COVID-19 has affected nearly every aspect of American life, including access to health insurance coverage, which is critical during a pandemic. Job losses and reductions in hours have resulted in millions losing employer coverage or the income needed to pay premiums, forcing them to join the already sizeable ranks of the uninsured. State marketplaces have stepped in to make sure previously uninsured individuals and those losing coverage have a source of coverage.
On June 5, 2020, executive directors from 14 state-based insurance marketplaces (SBM) sent a letter to Congressional leaders voicing support for federal efforts to reinforce insurance markets during the COVID-19 pandemic.
The Department of Health and Human Services (HHS) has issued the final Notice of Benefit and Payment Parameters (NBPP) for 2021 — the annual rule governing health insurance plans and health insurance marketplaces. While the final rule contains several changes, it does not significantly alter automatic re-enrollment for individuals who purchase through the health insurance marketplaces, which the federal government had proposed earlier this year.
The annual NBPP is of particular importance to insurers, insurance regulators, and marketplace officials who rely on the rule and its regulations to set the playbook by which health plans will be required to operate in the following year. The rule also sets requirements for system changes that marketplaces may have to implement as soon as the upcoming enrollment season.
The annual rule was issued May 7, 2020, the latest date that this annual rule has ever been released. As a result, the final regulations come very close to – or for some states after – the filing deadlines by which health insurers must submit their planned offerings for 2021. The delay caused health insurers to develop plans while operating under a level of uncertainty of what might be included in the final rule. Once released, insurers had little, if any, time to adjust their proposed filings in accordance with the changes finalized by the regulation.
Acknowledging the tight timeframe for implementing changes before the 2021 plan year, HHS delayed implementation of several of the requirements imposed under this rule until 2022 – including new requirements for medical loss ratio (MLR) calculations and changes to policies related to special enrollment periods (SEPs).
Delayed implementation of changes and deadlines required of insurers and insurance marketplaces is especially pertinent as markets face ongoing uncertainty resulting from the COVID-19 pandemic. As the country works to curb the spread of the disease, many questions remain about the pandemic’s long-term effects on insurance markets.
- How will consumers who lose employer-sponsored coverage and transition to individual plans affect the commercial insurance market?
- What will be the financial impacts of COVID-19 related treatments, including a possible vaccine?
- What will be the cost of consumers’ delaying or foregoing care?
- How will greater utilization of telehealth services impact costs?
Meanwhile, the health insurance marketplaces are operating in a new environment with increased enrollment of new consumers, all while modifying their operations, which include marketing and outreach strategies that comply with enhanced social distancing standards.
Major changes included in the rule are summarized below.
Annual reporting of state-mandated benefits. Federal law requires that health insurance plans sold in the individual and small group markets cover essential health benefits (EHB) and 10 broad health benefit categories, including hospitalizations, emergency services, and prescription drugs. States may impose benefits requirements in addition to the federal EHB requirement. Typically, benefit mandates lead to increased costs for health insurance. To insulate the federal government from increased expenditures on health insurance subsidies, which are calculated based on the cost of insurance premiums, states must defray the cost of any state-mandated benefits issued after Dec. 31, 2011, either by issuing payments to enrollees or insurers to cover the cost of these mandates. State-mandated benefits are also not allowed to be considered as part of federal advance premium tax credit (APTC) calculations or as part of cost-sharing limitations imposed on qualified health plans (QHPs).
Citing concerns that states may not be defraying the costs of state-requirement benefits, beginning in July 2021, states will be required to submit an annual report on state-mandated benefits outside of EHB. In the first year, states are required to include a comprehensive list of all state benefit requirements for QHPs sold in in their individual and small group markets. This will set a baseline – going forward states will only be required to submit an update to the report to include any new, amended, or repealed benefits. If no changes are made during a given year, a state may submit the same report. The report must accurately report information available within 60 days prior to the annual submission deadline. The rule also clarifies that insurers may refer to states to produce any cost analysis associated with additional benefits, rather than perform the calculations themselves.
