HHS Secretary Tom Price has proposed a new rule that would allow health insurance to be denied if previous coverage was cancelled for non-payment.
The Department of Health & Human Services has launched a new webpage for Secretary Tom Price to promote his vision of Trumpcare. But before Trumpcare has even been approved, Secretary Price is taking initiatives to reduce the current Affordable Care Act benefits and squeeze consumers. One new rule being proposed would allow health insurance companies to collect health insurance premiums on health plans that had been cancelled before consumers could enroll in a new plan.
Consumers Would Have To Pay Premiums For Coverage They Did Not Have
It is comical that the new HHS webpage is title Providing Relief Right Now for Patients, when in reality, many of their proposed rule changes to the Affordable Care Act will create serious pain for patients. The proposed rule changes have nothing to do with consumer protections, which the title implies. The rule changes all benefit the insurance companies at the potential expense of consumers. One insidious proposed rule would allow health insurance companies to collect premiums for health plans that were cancelled for non-payment.
Health Insurance Is A Monthly Contract
Health insurance is a monthly contract between the insured (consumer) and insurer (health plan). The insured can cancel the contract at any time during the year. Sometimes the insurance companies can make it very difficult to cancel a health plan. Many people just let their health plans terminate for lack of non-payment. There is not always a nefarious attempt to “game the system”, as Secretary Price states, when people let their health plan coverage lapse. Sometimes, people just can’t reach the health plan to cancel their coverage because they lost their job, moved out of state, or got other health insurance. Health insurance will automatically terminate if no premium payments are received.
Under Secretary Price’s proposed rule, a health insurance company could deny coverage during the open enrollment period if the consumer had a health plan through the company in the prior year, but let the coverage lapse for non-payment. Before the consumer could enroll in the plan, the insurance company could demand payment for those months after the plan was terminated for non-payment.
Holding Consumers Hostage
This is the gift of legal extortion to health insurance companies. Individuals and families who may have had to drop their health coverage due to catastrophic circumstances because of the loss of a job, death of a family member, or natural disaster, can now be held hostage by insurance companies. The ransom to be paid is back premiums for coverage the insurance company did not provide. The guarantee of insurance is that while the policy is in effect, the company will compensate the insured for losses they may receive under the terms of the contract. But if the policy is not in force because it was terminated, regardless of whether it was for non-payment, then there is no coverage. If there was no coverage, the company assumed no risk to pay claims. If there was no coverage, the previously insured has no right to file a claim and expect compensation.
Why Should A Consumer Pay For A Service They Did Not Have?
If a consumer has their phone or cable TV cancelled for non-payment, they are not compelled to pay for those months when the utility was not providing them service. When it comes to health insurance, there is a grace period. A health plan member may fail to make premium payment and still receive health care services during that 30 day grace period in California. If the member never makes the health insurance premium payment for the month in which they received service, the health insurance company cancels the plan retroactively back to the last day of the month in which premiums were paid in full. The consumer is then on the hook for the full amount of the health care services they received from the providers and must repay any payments the health plan made on their behalf during the grace period.
The big night mare is insurance companies that list individuals and families who were cancelled for non-payment when the policy was properly terminated. I have clients that get past due invoices from health insurance companies when we changed their health plans through Covered California. I have clients get past due notices when they properly terminate their coverage. There is no guarantee that the health insurance companies will get their billing systems functioning properly to avoid accidentally blackballing a consumer for non-payment of premiums.
I completely understand that some people do get health care services and then drop their insurance. But once the insurance is dropped, they can’t re-enroll. Once the insurance is terminated, either through proper notification or lack of premium payment, the individual can’t file a claim. In other words, the health insurance companies are not realizing a loss because a consumer’s health plan was terminated.
Honest Consumers Will Be Hurt
A person who decides to terminate their health insurance after receiving services will not be deterred from cancelling the plan on the threat of having to repay the back premiums. Plus, people who are going to game the system are smart and have the tenacity to make sure they terminate the health plan through proper notification so as to avoid being held liable for the back premiums next open enrollment period. It will be the honest mother or father who truly forgot to pay the health insurance invoice, were terminated for non-payment and then are held hostage for the back premiums. The true schemers of this world will avoid getting spanked by the proposed rule and the honest people will get hammered.
Secretary Price Works For Health Insurance Companies, Not Consumers
When you read some of the rules that Secretary Price has proposed and his support of Trumpcare, it is clear that the man has no heart or understanding of what most working families juggle every day. The proposed rules favor the insurance companies, punish consumers, and at the end of the day, will lower health insurance premium rates because only the healthiest and wealthiest will be able to get coverage.
Excerpt from the proposed HHS Rules
III. Provisions of the Proposed Rule
- Part 147 – Health Insurance Reform Requirements for the Group and Individual Health Insurance Markets
- Guaranteed availability of coverage (§147.104)
The guaranteed availability provisions at section 2702 of the PHS Act and §147.104 require health insurance issuers offering non-grandfathered coverage in the individual or group market to offer coverage to and accept every individual and employer in the State that applies for such coverage unless an exception applies. Individuals and employers typically are required to pay the first month’s premium to have coverage effectuated.
We have previously interpreted the guaranteed availability requirement to mean that an issuer may not apply any premium payment made for coverage in a different product to any outstanding debt owed from any previous coverage and then refuse to effectuate the enrollment based on failure to pay premiums.3 Under that interpretation, any coverage under a different product would fall under the guaranteed availability requirements and the consumer must be allowed to purchase coverage without having to pay past due premiums. However, under our previous interpretation, should the individual seek to renew prior coverage with the same issuer in the same product, the issuer could attribute the enrollee’s forthcoming premium payments to prior non-payments.
HHS has received comments from stakeholders expressing concerns about the potential for individuals with histories of non-payment to take advantage of guaranteed availability by declining to make premium payments for coverage at the end of a benefit year, for example.4 In the preamble to the 2014 Market Rules, HHS encouraged States to consider approaches to discourage gaming and adverse selection while upholding consumers’ guaranteed availability rights and indicated that we intended to address this issue in future guidance.
To address the concern about potential gaming, we propose to modify our interpretation of the guaranteed availability rules with respect to non-payment of premiums. Under this proposal, an issuer would not be considered to violate the guaranteed availability requirements if the issuer attributes a premium payment for coverage under the same or a different product to the outstanding debt associated with non-payment of premiums for coverage from the same issuer enrolled in within the prior 12 months and refuses to effectuate new coverage for failure to pay premiums. Assuming State law does not prohibit such action, this would permit an issuer to require a policyholder whose coverage is terminated for non-payment of premium in the individual or group market to pay all past due premium owed to that issuer after the applicable due date for coverage enrolled in the prior 12 months in order to resume coverage from that issuer. The issuer would be required to apply its premium payment policy uniformly to all employers or individuals regardless of health status, and consistent with applicable nondiscrimination requirements.5 This proposal would not prevent the individual or employer from enrolling in coverage with a different issuer, or affect the ability of any individual other than the person contractually responsible for the payment of premium to purchase coverage, whether from the same or different issuer. We encourage States to adopt a similar approach, with respect to any State laws that might otherwise prohibit this practice.
Because of rules regarding grace periods and termination of coverage, individuals with past due premium would generally owe no more than 3 months of premiums.6 Furthermore, for individuals on whose behalf the issuer received APTC, their past premium owed would be net of any APTC paid on their behalf to the issuer.
We note that due to operational constraints, the Federally-facilitated Small Business Health Options Program will be unable to offer issuers this flexibility at this time.
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