Secretary Tom Price is now officially leading the Health and Human Services Department, and Affordable Care Act (ACA) changes have started coming. On Wednesday, President Trump released a 71-page document outlining five new changes to Affordable Care Act regulations that will impact 2018 individual health insurance enrollments. Here’s a quick summary of each:
- Pre-enrollment verification will be required during special enrollment periods
If a consumer missed open enrollment but experienced a “qualifying event” later in the year, a special 60-day enrollment period opened for them. Common qualifying events included getting married, losing employer-provided insurance, or having a baby. In the past, if a consumer was enrolling in a health insurance plan during a special enrollment period, they have to provide documentation after the fact and enforcement was spotty. It was often left up to insurers to verify. In some cases, consumers would not buy insurance until they were ill and would use the qualifying life events as a loophole to game the system. This is one of many factors that hurt the risk pool — and the overall market — by adding a disproportionate amount of unhealthy enrollees.
Now, consumers attempting to enroll during a special enrollment period will need to provide proof of a change in status before they are permitted to enroll. Insurers are hopeful that this will help better the balance of healthy to unhealthy people being covered, helping to reduce (or at least stabilize) future costs. - The three-month open enrollment period will be reduced to 45 days
Open enrollment periods under the Affordable Care Act have run from November 1 through January 31, but this year, the period will be shortened to November 1 through December 15. The general consensus seems to be that this will reduce the number of enrollees, but whether it skews the pool for better or worse is yet to be seen. Typically, healthy people (those who feel they don’t really need coverage) waited until the end of the enrollment season to sign up. With a shortened enrollment period, we may see these people drop out of the market, or perhaps they will just sign up sooner. Only time will tell. - Insurers can now collect back premiums before re-enrolling consumers
Previously, a consumer could enroll in a health insurance plan through the marketplace and not pay their premium for up to 90 days without their coverage being terminated. If they failed to pay and lost coverage, they could simply re-enroll during the next open enrollment period. This new regulation allows insurers to collect unpaid premiums before reinstating a new plan. - The IRS won’t hold refunds due to lack of health coverage
One of the rules of the ACA was that, generally, people needed to obtain health insurance coverage or could face a penalty when they file their taxes. Penalties could be deducted from a consumer’s refund or added to a tax liability. If the penalty wasn’t collected at the time of refund, a letter would be sent and interest would accrue on the penalty.
This year, the IRS had planned to stop processing a tax return if the filer hadn’t indicated whether or not they had health insurance. This regulation rolls back that change and the IRS will continue processing returns, as it has in the past. It’s important to note that as of now, the penalty calculation remains the same and those who have gone without coverage are still subject to the penalty. - The way premiums are calculated will be changed
This particular change is a big deal for everyone involved. Without getting into too much of the actuarial math of it all, tax credits were based on the cost of the second-lowest silver health plan. If the cost of that plan would exceed roughly nine percent of your annual income, you qualified for a tax credit. The new regulation changes the way metal tiers are defined, giving insurers the option to still offer silver-level plans, but with less coverage, creating a plan with a lower monthly premium. Insurers now have more flexibility to offer more “affordable” plans, however, since the premiums will be reduced, so will the tax credits.
Six of one, half dozen of the other? Not quite. The Center on Budget and Policy Priorities ran some numbers and estimates that this change could potentially reduce the size of family tax credits by $327, while increasing their annual deductible by $550. But, much like the shortened enrollment period, we’ll have to wait to see how the numbers actually play out.