The new requirement comes despite a majority of comments opposed to increased reporting, noting a lack of evidence that states were not in compliance with defrayal requirements and that such a requirement would be onerous and duplicative of processes already in place to assess the effects of state-mandated benefits. HHS asserts the reporting requirement should be complimentary to work already being conducted by states to assess these benefits and will help promote a uniform approach to assuring compliance with federal requirements across all states. The rule also stipulates that HHS will be providing additional technical assistance to states to address concerns over the lack of clarity about defrayal processes and identification of state-benefits that fall outside of EHBs.
Consideration of pharmacy price concessions and wellness incentives in medical loss ratio (MLR) calculations. Beginning in 2022, insurers will be required to deduct prescription drug price concessions from incurred claims considered as part of MLR calculations. Such concessions may include drug rebates or incentive payments given directly to insurers as well as those secured and retained by entities providing pharmacy benefit management (PBM) services or PBM-like entities. This is a change from previous requirements that only mandated inclusion of concessions received directly by an insurer and aligns with MLR policies already in place under Medicare and Medicaid. The change intends to even the playing field between insurers with PBM contracts and promote a uniform standard for what factors are considered when performing MLR calculations. HHS is considering additional rulemaking to provide precise definitions for prescription drug rebates and price concessions in advance of implementation of the new requirement.
HHS has also finalized changes that individual market insurers may include the cost of certain wellness incentives as quality improvement activities (QIA), which are considered medical care for the purposes of MLR calculations. Wellness incentives include rebates, discounts, waivers of cost-sharing, or other incentives provided as part of participation in a wellness program. This change conforms with how MLR calculations are assessed in the group market.
Inclusion of drug rebates into cost-sharing calculations. The rule permits, but does not require, insurers to count direct support offered by drug manufacturers (e.g., drug rebates, coupons) toward calculation of an enrollee’s cost-sharing responsibility. The rule clarifies that neither HHS nor the departments of Labor or Treasury will take enforcement action against insurers who exclude the value of direct support from cost sharing, even in cases where supports may incentivize take-up of brand-name drugs when generic alternatives area available.
HHS notes advantages to policies that include rebates as part of calculations (e.g., cost protections for consumers who use/need brand-name drugs) as well as policies that mandate exclusion of rebates (e.g., to incentivize use of generics where available). Application of the rule ultimately defers to state law and any restrictions states may impose on how direct supports are included in cost-sharing calculations. Insurers must apply their policies on direct support uniformly across all QHPs. HHS expects that issuers “prominently include” information on websites and other educational collateral explaining how drug manufacturer rebates are included in cost-sharing calculations.
Greater flexibility on plan selection available during a special enrollment period (SEP). Current rules maintain tight restrictions on the types of plans enrollees may select if enrolling during a SEP; usually requiring that consumers enroll in a plan at the same metal tier (of the same value) as previously held coverage. This is to ensure that consumers do not take advantage of SEPs to enroll in more generous plans because of an emerging health care need, as well as to provide greater consistency for insurers operating in the market. However, in a case where a SEP is triggered by an increase in income, the income change may render a consumer ineligible for cost-sharing reductions (CSRs), an additional subsidy given to individuals earning between 100nto 250 percent of the federal poverty level to cover out-of-pocket costs of care.
Loss of CSR eligibility may significantly alter affordability of certain health plans for a consumer. To account for this change, beginning with plan year 2022, consumers who lose CSR eligibility may enroll in a plan at a different metal level. The rule also allows consumers who are newly eligible for coverage to enroll in the same QHP as any dependents who are currently enrolled in QHP coverage through a health insurance marketplace.
Expedited effective dates for coverage obtained during a SEP. Current enrollment policies can lead to significant delays in effectuation of health insurance coverage. For instance, enrollees who enroll in coverage from the day 16 through 31 of any given month typically would not start coverage until the first of the month subsequent to the month that immediately follows their enrollment (e.g., if a person enrolled on June 16, coverage would not begin until Aug. 1).
Recognizing advancements in the time it takes issuers to process enrollments, in plan year 2022 insurers participating in the federally-facilitated marketplace (FFM) will be effectuating coverage on the first of the month following enrollment, regardless of the date the individual enrolled. State that operate their own marketplaces (SBMs) have flexibility to impose their own guidelines on effectuation dates – several have already accelerated the timeline for their issuers.
