Under the ACA, insurers must wait three months before cancelling the policies of subsidized enrollees who are delinquent on premium payments.
What’s the issue?
From October 2013 through March 2014 more than eight million Americans enrolled in a new health plan through the Affordable Care Act’s (ACA’s) insurance Marketplaces. The law recognizes that for some enrollees this represents a significant period of transition, with many gaining regular health coverage for the first time in their lives. To help enrollees new to the system keep their insurance, the ACA provides a ninety-day grace period before an insurer can discontinue someone’s coverage for failure to pay a monthly premium. This applies only to those who have received an advance premium tax credit to purchase health insurance through the Marketplaces and have previously paid at least one month’s full premium in that benefit year.
The grace period allows for continuity of care for patients by preventing people from shifting or “churning” in and out of coverage when they fail to make a monthly premium payment. Health care providers, however, have argued that the way in which the Centers for Medicare and Medicaid Services (CMS) has implemented the grace-period requirement could expose them to significant financial risk.
This Health Policy Brief focuses on CMS’s implementation of the ACA grace period and concerns from hospitals and physicians about potential financial liability now that millions of people have signed up for subsidized health insurance on the Marketplace exchanges.
What’s the background?
Before the ACA, state laws and regulations on outstanding premium payments varied, and this continues to be the case for nonsubsidized consumers. According to the National Association of Insurance Commissioners (NAIC), most state laws provide for a thirty-day grace period, and state law will continue to apply for those not receiving subsidies through a Marketplace. However, the ACA established a uniform timeframe for subsidized consumers. The grace-period requirement applies to all consumers receiving advance payment of premium tax credits, regardless of whether the insurance Marketplace in their state is operated by the state or by the federal government.
The most recent report on enrollment through the state-based and federally facilitated Marketplaces from the Department of Health and Human Services (HHS) found that more than eight million people chose plans between October 1, 2013, and April 19, 2014, and 85 percent of them qualified for premium tax credits. This percentage shows that the impact of the grace period could be significant because most of the people who enrolled qualified for subsidies to help afford their premiums. As of mid-August, 7.3 million people enrolled in the Marketplaces had paid their premiums.
Furthermore, many subsidy-eligible people have yet to enroll, and they could add to the magnitude of the issue if they enroll but are unable to pay their premiums.
Read the full article here.
Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
