Employee Benefits Compliance, Exchanges, Marketplaces, Small Employers

Restrictions on Minimum Participation Requirements in State & Federal SHOPs

benefit changes 2014

(Updated December 24, 2013 to include FAQ 575 at the end also)

Two CMS FAQs published December 11, 2013 limit the application of minimum participation requirements on small employers who purchase coverage in either state or federally-facilitated SHOPs (small business exchanges).  Specifically, FAQ 574 provides that small employers will not have to meet minimum participation requirements upon renewal next year in federally-facilitated SHOPs, and FAQ 575 requires state exchanges to allow small employers, even those that do not meet minimum participation requirements, to enroll at any time in 2014 if the exchange did not allow them to enroll during November 15 – December 15, 2013.

Existing Affordable Care Act (ACA) regulations (published February 27, 2013) already required health insurance issuers to offer an annual one-month special open enrollment period (from November 15 – December 15) to employers in the small group market who do not meet the employee minimum participation or employer minimum contribution requirements, but they did not require issuers to renew groups that did not meet the requirements.    The recent CMS FAQ 574 prohibits all issuers who sell QHPs in the SHOP exchange from enforcing the minimum participation requirements during November 15 – December 15 renewals.

Even before this FAQ was issued, many issuers had informally said they probably would renew groups that did not meet minimum participation requirements, because not doing so would just result in such groups changing carriers each year in order to obtain coverage.  Additionally, it’s not clear whether the FAQ requires issuers offering coverage through the FF-SHOP to renew all policies—even those offered outside the FF-SHOP—or only to renew those offered inside the FF-SHOP.

The recent FAQ (ID 574), which CMS published at its Registration for Technical Assistance Portal (RegTAP) is as follows:


Will employers need to meet the minimum participation requirement upon renewal for renewals occurring from November 15-December 15?


No. For operational and consumer consideration reasons, employers will not have to meet the FF-SHOP’s minimum participation rate for renewals occurring during Nov. 15-Dec. 15. Because under guaranteed availability requirements at § 147.104(b)(1) an employer must be allowed to purchase coverage from Nov. 15-Dec. 15, even if the employer cannot meet minimum participation requirements, we believe it would impose undue burden on issuers, employers, their employees, and the FF-SHOP to non-renew coverage under the exception to guaranteed renewability for failure to meet minimum participation rates and then re-enroll employers under guaranteed availability during this period. Therefore, the FF-SHOP will not impose (and QHP issuers offering coverage through the FF-SHOP may not enforce) minimum participation requirements for renewals occurring between Nov. 15-Dec. 15.

FAQ (ID 575) reads as follows:


Are state-based SHOPs delaying open enrollment to January 1, 2014 or later able to deny enrollment during 2014 to small employers that fail to meet minimum participation requirements?


No. The exception to guaranteed availability allowing issuers to restrict enrollment for small employers that fail to meet minimum participation requirements requires that enrollment be available to such employers from November 15 – December 15 of the preceding year.  If the exception is not met, such as in SHOPs that did not provide for open enrollment during that period for plans available in 2014, guaranteed availability requires that small employers, even those that fail to meet minimum participation requirements, be permitted to enroll at any point during 2014.