United States: HHS Proposes Regulations To Stabilize Health Insurance Markets

Last Updated: April 26 2017
Article by Ron M. Present, CALA, CNHA, LNHA, FACHCA

Most of the attention regarding health care reform has focused on the prospective repeal and replacement of the Affordable Care Act. But, in February, the federal government made another move that garnered relatively little attention.

The Department of Health and Human Services (HHS) issued proposed regulations intended to help stabilize the individual and small group health insurance markets. These regs address the guaranteed-availability rules, annual open enrollment and special enrollment periods for Health Insurance Marketplaces (often referred to as "exchanges"), and certain other Marketplace standards.

Guaranteed Availability

In the preamble, the HHS proposes to change its interpretation of guaranteed availability to remove an economic incentive for individuals to pay premiums only when they need coverage and to prevent gaming. Under the agency's current interpretation, individuals whose coverage was previously terminated for nonpayment of premiums can apply for coverage under a different product from the same insurer. The guaranteed-availability rules require the insurer to issue the coverage — in other words, the insurer cannot apply new premiums to past-due amounts.

Under the proposed interpretation, the insurer could refuse to enroll the individual in new coverage and instead apply new premium payments to outstanding debt associated with nonpayment of premiums for up to the previous 12 months of coverage. This would effectively require an individual whose coverage was terminated for nonpayment of premium in the individual or group market to pay past-due premiums in order to resume coverage from that insurer.

The HHS notes that state law could limit an insurer's ability to apply this new rule, and it won't be available to insurers in the federally facilitated Small Business Health Options Program (SHOP). Also, the interpretation wouldn't prevent delinquent individuals or employers from enrolling in coverage with a different insurer.

Marketplace Annual Enrollment

The regulations propose to shorten the annual open enrollment period for obtaining Health Insurance Marketplace coverage for the 2018 plan year so that it would begin on November 1, 2017, and end on December 15, 2017. Previously, the HHS had set the open enrollment period from November 1, 2017, to January 31, 2018, for 2018 coverage. The shift to the earlier end date was already set to begin for 2019 coverage, so it will just go into effect a year earlier.

In addition to possibly reducing adverse selection, the earlier end date to open enrollment would align better with open enrollment periods for employer-sponsored plans and Medicare. It could also serve to simplify administration where coordination is required.

Marketplace Special Enrollment

The proposed regulations would increase the scope of pre-enrollment verification of eligibility for all categories of special enrollment periods, starting in June 2017. The aim is to:

  • Improve the risk pool
  • Enhance market stability
  • Promote continuous coverage

This pre-enrollment verification, which would require individuals to submit supporting documentation, would be implemented in the federally facilitated Marketplaces and state-based Marketplaces using the federal platform.

New proposed rules would also tighten restrictions on enrolling dependents during a special enrollment period and would require some consumers in special enrollment periods to demonstrate prior coverage. It's important to note that some of the proposed changes to special enrollment periods would apply in the individual market only. Thus, for example, the proposed restrictions on enrolling dependents wouldn't apply to special enrollment periods in the SHOP.

Future Reform

There will undoubtedly be more fundamental changes proposed in the coming weeks and months relating to the structure of health care reform.

These proposed regulations appear to be an interim step to ease insurer concerns about participation in Health Insurance Marketplaces and promote market stability. As the news release states, the regulations would help protect individuals "enrolled in the individual and small group health insurance markets while future reforms are being debated."

If you have questions about HHS regulations, please contact Ron Present, Partner and Health Care Industry Group Leader, at rpresent@bswllc.com or 314.983.1358.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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