New regulations imposed by the US Department of Health and Human Services (HHS) require a significant change in how insurers bill consumers for health insurance premiums. The technical change:

• Imposes a significant administrative burden on insurers, the health insurance marketplaces, and consumers;
• Raises premium prices; and
• Risks generating confusion among consumers when they pay their monthly premiums.
• Collect no less than $1 per enrollee per month to cover non-Hyde abortion services (if offered);
• Create distinct accounts to collect premium payments and use them to reimburse enrollees’ claims for non-Hyde abortion services; and
• Alert enrollees that the insurer is separately charging for these services by adding a distinct line item on the enrollee’s monthly bill; sending the enrollee a separate bill for non-Hyde services; and/or by sending the enrollee a notice, shortly after the time of enrollment, that their monthly bill will include a separate charge for these services.

Billing and Premium Payments Changes

This new regulation alters the current enrollee billing and notification requirement, mandating that insurers send an entirely separate bill to enrollees for premium charges associated with non-Hyde abortion services. The invoice for the separate premium that would be used to fund non-Hyde abortion services can be included in the same envelope as the health plan’s monthly premium bill. However, the non-Hyde charges must be listed on a distinct piece of paper with separate explanations so that the enrollee “understands the distinction between the two bills.” If an enrollee has opted to receive electronic communications, the non-Hyde premium charges must be sent through separate emails.

Prior to implementation of this rule, insurers were permitted to collect a single premium payment from enrollees, and then split the payment into the separate accounts required by the prior regulation. The rule changes this process to now require that enrollees submit two distinct premium payments – one for premium charges for non-Hyde services, and another for the remainder of the premium. In order to implement this change, insurers will be required to send clear instructions to enrollees to explain the need to pay the two charges through separate transactions, such as two distinct credit card charges. Enrollees who do not pay their full monthly premium (including the separate charge for non-Hyde services) risk having their coverage terminated by their insurer. Insurers are allowed to offer consumers a grace period (usually 90 days) during which consumers can reconcile missed payments before terminating coverage.

Stakeholder comments submitted when the rule was proposed cited concerns that multiple bills and payments could create confusion for enrollees. In an attempt to mitigate these losses, HHS indicated it will not take enforcement action against insurers that do not terminate enrollee coverage because the consumer did not pay the separate bill, at least not until new regulations are put in place to provide additional guidance on these requirements. The rule also suggest that insurers may leverage allowable “premium disregard thresholds” as one tool to aid consumers who may have missed making a separate payment, for example, the insurer will not terminate coverage as long as 99 percent of the premium is paid during a set amount of time.

Finally, the rule provides insurers with a new option to allow enrollees to opt-out of coverage of non-Hyde services by not paying the second premium. This option would fundamentally change the plan consumers were enrolled in for the year, as well as their premium costs, which is a potentially significant change for an insurer to bear in the middle of a plan year. The regulation grants deference to state law and/or health insurance marketplace certification requirements that prohibit such mid-year changes. This option also may not apply in states that mandate coverage of non-Hyde abortion services on private health insurance plans (CA, IL, ME, NY OR, and WA).

Expected to Cost Marketplaces and Insurers Millions

As stated by commenters and reflected in the final rule, implementation of these changes will require insurers or state-based marketplaces that perform premium billing on behalf of insurance (including MA, RI, and VT) to make “changes to nearly every aspect of the enrollment and billing process.” HHS estimates the rule will impose one-time costs of nearly $4.1 million to each insurer or marketplace that must institute these changes, plus an additional cost of nearly $1.1 million annually to maintain operation of the rule.

In total, insurers and marketplaces are estimated to spend more than $550 million to implement this rule between 2020 and 2022. HHS estimates that these additional costs will result in premium increases to consumers. While premiums have already been set for the 2020 plan year, HHS estimates that these changes will result in a 1 percent increase in premiums per year beginning in plan year 2021.

These estimates do not include additional expenditures that might be made by all health insurance marketplaces, brokers, and other agencies to ensure systems are in compliance with the new regulations and to conduct outreach and education to mitigate confusion among consumers who will now receive multiple monthly bills. HHS estimates that the 12 state-based marketplaces alone will spend a total of $24.6 million from 2020 to 2024 to implement these such changes. In the case of marketplaces that do premium billing, these charges are in addition to those outlined above.

Outlook for States’ Insurance Markets

The billing changes made by this rule are slated to go into effect on June 27, 2020, which gives states and insurers limited time to prepare the systems and outreach materials that will be needed to smoothly implement this change. HHS acknowledges that the rule may result in coverage losses, caused in part by confusion and the additional burden put on consumers to understand and follow through on making separate premium payments. Reductions in enrollment could affect a health plan’s risk mix and lead to additional changes in premiums. HHS also acknowledges that insurers may choose to drop coverage options to avoid the burden of implementing the rule, which would reduce the number of choices available to consumers in the marketplaces.

The National Academy for State Health Policy will continue to track this issue as state regulators coordinate with insurers on implementation of these rules and monitor impacts of these changes on markets.