Health Reform WK-EDGE CMS announces safe harbor to 90-day requirement for product discontinuation notices
Wednesday, August 1, 2018

CMS announces safe harbor to 90-day requirement for product discontinuation notices

By Sheila Lynch-Afryl, J.D., M.A.

CMS announced an enforcement safe harbor for product discontinuation notices in connection with the open enrollment period for coverage in the 2019 benefit year. Instead, issuers are required to provide notice pursuant to the time frames for renewal notices, which, for non-grandfathered, non-transitional plans, is before the first day of the next annual open enrollment period, and for grandfathered health plans and transitional plans is at least 60 days before the date of renewal (CMS Center for Consumer Information & Insurance Oversight Letter, April 9, 2018).

Under the guaranteed renewability provisions of Public Health Service (PHS) Act §2703, as added by Sec. 1201(4) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), as well as PHS Act §§2712and 2742 and 45 C.F.R. §§146.152147.106, and 148.122, a health insurance issuer that elects to discontinue offering a particular product in the group or individual market generally must provide notice of the discontinuation at least 90 calendar days before the date of the discontinuation. However, many issuers were unable to finalize their plan offerings until after this deadline because of the timing of qualified health plan certification for the 2015, 2016, 2017, and 2018 benefit years. As a result, consumers could receive product discontinuation notices without enough time to promptly shop for new coverage.

Consistent with previous guidance, CMS provided that it will not take enforcement action against health insurance issuers that fail to send a product discontinuation notice with respect to individual market coverage in the 2019 benefit year at least 90 days prior to the discontinuation. CMS urged the states to offer flexibility to insurers.

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