Limited flexibility for consumers eligible for retroactive coverage. A consumer may be incorrectly determined ineligible for coverage, in which case they can appeal the coverage decision. In some of these cases, the person may ultimately be eligible for coverage retroactive to a certain point before a determination of the eligibility was finalized.
Earlier rules had given consumers some flexibility over the start date at which consumers could retroactively elect coverage – which gave consumers some options in case they were in need of retroactive coverage, yet had concerns about paying premiums owed to cover all the months of retroactive coverage. The new rule eliminates this flexibility, and requires consumers to either begin their coverage retroactive to the entire period for which they should have been eligible for coverage or to begin coverage prospectively. The change is expected to have minimal effect as less than .05 percent of consumers with verification issues opted for retroactive coverage in 2018 and 2019.
SEP timeframe for Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs). Current rules allow that consumers may qualify for an SEP upon becoming newly eligible for a QSEHRA, a type of health reimbursement arrangement (HRA) whereby employees can use the funds in the HRA to purchase health coverage sold through the health insurance marketplaces (for more information on QSEHRAs, read New Federal Health Reimbursement Proposal Adds New Variables to State Health Insurance Markets). The rule clarifies that the SEP applies even in cases where the QSEHRA’s plan year does follow the calendar year, the typical standard for the coverage year.
Maintains FFM user fee. Health insurers will be assessed at a rate of 3 percent to participate on the FFM, also known as healthcare.gov. For states that use a hybrid marketplace model, known as state-based marketplaces on the federal platform (SBM-FPs), HHS will retain 2.5 percent with 0.5 percent available to states to perform functions related to outreach, marketing, and plan management. Thirty-two states used the FFM in 2020, while six were SBM-FPs. (For more on health insurance marketplace models read Where States Stand on Exchanges.)
Eases process for coverage terminations and verifications. Consumers who are eligible for Minimum Essential Coverage (MEC), including most employer-sponsored coverage, Medicare, and Medicaid – are not eligible to receive federal subsidies to purchase coverage through the health insurance marketplaces. In the case where a marketplace determined that a person was dually enrolled in an exchange plan and MEC, a marketplace was required to redetermine the enrollee’s eligibility for subsidies before terminating that person’s coverage. This rule eliminates the requirement that marketplaces re-determine eligibility before termination, so long as the enrollee has opted in to be automatically terminated from coverage in this circumstance.
The rule clarifies that coverage terminations will be processed retroactive to the date of death in the case of an enrollee who has expired. The rule also clarifies that termination initiated by an enrollee will be effective retroactive to the date that the enrollee first attempted to end coverage, though SBMs are granted flexibility in how to apply this policy.
Finally, currently marketplaces must verify whether consumers are eligible for qualifying employer-coverage as part of determining whether consumers are eligible for marketplace subsidies. In some cases, insufficient data is available to perform this function, in which case marketplaces may use random sampling to verify eligibility. Due to limitations in sampling processes, including availability of adequate data, HHS is continuing its current policy to not enforce action against states that do not conduct random sampling.
Customization of QHP Quality Rating System (QRS) Display. Health insurance marketplaces are required to display quality ratings for insurance plans on their websites. The quality ratings are determined based on the federal QRS, which sets universal standards for the quality of health plans sold across all states. While the rule maintains federal governance over the QRS, it does grant SBM states flexibility in how they choose to display quality data. For example, SBMs may opt to include state-specific information related to quality in addition to QRS data.
Encouraging value-based insurance design. The rule does not explicitly mandate or incentivize adoption of value-based strategies, but does encourage insurer adoption of value-based insurance design principles consistent with policies supported by the University of Michigan Center for Value-Based Insurance Design, including benefit models that offer high-value services to consumers with little to no cost-sharing.
Adjusts factors used for risk adjustment calculations. Under the federal risk adjustment program, the federal government redistributes funds between health insurers that take on lower-risk enrollees, to those with a higher risk mix. Calculations are based on a complicated formula that computes risk based on various disease categories known as Hierarchical Condition Categories (HCCs). The rule updates the HCCs to conform with updated codes used to categorize diseases (a shift from ICD-9 to ICD-10 codes for disease classification). Other changes include a recalibration of how hepatitis C treatments factor into risk calculations and inclusion of pre-exposure prophylaxis (PReP), an HIV-prevention drug, as a preventative service. Collectively, these changes intend to ensure that risk adjustment calculations more accurately reflect current medical diagnoses and practices to ensure better assessment of risk taken on by insurers. The impact of these changes will vary by insurer and enrollee population.
