Two important pieces of federal regulatory guidance for health insurers were released on March 5, 2014. First, the government announced a further extension of certain transitional health insurance policies that had been exempted from many Affordable Care Act (ACA) requirements in November 2013. Second, the final 2015 Notice of Benefit and Payment Parameters was released, which includes important additional policy adjustments related to these formerly canceled plans. Some of these changes will take effect for the 2014 plan year.
The original transitional policy for canceled plans allowed certain individual and small group plans that did not comply with the ACA to be renewed for one additional year. This change, announced long after health insurers filed their premium rates for 2014, could result in a less healthy population in the ACA-compliant market, since healthier individuals may be more likely to retain their noncompliant plans. If this occurs, there is an increased risk that the filed premium rates could be inadequate to cover the higher claim costs. To mitigate this concern, the government proposed changes to certain rules for 2014—namely, the federal reinsurance program, the risk corridor program, and the medical loss ratio (MLR) requirement. The final 2015 Notice finalizes several of these changes, although key provisions may be subject to further alterations.