Health Insurance Denied For Past Due Premiums

Health plans can deny enrollment if the consumer owes them past due premium payments from a terminated health insurance plan.

In 2017 the Department of Health and Human Services under then Secretary Tom Price implemented a new rule within the Affordable Care Act that allowed health insurers to deny enrollment to any person who owed past premiums. This usually occurs when a health plan is terminated for non-payment of premiums.  If the consumer wants to re-enroll in the plan during either Open Enrollment or a Special Enrollment period they are liable for at least one month of the past due premiums before the plan becomes active.

On January 31, Healthcare.gov issued an overview to agents regarding the issue of repaying the past premiums before the consumer can enroll in a health plan.

Assisting Consumers Who Owe Past-Due Plan Premiums

After enrolling in Marketplace coverage, consumers are required to pay the first month’s premium (referred to as a binder payment) to have coverage effectuated. Subject to state law, an issuer meeting certain requirements may:

• Apply an individual’s binder payment made for new coverage to past-due premiums owed to that issuer (or to an issuer in the same controlled group) for coverage within the prior 12 months.
• Refuse to effectuate the new coverage based on failure to pay the initial premium payment.

How are Past-Due Premiums Calculated?

Past-due premiums are the net premium the consumer owes, calculated by subtracting advance payments of the premium tax credit (APTC) from his or her base premium. Consumers may fall into one of two scenarios:

• Individuals who are receiving APTC whose coverage is terminated after the three-month grace period for nonpayment of premium would owe at most one month of premiums, net of any APTC paid on their behalf to the issuer.
• Individuals who attempt to enroll in new coverage while in a grace period could owe up to three months of premium, net of any APTC paid on their behalf to the issuer.

In either case, the issuer can only demand payment for previous coverage during the 12-month period preceding the effective date of the desired new coverage.

Secretary Price Wants To Force Consumers To Pay Premiums On Cancelled Health Insurance

To read the original rule

For more information about calculating past-due premium payments, check out these webinar slides at the end of the post.

Covered California Cancels Health Plan For Past Due Premiums

One woman I talked to in Southern California has been caught in this confusing past due premium rule. She reported to Covered California in the summer of 2017 that the household income had decreased because her spouse was no longer employed. The loss of monthly income triggered a Medi-Cal enrollment. Her health plan coverage was terminated. But they were able to continue the health plan because of unemployment benefits. However, the notices she received were confusing. She thought the coverage had been terminate so she stopped making the premium payments.

In December, during the Open Enrollment Period, she enrolled in the previous health plan for the 2018 year. The health plan took her first month’s premium payment, applied it to her past due balance, and then terminated her coverage at Covered California.

Under the new rules the health plan is within their rights to take her money and deny her coverage for 2018.

Summary of the past due premium rules

Subject to state law, an issuer meeting certain requirements may

• Apply an individual’s binder payment made for new coverage to past – due premiums owed to that issuer (or to an issuer in the same controlled group*) for coverage within the prior 12 months, and
• Refuse to effectuate the new coverage based on failure to pay the initial premium payment.
• Notice of premium payment policy: Issuers adopting this policy must describe in any enrollment application materials, and in any notice regarding non-payment of premiums, the consequences of non – payment on future enrollment. (Emphasis added)
• Effective for individuals to whom notice was provided prior to their failure to pay premiums that become past – due.
• An issuer may only condition the effectuation of new coverage on payment of past – due premiums for the individual contractually responsible for the past – due premium.
• Individuals who are receiving advance payments of the premium tax credit (APTC) whose coverage is terminated at the conclusion of the three – month grace period for nonpayment of premium would owe at most one month of premiums, net of any APTC paid on their behalf to the issuer.
• Individuals who attempt to enroll in new coverage while in a grace period (and whose coverage has not yet been terminated for nonpayment of premium) could owe up to three months of premium, net of any APTC paid on their behalf to the issuer.

In either case, the issuer can only demand payment for previous coverage during the 12 – month period preceding the effective date of the desired new coverage.

For the Southern California woman caught in this past due premium rule, her selected health plan did incorporate language into their 2018 Evidence of Coverage about refusing to enroll a person if they have a past due balance. The language is vague and does not expound on how much of the past due balance must be repaid before they will effectuate the policy. In the case of the Southern California woman, when she contacted the health plan they were asking her to repay all of the past due balance when under the new rules, it looks as if she must only repay one month.

If you are caught by this rule you may have little recourse other than repaying past due premium amounts. One loop-hole is if the health plan has not stated that they can refuse to enroll a consumer into a health plan for nonpayment of past due premiums, which is a condition of the rule. Covered California has not posted any information regarding the rule and only a few people at the consumer service unit seem to be aware of it.