Updated June 8, 2020
State Health Insurance Marketplace Directors Recommend Federal Efforts to Improve Coverage Affordability and Stability in Light of COVID-19
As the state-based marketplaces (SBMs) take steps to improve access to coverage during the COVID-19 pandemic, affordability of coverage and stability of insurance markets remain significant barriers to health insurance.
On June 1, 2020, SBM directors representing 12 state-based health insurance marketplaces sent a letter to Congressional leaders recommending actions that could help ease access to affordable coverage, including reinsurance, enhanced subsidies, and leniency on penalties for individuals whose income and employment fluctuations may lead to incorrect eligibility determinations.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes a Pandemic Unemployment Compensation benefit of $600 a week, which supplements traditional unemployment insurance (UI) benefits and provides an important source of additional financial support for individuals who qualify for these payments.
However, as highlighted in NASHP’s April 6, 2020 blog, Federal Guidance Needed to Clarify CARES Act Health Coverage Provisions, because these supplemental payments are counted as income for determining eligibility for marketplace subsidies – but not counted when determining eligibility for Medicaid and the Children’s Health Insurance Program (CHIP) – there could be challenges for both individuals and states.
States are required to use streamlined applications across their health coverage programs and several states (CT, DC, CO, MA, MD, MN, RI, VT, and WA) have developed fully integrated eligibility systems shared by their Medicaid and state marketplaces. States must closely coordinate across these agencies as any changes to application instructions or questions could have ramifications for eligibility determinations between the programs.
The Centers for Medicare & Medicaid Services (CMS) recently released guidance that provides information on ways that states can identify the $600 weekly payments that are to be disregarded when determining Medicaid and CHIP eligibility. While the guidance gives states implementation flexibility, the options offered could be burdensome for both state Medicaid and CHIP agencies and individuals. Some of the issues include:
- Complications in coordinating with state unemployment offices: The guidance suggests that state Medicaid and CHIP agencies can work directly with their state unemployment agencies to determine which individuals will qualify for the additional payments. Yet, implementing a plan to identify these individuals in close coordination with unemployment agencies that are already significantly stressed with handling increased consumer demand is expected to be challenging for states.
- Challenges in implementing system changes: CMS notes that state unemployment agencies have the option to include the supplemental payments within their regular UI payments, or make the supplemental payments separately, which could help identify the $600 supplement for health coverage purposes. Separating the supplemental $600 payment from an individual’s regular UI may create additional work for the unemployment agency at a time when they are least able to accommodate additional work, but it could help both Medicaid and CHIP agencies (and although not referenced in the guidance, the marketplaces) to account for those separated funds in eligibility calculations.
CMS suggests that if state Medicaid and CHIP agencies can identify and document that all UI recipients will receive the additional payments, they will be able to program their eligibility systems to automatically reduce all UI income by $600 per week until the additional payments end on July 31, 2020. While the guidance indicates that states can potentially receive a higher federal match rate for making these system changes, quickly implementing them on a temporary basis will be administratively difficult for states – and it also assumes that states will have the ability to determine that all UI recipients are eligible for the additional payments.
- Relying on individuals to correctly report income could create eligibility determination complications: CMS indicates that states can choose to provide instructions in application forms or in their call center scripts to direct individuals to not report the $600 per week additional payments in their income for Medicaid and CHIP eligibility determinations. States can also ask that individuals self-attest about whether or not their UI income includes the $600 per week of additional payments. But some individuals may still mistakenly report the supplemental payments or not provide the correct information about whether their UI income includes the additional payments, which could negatively affect their Medicaid or CHIP eligibility. It could also hamper the ability of states to make accurate eligibility decisions and could result in state eligibility determination workers having to conduct extensive outreach to clarify applicants’ income information.
