The following Update provides an overview of the Centers for Medicare & Medicaid Services (CMS) Market Stabilization regulations.
The Department of Health and Human Services released final regulations on April 13, 2017 to stabilize the federal and state market exchanges for 2018 and calendar years going forward. The regulations intended purpose is to help lower premiums and stabilize individual and small group markets and increase choice for American who are obtaining coverage in the Marketplace created by the Affordable Care Act (ACA.
WHAT IS THE REGULATION?
The final rule made several policy changes to improve to promote stability in the market and is effective June 19, 2017, including:
- Shortened Individual Annual Open Enrollment Period for 2018 – more closely aligns with Medicare Open Enrollment and the private marketplace. Open Enrollment for 2018 calendar year coverage will start on November 1, 2017 and run through December 15, 2017. This changes from the prior year which allowed an Open Enrollment Period in 2017 from November 1st through January 31st.
- Reduction of Fraud, Waste, and Abuse – requiring individuals to submit supporting documentation for Special Enrollment Period and ensure that only those who are eligible with Qualifying Events to be able to enroll. In addition, it encourages individuals to stay enrolled in coverage all year, reducing gaps in coverage and resulting in fewer individual mandate penalties to help lower premiums.
- Promotes Continuous Coverage – allows insurance carriers (insurers) to require individuals to pay back past due premiums before being able to enroll into a plan with the same carrier the following year. This provision is intended to encourage individuals to maintain continuous coverage throughout the year, which is expected to bring a positive impact on the risk pool and discourage gaming of the system.
- More Choices for Consumers – allowing for insurers additional actuarial value flexibility to develop more choices with lower premium options for individual consumers and to continue offering existing plans.
- Empower States & Reduce Duplications – returns oversight of network adequacy to states that are best positioned to evaluate network adequacy and reduce waste of taxpayer dollars on duplicative review by the federal government.
A press release that accompanied the final regulations for the Patient Protection and Affordable Care Act Market Stabilization cites the evidence to support the views of the government that federal and state exchanges required intervention to help stabilize the exchanges.
Below is a brief summary of those citations:
- In 2017, approximately one-third of the counties in the U.S. had only one carrier participating in the 2017 exchange.
- Five states had only one carrier participating in their state’s exchange for 2017.
- Premiums for the benchmarked second-lowest cost “Silver Plan” on www.healthcare.gov increased by an average of 25% from 2016-2017.
- 500,000 fewer Americans selected a plan in the exchange during open enrollment in 2017 compared to 2016.
- Many states witnessed double digit increases in their insurance premiums including: Arizona – 116%; Oklahoma – 69%; Tennessee – 63%; Alabama – 58%; Pennsylvania – 53%.
OTHER CHANGES OF THE REGULATION
Additional notable changes for the regulations include:
Special Enrollment Periods
- Individuals enrolling mid-year as a result of a Qualifying Event (Loss of Job, Loss of Coverage, Death, etc.) will be given 30 days for the date of the insurance application to provide verifying information to substantiate the Qualifying Event. Once approved, the insurance coverage will be retroactive to the initial application date. Should verification take two to three months, the individual will not be required to pay the insurance premium for the first month of coverage.
- Limits individuals from changing from one metal tier (i.e. the platinum, gold, silver and bronze levels) to another metal level.
- Individuals will no longer have the option to choose a later effective date if the enrollment is delayed due to verification issues.
- Imposes additional limitations on eligibility such as if an individual has a special enrollment due to loss of insurance would be ineligible to enroll if the loss is due to non-payment of premiums. That is unless and until the past due premiums are paid in full.
Exchange plans must fit into four categories identified by metal tiers – platinum, gold, silver and bronze. The highest level being that the plan covers 90% of the health care expenses:
o Platinum – 90%
o Gold – 80%
o Silver – 70%
o Bronze – 60%
Recognizing it’s difficult to target an exact actuarial value, the previous regulations established a de minimis variation of +/- 2%.
In 2018 the new regulations increase the allowable de minimis variation to:
o Bronze: -4 to +5%
o All others: -4 to +2%
Over the next couple of weeks insurance carriers will be notifying their individual clients via email and standard mailing these new regulations.
Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at firstname.lastname@example.org.