to be renewed and kept in force until Dec. 31, 2015. Insurance companies are not required to continue offering these plans, but so far most major insurers are likely to continue doing so.

While the law in California provides for providing non-compliant plans through 2015, federal law actually allows states to let insurers offer them through 2016. But the state Legislature opted for a shorter time frame for removing these plans from the small group market (companies with 50 or fewer employees).

SB 1446 in a nutshell offers relief to eligible small group plans from the following ACA requirements:
•    The prohibition on pre-existing conditions limitations for participants of any age (not just up to age 19),
•    The prohibition against discrimination based on health status,
•    The limits on annual out-of-pocket expenses and deductibles,
•    The requirement that carriers set premium rates based only on age, geographic area and family tier (called modified community rating), and
•    The requirement that carriers and HMOs must sell all policies to all employers.

Because of the increased breadth of coverage in ACA-compliant plans, eligible small group plans will likely cost less than those that are ACA-compliant.
Health insurers are allowed to offer such policies for renewal, but are not required to do so. However, those carriers that do offer such policies for renewal must offer it to all employers who had such policies on Dec. 31, 2013.

One issue that is not entirely clear is whether a carrier or HMO must allow an employer to renew if the employer was not truly a small employer on Dec. 31, 2013, but did have a small group policy or contract in effect on that date.

Keep in mind that SB 1446 applies only to small group plans, and not to individual insurance.

As a result of SB 1446 and federal guidance, your business may renew this coverage for one more contract year. After this additional 12-month period, the coverage will be withdrawn from the market and will not be available for renewal, as required by the ACA.

Governor Brown has signed legislation that will allow small employers to keep group plans that don’t fully comply with the Affordable Care Act’s coverage provisions.

The legislation, which took effect immediately after the governor signed it, allows small group, non-grandfathered health plans which were in effect on Dec. 31, 2013 (and still are today) to be renewed and kept in force until Dec. 31, 2015. Insurance companies are not required to continue offering these plans, but so far most major insurers are likely to continue doing so.

While the law in California provides for providing non-compliant plans through 2015, federal law actually allows states to let insurers offer them through 2016. But the state Legislature opted for a shorter time frame for removing these plans from the small group market (companies with 50 or fewer employees).

SB 1446 in a nutshell offers relief to eligible small group plans from the following ACA requirements:

·        The prohibition on pre-existing conditions limitations for participants of any age (not just up to age 19),

·        The prohibition against discrimination based on health status,

·        The limits on annual out-of-pocket expenses and deductibles,

·        The requirement that carriers set premium rates based only on age, geographic area and family tier (called modified community rating), and

·        The requirement that carriers and HMOs must sell all policies to all employers.

 

Because of the increased breadth of coverage in ACA-compliant plans, eligible small group plans will likely cost less than those that are ACA-compliant.

Health insurers are allowed to offer such policies for renewal, but are not required to do so. However, those carriers that do offer such policies for renewal must offer it to all employers who had such policies on Dec. 31, 2013.

One issue that is not entirely clear is whether a carrier or HMO must allow an employer to renew if the employer was not truly a small employer on Dec. 31, 2013, but did have a small group policy or contract in effect on that date.

Keep in mind that SB 1446 applies only to small group plans, and not to individual insurance.

As a result of SB 1446 and federal guidance, your business may renew this coverage for one more contract year. After this additional 12-month period, the coverage will be withdrawn from the market and will not be available for renewal, as required by the ACA.