An important, remaining issue is that the CMS guidance does not address how states should align Medicaid and CHIP eligibility determinations with the fact the CARES Act requires the $600 supplemental payments to be counted as income when assessing eligibility for marketplace subsidies. This is particularly concerning for low-income consumers who are deemed ineligible for Medicaid and then are deemed eligible for low or zero marketplace subsidies because the inclusion of the supplemental payments has pushed them into an even higher income threshold. Concerns also remain about whether consumers might face penalties for inaccurately reporting income because of confusion caused by the different reporting requirements.
Additional federal guidance from the Center for Consumer Information and Insurance Oversight is needed to ensure that states can make accurate and timely eligibility determinations and that individuals are efficiently enrolled in health coverage.
Update: March 2, 2020
State Insurance Marketplace Directors Express Concerns Over Potential Changes to Automatic Re-enrollment
Directors representing 15 state-based marketplaces submitted a joint comment to the US Department of Health and Human Services responding to its latest proposed rule governing health insurance markets. Their comments expressed concerns over future changes to automatic re-enrollment policies that may cause considerable consumer confusion and disrupt insurance markets. Their comments are available here.
State-based marketplace (SBM) leaders convened in Washington, DC last week to share experiences and ideas and meet with key Congressional staff in advance of this year’s open enrollment period.
SBMs, which exercise total control over their health insurance marketplaces in contrast to states that use the federal marketplace, are making considerable progress in reaching and serving the uninsured. However, confusion fostered by unclear federal policies — such as the recent public charge rule and the looming decision in Texas v Azar that could strike down the Affordable Care Act – has created a cloud of uncertainty that challenges all states.
Today, 13 states operate SBMs, including Nevada that transitioned to this model for the 2020 open enrollment season. Additionally, four states (ME, NJ, NM, and PA) have announced plans to transition to the SBM model, three of which are currently operating as hybrid SBM models that use the federal platform (SBM-FPs) during this enrollment season.
Officials from the newly transitioning states – New Jersey and Pennsylvania – were welcomed at the meetings. They explained that a desire for stable insurance markets, state sovereignty over their marketplaces, and the potential for financial savings drove enactment of their new laws to transition to the SBM model.
Pennsylvania Democrat Gov. Tom Wolf’s proposal to establish an SBM and a reinsurance program received unanimous support from the state’s Republican-controlled legislature. In New Jersey, the decision to launch an SBM came on the heels of earlier efforts to restore the individual mandate requiring coverage and a successful federal waiver application to begin a reinsurance program.
By “owning” their marketplaces through the SBM model, state officials indicated they believe they will more efficiently and effectively serve their constituencies through implementation of state-focused policies and tailored outreach that were not possible when they used the federally facilitated marketplace (FFM).
Data shared at the meetings underscored the greater success that SBM states have had in serving their populations. (View a slideshow about SBM advantages here.) Unlike states that use the FFM, SBM states have the flexibility to address the health insurance needs of local populations and, as a result, have:
- Maintained steady enrollment steady;
- Been more successful in lowering their states’ uninsured rates; and
- Helped more unsubsidized consumers find coverage.
While SBM states have held down premium cost growth better than FFM states, SBM leaders expressed urgency to do more to make coverage affordable, especially for middle-income consumers. This slide highlights a number of strategies SBM states are pursuing.
Five states are operating reinsurance programs – that subsidize coverage of high-cost enrollees – in partnership with the federal government and five more states will join their ranks in the 2020 plan year. The results officials presented made clear that reinsurance programs do lead to significant premium reductions and provides a tangible initiative for state insurance departments to hold insurers accountable through quantifiable premium reductions. But, state officials were quick to point out, state-run reinsurance programs are time-limited or are simply unaffordable for many states. The need to restore and make permanent a federally funded reinsurance program remains a priority even as states pursue other strategies to address affordability.
The message from SBM leaders who attended the Washington, DC meeting was clear – SBMs are succeeding, sustainable, and growing in number because they are on the ground, fine-tuning their operations, and growing their capacity to address local needs.
California Gov. Gavin Newsom’s new budget has infused significant funds to make health care coverage sold through its health insurance marketplace (Covered California) more affordable and has made new subsidies available to middle-income individuals earning between 400 to 600 percent of the federal poverty level (FPL).
The budget allots $429 million in 2020 to provide new subsidies and builds on current federal premium subsidies that help fund individuals earning 100 to 400 percent of FPL.
