Rescission requirements impact group health plans: What constitutes a rescission?

The federal health care reform law changed the way health plans and issuers approach rescissions in both the group and individual markets. Group health plans are affected whether they are insured or self-insured.

It's important to understand what constitutes a "rescission" for federal health care reform, as opposed to another type of coverage termination. A rescission is broadly defined as a retroactive termination of a member's coverage.

However, there are some important exceptions from this broad definition. For example, termination of coverage because of nonpayment of premium or contribution (either by the group or the member) is not a rescission. It is not considered a "rescission" when the member's coverage is retroactively canceled to the last paid-to date if the member pays no premiums or contribution for periods of time after termination of employment or eligibility. The member's coverage can be retroactively canceled to the last paid-to date.

For information on the restrictions on rescissions and clarification on which coverage terminations qualify as rescissions, refer to the Affordable Care Act Implementation FAQs - Part 2.