On November 14, 2013, the Centers for Medicare and Medicaid Services of the Department of Health and Human Services (CMS) issued a letter to state insurance commissioners detailing the Administration’s new “transitional policy” regarding non-grandfathered coverage in the small group and individual health insurance markets. Under the transitional policy, health insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled—if permitted by applicable State authorities and subject to certain specific conditions.
One of the conditions that must be met under the transitional policy is that health insurance issuers send a notice to all individuals and small businesses that either received or will receive a cancellation or termination notice for the coverage. The notice must inform the recipients of: (1) any changes in the options available to them; (2) which of the specified market reforms would not be reflected in any coverage that continues; (3) their potential right to enroll in a Qualified Health Plan offered through a Health Insurance Marketplace and possibly qualify for financial assistance; (4) how to assess such coverage through a Marketplace; and (5) their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms.
On November 21, 2013, CMS released three standard notices that must be used to satisfy the notice requirement. The first is the notice that must be sent to policyholders that have already been sent a cancellation notice for their existing coverage. The second is the notice that must be sent to policyholders that have not yet been sent a cancellation notice for their existing coverage. The third is standard language to be used when a health insurance issuer proceeds with the cancellation of the coverage in either the individual or small group health insurance markets. According to guidance released the same day, health insurance issuers may not modify or customize these notices. A state insurance regulator can develop its own notices as substitutes, but the revised notices must be approved by CMS. Once approved by CMS, the revised notices cannot be modified or customized by health insurance issuers. The notices must also be sent separately from any other plan material or correspondence.