To learn more about California’s new initiative, NASHP spoke with Covered California Executive Director Peter Lee and Director of Policy Katie Ravel. They also discussed their implementation plans for the 2020 coverage year.
What prompted development of this coverage initiative?
PL: Many people have been left out of accessing coverage — especially the middle class and those who are undocumented — and our governor and legislature wanted to take concrete steps to get the state toward universal coverage. On Governor Newsom’s first day in office, he laid out his agenda, calling for the federal government to reinstate the individual mandate and expand subsidies available through the marketplaces. Meanwhile, our legislature has also been committed to building on what the Affordable Care Act (ACA) did to expand coverage.
KR: Last year, the legislature required Covered California to develop options to improve coverage affordability for low- and middle-income consumers in the state.
What was California’s approach in developing this initiative?
PL: We had four goals driving our work; decrease the number of uninsured; address affordability concerns of those who are insured; make sure what we did would be affordable for the state; and deliver options that could be implemented in the short term.
KR: To start, we wanted to build on the main levers of the ACA and ultimately move the needle on coverage and cost. We formed a workgroup inclusive of consumer advocates, insurers, providers, and legislative staff members. We provided them with education about the basics of how our programs currently work and how Covered California is structured in addition to reviewing data about current affordability challenges. We worked with economists Wesley Yin from the University of California at Los Angeles and Nicholas Tilipman from the University of Illinois at Chicago to model the impacts on coverage and cost of various affordability policies including enhanced premium and cost-sharing subsidies, reinsurance, and reinstatement of a coverage mandate.
PL: We were able to prepare a good product that laid out the options and informed legislators and advocates about the pros and cons of each. From this work, they could clearly understand what an investment of additional funds would get you in terms of increased coverage and affordability. The information we gathered helped steer us away from other options like reinsurance or reducing cost sharing for marketplace plans.
KR: When it was clear that the intention was to launch a program in 2020, the most turnkey option was to increase subsidies. Ultimately, the best way to drive enrollment is to make premiums more affordable.
Why is it important to include a coverage mandate?
PL: Policymakers almost universally recognize the sensibility of the individual mandate. There is empirical evidence that a mandate has an impact on driving people to get insured. Massachusetts is one example, they have a long-standing state mandate and was the only state to see an increase in new enrollment after the federal mandate went away.
Once legislators were able to come together and recognize that lack of a mandate [and associated drops in enrollment and increases in premiums] was most hurting the middle class who do not qualify for federal subsidies, it made sense to marry those policies together; reinstitution of a mandate, with penalty funds supporting those who were at the “subsidy cliff” [400 percent of FPL, the point at which individuals no longer qualify for federal subsidies]. Sixty percent of the new enrollment we project due to these policies in 2020 will actually be motivated by the penalty. Approximately 80 percent of overall funding allotted for subsidies will go to those [earning] between 400 to 600 percent of FPL.
What other work was required to bring policymakers on board with this subsidy plan?
KR: What was most important was that we were able to produce concrete estimates of how each policy choice would impact enrollment and affordability. Data made the choices real. Legislators understood the impact they could have if these initiatives were passed. We spent a lot of time diving into the data to better understand the health care costs for Californians whose incomes are over 400 percent of FPL. It was eye opening! Some, especially those nearing Medicare eligibility, would have to pay nearly 35 percent of their premium to purchase a benchmark health insurance plan.
PL: That people have to pay tens of thousands of dollars a year in health plan premiums is unfair. People are really hurt by the federal subsidy cliff. However, for this to work, we were talking about a lot of money, and had lot of politics to get through. These policies are complicated, and it took years of Covered California becoming a trusted part of health policy discussions to get here. It was important for us to bring awareness about what was actually doable, especially in quick-turnaround. There is no way we would be implementing as soon as 2020 if it were not for the workgroup.
Through our reports and data, we told the story of the local impact of these policies. In our workgroup report, we provided examples of hypothetical families, but presented them in a way that most policymakers could relate to — policymakers had heard from “people like them” in their communities for whom our insurance system was not working. Having that data to make things local is an important role for the state-based exchanges.
Plan year 2020 is quickly approaching. How will Covered California be able to implement this law so quickly?
