Source: hr3590.com
Final health insurance market reform rules issued Feb. 22 could result in higher health premiums, a major association of health insurers predicted, even though the policy goal is make health insurance more dependable and valuable for consumers.
The final rules issued by the U.S. Department of Health and Human Services are designed to ensure that consumers will not be denied health coverage because they have a pre-existing health condition, nor will they be prevented from renewing coverage for the same reason. Workers at fully insured firms will be the primary beneficiaries of these protections. Here is a fact sheet on the rules.
Guaranteed Issue and Renewability
Insurers offering nongrandfathered coverage must accept any individual or employer that applies, subject only to limits on network or financial capacity, starting January 2014 under the rule. In other words, individuals and plan participants may not be denied health coverage due to pre-existing conditions. The guaranteed issue and renewability provisions still have exceptions for fraud, nonpayment of premiums, failure to meet contribution or participation rules and plan termination. The guaranteed renewability rules existed in the group market but are being extended to the individual market under the rule.
AHIP had said in a March 2012 study of eight states with guaranteed issue and renewability showed that such provisions increased insurance rates and led some insurers to quit offering individual coverage.
Premium Rating Bands
Health reform limited the variation in premiums attributable to health status and other characteristics, and eliminated several that have been used to date.
Starting January 2014, insurers can vary premiums based on age, but the law limits the age rating band to 3:1. In a Feb. 22 statement, AHIP predicted the new age rating bands could increase premiums for younger individuals who live in states that currently have higher age bands.
Insurers can vary premiums based on tobacco use within a 1.5-to-1 ratio, the rule states.
Insurers may increase premiums based on family size and geography, but nothing else. Eliminated are increases due to health status, past insurance claims, gender, occupation, how long an individual has held a policy and size of a small employer.
Catastrophic Plans
The final rules also include provisions for enrollment in catastrophic plans, where younger people with lower expected costs can get coverage with cheaper premiums. Catastrophic plans generally will have lower premiums, protect against high out-of-pocket costs, and cover recommended preventive services without cost sharing — providing affordable individual coverage options for young adults and people for whom coverage would otherwise be unaffordable, HHS said in a press release.
Single Risk Pools
Health insurance companies will be required to maintain a single state-wide risk pool for the individual market and single state-wide risk pool for the small group market. They will no longer be able to move them into separate risk pools and charge them higher premiums.
Enrollment Rules
Employer groups of any size must be afforded a year-round open enrollment period. Individuals’ open enrollment periods must correspond to those established by the state health insurance exchanges being developed the reform law
Insurers may no longer condition small groups’ enrollment on meeting contribution and participation requirements. The version of the rules originally proposed Nov. 26 (77 Fed. Reg. 70584) would have allowed this, but “upon further consideration” HHS decided this would go against the plain language of Public Health Service Act Section 2702, as amended by the reform law. However, insurers may limit the enrollment period for small groups that fail to meet these requirements.
In both the group and individual markets, insurers also must grant a special enrollment period for events that would trigger COBRA eligibility.
The final rules also add marketing restrictions to prohibit practices or benefit designs that discourage “the enrollment of individuals with significant health needs,” or discriminate in other impermissible ways. Insurers must continue to comply with state laws on insurance marketing.
The rules will be officially published in the Feb. 27 Federal Register.