IRS, HHS and the Employee
Benefits Security Administration also want to limit short-term health insurance
use to three months
Jun 08, 2016 |
By Allison Bell
Obama
administration officials want to limit use of short-term health insurance
in the United States to periods of three months or less.
Officials are
also thinking about the possibility of banning the sale of critical illness
policies and other policies that cover two or more specific diseases.
The so-called
"tri agency" team — the Internal Revenue Service, the Employee
Benefits Security Administration and the U.S. Department of Health and Human
Services — has included those proposals in a new batch of draft regulations.
The agencies
developed the draft regulations to implement the Expatriate Health Coverage
Clarification Act of 2014, and to adjust the requirements for health insurance
products other than major medical coverage.
Participants in
a data needs survey were less interested in information about accident
insurance.
The three
agencies are preparing to publish the regulations in the Federal Register
Friday. Members of the public can send in comments up until 60 days after the
official publication date.
The Centers for
Medicare & Medicaid Services (CMS), part of HHS, announced the release of
the draft in a statement about what HHS doing to help the Patient Protection
and Affordable Care Act public exchange system.
CMS said it and
HHS want to:
- Improve the PPACA risk-adjustment
program, which is used to use cash from health plans with low-risk
enrollees to compensate competitors that end up with high-risk
enrollees. CMS wants
to create an adjustment mechanism for part-year enrollees and let plans
include enrollees' prescription information when calculating health risk
scores, according to a new batch of risk-adjustment program
guidance.
- Forge ahead with previously
announced efforts to increase documentation requirements for consumers who
seek coverage outside the usual open enrollment period window. Officials say they hope getting
tough on special enrollment period applicants will keep healthy people
from waiting until they get sick to pay for health insurance.
- Limit use of products that some
consumers might see as an alternative to buying major medical coverage. The three agencies described the
limits in the draft regulations.
For more
details about what the tri agencies said about health insurance products other
than major medical insurance in the draft regulations, read on:
Expat coverage
The three
agencies want to distinguish travel insurance that happens to cover
travel-related health problems from "expatriate health plans," or coverage
aimed at U.S. citizens or U.S. residents who live outside of the United States
on a long-term basis, according to the introduction to the draft regulations.
The three
agencies want to require an issuer of expat coverage to be a substantial issuer
of expat coverage. An issuer would, for example, have to maintain call
centers in three or more countries, accept calls from customers in eight or
more languages, and process at least $1 million in claims per year in foreign
currency equivalents.
An expat plan
would be exempt from some requirements that apply to ordinary major medical
plans. In the United States, individuals usually need to show they have
"minimum essential coverage" to escape from the penalty PPACA imposes
on the uninsured, or underinsured. A minimum essential coverage plan
cannot impose lifetime or annual limits on the amount of medical benefits a
patient can get.
The tri
agencies say they would exempt expat plans from some of the PPACA requirements
that apply to minimum essential coverage, such as the ban on annual and
lifetime benefits limits. But, to qualify as minimum essential coverage, an
expat plan would have to cover inpatient services, outpatient facility
services, physician services and emergency services.
An employer
that sponsored a group health expat plan, and wanted to get credit for offering
minimum essential coverage, would have to "reasonably believe" that
the expat plan met the usual minimum essential coverage minimum value
standards.
Critical illness insurance
PPACA exempts
indemnity insurance from the PPACA major medical requirements.
The tri
agencies have given their blessing in the past to indemnity products that pay a
set, time-based benefit. The agencies have said, for example, that an
insurer can pay $100 per day to a policyholder who enters the
hospital. Insurers have asked the agencies to allow the sale of
traditional supplemental policies that pay benefits to consumers who have
certain kinds of conditions or get certain kinds of medical service.
The tri
agencies say they are not sure whether a policy that covers multiple specified
diseases or illnesses should qualify for excepted benefits status.
The
agencies "are concerned that individuals who purchase
a specified disease policy covering multiple diseases or illnesses
(including policies that cover one overarching medical condition such as
'mental illness' as opposed to a specific condition such as depression)
may incorrectly believe they are purchasing comprehensive medical coverage
when, in fact, these polices may not include many of the important
consumer protections," officials say.
The tri
agencies "solicit comments on this issue and on whether, if such
policies are permitted to be considered excepted benefits, protections are
needed to ensure such policies are not mistaken for comprehensive medical
coverage," officials say.
If the agencies
let insurers continue to sell the policies, the agencies might limit the number
of conditions that a policy could cover, officials say.
Short-term health insurance
The three
agencies have been letting consumers continue to buy traditional short-term
health insurance coverage outside the PPACA framework.
A short-term
health insurance issuer usually requires applicants to go through a simple
medical underwriting process. The issuer may decline to cover pre-existing
conditions, and it may leave out benefits for mental health care, maternity
care and other types of care that a PPACA-compliant major medical plan would
cover. An issuer may also impose annual benefits limits of $100,000 or less.
For qualified
applicants, short-term health insurance is
often cheaper than major medical coverage, marketers say.
Issuers of
short-term health insurance can sell the coverage all year round. Issuers of
individual major medical coverage require consumers to show they have a legal
excuse to get a special enrollment period before selling them outside the
annual open enrollment coverage. The open enrollment period now lasts from Nov.
1 through Jan. 31. The rules mean that, for much of the year, short-term health
insurance may be the only health insurance some consumers can buy, marketers
say.
In most states,
issuers can offer short-term health insurance available for periods of up to
one year.
The three
agencies want to keep consumers from using short-term health insurance as a
convenient major medical alternative by limiting use of a policy to three
months. The three-month time limit would include the period of any policy
renewals as well as the original policy duration, officials say.
Indemnity insurance
In the past,
the three agencies have let insurers continue to sell hospital indemnity
insurance plans, which pay benefits to insureds who enter the hospital, or to
cancer insurance policies and critical illness insurance policies, which pay
benefits when insureds suffer from the covered diseases. The three agencies
have said those products would be "excepted benefits."
Excepted
benefits are products free from the federal benefit design rules that usually
apply to major medical policies.
In the past,
federal agencies have said that excepted benefits policies should be used to
fill in the gaps in the major medical policies that comply with PPACA, not as
an alternative.
The tri
agencies now say they are hearing about group health plan operators telling
workers in employer-sponsored group health plans that indemnity policies and
other supplemental products count as minimum essential coverage.
The agencies
"are concerned that some individuals may incorrectly understand these
policies to be comprehensive major medical coverage that would be considered
minimum essential coverage," officials say.
The agencies
want issuers of the supplemental products to include prominent notices, in
large type, stating that the products are supplemental products, not minimum
essential coverage.
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