PL: A critical part of our planning was early engagement with our carriers. We engaged them to work through importation questions like: Could our systems even work with theirs to add a state subsidy? What were their deadlines to price products anticipating changes might come as soon as plan year 2020? The plans have confidence we will aggressively market these changes, and anticipate this will lead to lower rates for plan year 2020.
Also helpful is that we modeled everything off what already existed under the ACA and leveraging as many existing processes as we can. We are using the same rules for the mandate as exist under federal law and subsidies will be distributed using the same mechanics in place for advanced premium tax credits.
KR: On the technical side, there are three main buckets we’re focused on for implementation: we’ll have to make changes to our eligibility rules engine, then figure out the money flow for the subsidies, then how to reconcile the subsidies at the end of the year based on income changes. We have been coordinating regularly with our design team and carriers to develop and test new systems and processes. We’re also working closely with our state tax agency on the subsidy reconciliation piece.
PL: The partnership with the tax agency is new for us. We recognize that it is part of our collective job as agencies of the state to make sure that people are insured, so we are working hard on how we inform consumers that they have better options than to pay the penalty. Our intent is not to penalize individuals, but rather to make sure that people are insured.
How will Covered California raise awareness about these changes?
PL: We are currently doing market research on what messages will resonate best with consumers. We recognize that passage of a mandate does not necessarily mean consumers will automatically be aware of and comply with the law, so we are planning a marketing strategy to increase awareness. Rather than focus on the penalty, our ads will focus on the fact that the mandate is now the law in California and that we are making coverage even more affordable. We want to drive people to come in and shop for coverage.
What else should we know about California’s new initiative?
PL: Importantly, these proposals are just stopgaps for what California believes should be federal responsibilities [e.g., to enforce a mandate and to provide subsidies that make coverage more affordable for all]. The penalty is written so that it is in effect until the federal one is reinstated. As for the subsidies, the program is only set to run for three years. We believe this will greatly benefit Californians in the short-term, but don’t want it to be the long-term solution. In the absence of leadership from the federal government, states can step up, but ultimately the federal government needs to step in.
More details about California’s new subsidy program are available at Covered California’s board meeting presentation available here.
State-based health insurance marketplaces (SBMs) outperform those using the federal platform – achieving lower premium rate hikes and providing more competition and plan choices. As a result, some states are thinking about converting to an SBM, but what does it take for a state to make the switch? During this webinar, SBM executives from Washington, DC, Idaho, and Massachusetts will share lessons in how to build effective SBMs based on their years of experience.
Nevada Health Link Executive Director Heather Korbulic will share how her state’s transition to an SBM, for the 2020 open enrollment period, is faring.
Read this NASHP Q&A with Heather Korbulic: Nevada’s Insurance Exchange Director Talks about Transitioning to a State-based Marketplace and Saving Millions, April 2018
In an April 29, 2019 letter to the secretaries of the departments of Treasury, Labor, and Health and Human Services, 12 state-based marketplace leaders expressed serious concerns about delays in proposed federal rules that would significantly change states’ insurance markets and marketplaces in 2020.
The proposed rules would impact health reimbursement arrangements (HRAs) — allowing employers to deposit pre-tax funds into accounts for employees to use to purchase insurance coverage. Previously, HRAs could only be tapped to purchase certain medical services and equipment. The government originally proposed the rule changes last October, but it has not released a final version of these rules yet, despite the fact the proposed changes are proposed to go into effect in 2020.
As proposed, implementation of the rule would require marketplaces to make significant policy and operational changes. With 2020 rate-filing deadlines starting next month and open enrollment beginning in six months, there is little time for marketplaces to implement changes.
In their letter, marketplace leaders emphasize that last-minute changes imposed by the final rule will lead to significant costs and a hasty implementation that would “detract from attention and service to marketplace enrollees and locally determined priorities for marketplace functionality.” They also point out that little time remains to adjust insurance product offerings to account for the hundreds of thousands of individuals expected to switch from the group health market into individual market coverage.
- View the letter marketplace leaders sent to the secretaries of the departments of Treasury, Labor, and Health and Human Services here.
- For a full summary of changes proposed under the rule read: New Federal Health Reimbursement Proposal Adds New Variables to State Health Insurance Markets