Under ACA, all health plans need to meet a variety of new requirements, these requirements caused many policies to be cancelled at the end of 2014 in order to find health plans that comply with ACA. Previously, section 1251 of PPACA only allowed certain group health plans and health insurance coverage existing as of March 23, 2010 (the day ACA was enacted) to be “grandfathered” and maintain coverage. The other health plans that did not meet the requirements for grandfathering were subject to the 2014 cancellation.
With Governor Jerry Brown signing into law SB 1446 on July 07, 2014, there is good news for all California small businesses with these kind of health plans.
The official bill states, “This bill would allow a small employer health care service plan contract or a small employer health insurance policy that was in effect on December 31, 2013, that is still in effect as of the effective date of this act, and that does not qualify as a grandfathered health plan under the Patient Protection and Affordable Care Act (PPACA), to be renewed until January 1, 2015, and to continue to be in force until December 31, 2015.”
What This Means For California Small Businesses
With SB 1446, also known as the “Grandmothering” Act, small employers in California are now allowed to renew existing coverage that was purchased prior to December 31, 2013. Instead of their health plans being cancelled at the end of 2014, these non-ACA compliant plans can be extended to December 31, 2015. In order to qualify, however, the existing small employer health plan must not already be part of a grandfathered health plan previously mentioned. Essentially, new bill gives small businesses another full year to find new coverage that complies to ACA before their current plan is canceled. In addition, as an urgency statute, the law is to take effect immediately.
“The signing of SB 1446 is a victory for all California small businesses, as small employers who need time to transition to Affordable Care Act compliant policies will now have additional time to make the transition,” said Insurance Commissioner Dave Jones. “While many small employers will move to new health insurance options right away, SB 1446 provides additional choices to those who choose to use the transition period.”
Contact PAYDAY with any questions about SB 1446 or ACA compliance.