Texas health insurance policyholders know that in order to maintain their coverage they must make premium payments according to the terms of the policy. For years Texas health insurance carriers have operated with a simple, straightforward approach that was fair, easy to understand and efficient to administer. With the advent of health insurance marketplaces on October 1st , Health and Human Services has issued regulations that will make the premium payment grace period more complicated, cumbersome and costly to implement.
Current Grace Period Rules
Texas Department of Insurance had established a 30-day grace period for health insurance premium payments. If a premium payment was due on the 1st day of the month but was not received by the health insurance carrier, the policy was not terminated. The coverage remained active pending receipt of the premium payment. The policyholder was allowed to submit payment during the 30-day grace period, and coverage remained active and in force. During the 30-day grace period, medical claims could be held and prescription claims not honored pending receipt of the premium payment, but coverage was not terminated and was fully activated as soon as the premium payment was received.
Revised Grace Period Rules
According to ACA, policies sold in the marketplace will be allowed a 90-day grace period. The 90-day grace period is only available to those Texas consumers with coverage from the marketplace. For those individual who purchase insurance outside of the marketplace there is no change in the grace period.
The confusion that a 90-day grace period creates is substantial. If a premium is past due by 30 days, the policyholder must pay three months of premium in order to keep the coverage active. If the policyholder is having difficulty paying one month of premium, the three months of past due premium will not be any easier. The same person who has not been able to make a one-month premium payment will still be able to access the health insurance coverage during the 90-day grace period, and that is where the regulation becomes extremely complicated.
Since the policyholder with a past-due premium is still able to access healthcare services, who is responsible for the claims that are being generated? The first month of claims is the responsibility of the insurance carrier. Once a policyholder’s premium has been deemed to be past due, the insurance carrier must inform Health and Human Services the healthcare providers that are submitting claims, and the policyholder. While the premium payment is in limbo, the health insurance carrier must continue to collect the premium subsidy that is being received from the federal government. If the coverage is terminated, the subsidy must be returned to the U.S. Treasury Department.
Termination of a past health insurance policy due to non-payment will not affect enrollment in coverage for the following year. If a policyholder allowed coverage to lapse due to non-payment of premium, they will be able to apply during the open enrollment period between October 15th and December 7th and be covered under a marketplace plan that is guaranteed issue.
The revised rules regarding the premium payment grace period has put additional requirements on the broker to maintain communication with policyholders to make sure premium payments are made in a timely manner and to communicate past due payment status to avoid confusion when claims are filed.
Contact Stateside to Discuss ACA Updates
The Affordable Care Act open enrollment period begins October 1, 2013. Do you understand what that means for you and your family in terms of insurance coverage for the remainder of 2013, and into 2014? Call us anytime to learn more.
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