On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services published its massive Notice of Benefit and Payment Parameters (BPP) for 2016 final rule, accompanied by a fact sheet. This rule addresses a host of issues involving the continuing implementation of the Affordable Care Act for 2016. A few provisions, however, affect the 2015 year as well and a number of provisions will not be implemented until 2017.
The BPP rule amends and updates existing rules; thus, it must be read in tandem with rules that have been promulgated earlier, which are catalogued in the preface to the rule.
CMS released also on February 20 its Final 2016 Letter to Issuers (Insurers) in the Federally-Facilitated Marketplace (FFM). This letter sets the ground rules for insurer participation in the FFM for 2016 and covers many of the same topics covered by the BPP rule.
These documents are very lengthy and will be covered in three posts over the next few days. This first post will focus on issues in the BPP rule that directly affect consumers. The second post will focus more on issues that affect health plans. The third post will examine the letter to issuers.
The proposed BPP rule was published on November 21, 2014, and was described here and here. CMS received 313 comments on the proposed rule, which are addressed in the preface to the final rule in some detail. Although most of the provisions of the proposed rule were adopted in the final rule, CMS made an extraordinary number of modifications and adjustments to the proposal, many of them quite technical. It also decided not to finalize a few of the changes it had proposed or to delay them to later years.
Changes Affecting the Essential Health Benefits Package
An important innovation of the Affordable Care Act was the designation of a package of ten essential health benefits (EHB) that must be covered by health plans in the individual and small group market. The ACA directs HHS to define the EHB. For 2014, CMS adopted a benchmark plan approach under which each state could identify a base benchmark plan from a menu of options which then defined the EHB that all non-grandfathered (or grandmothered) plans in the individual and small group market in the state had to cover. The benchmark plans chosen by a state (or assigned to the state by default), however, usually had to be modified to ensure full coverage of the ten benefits.
Habilitative Services. One category of benefits where modification of the benchmark plan benefits has most often been necessary is habilitative services, as pre-2014 plans that serve as benchmarks for 2014 often did not cover habilitation. For 2014, plans were allowed to cover habilitative services similar to the rehabilitation services they covered previously, but this sometimes resulted in inadequate coverage. The final rule adopts a uniform federal definition of habilitative services to ensure adequate coverage and clarify the distinction between habilitative and rehabilitative services. To satisfy the requirements of the habilitative services requirement, health plans must:
Cover health care services and devices that help a person keep, learn, or improve skills and functioning for daily living (habilitative services). Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities
States may, however, continue to provide their own non-discriminatory definitions of habilitative services as long as they are more protective of enrollees. Significantly, state laws defining habilitative services are not considered to impose requirements additional to the EHB, and thus states may not be required to defray the cost of additional services or devices provided under these laws (including perhaps some autism mandates). Insurers, however, will no longer be allowed to define habilitative services themselves. Insurers also cannot impose limits on habilitative services and devices that are less favorable than those they impose on rehabilitative services; they will be prohibited as of January 1, 2017, from imposing combined limits on both habilitative and rehabilitative services but must treat them separately.
The final rule also requires pediatric services to be provided until the end of the plan month in which an individual turns 19. The proposed rule would have required coverage until the end of the year in which the individual turned 19.
Continuation of benchmark plan approach to essential health benefits. State base benchmark plans are currently based on 2012 plans, with the benchmark adjusted to include all ten EHBs. These benchmark plans will apparently continue in place through 2016. The final rule, like the proposed rule, allows states to choose new base benchmark plans for 2017. These plans will be based on 2014 plans, again with adjustment to ensure coverage of all EHB requirements. States will still be required to pay for the cost of benefits required under state mandates adopted after January 1, 2012, unless those benefits are also required to comply with federal requirements.
CMS will begin collecting data on 2014 plans for the purpose of identifying benchmark plans, including administrative data and descriptive information pertaining to covered benefits, treatment limitations, drugs, and exclusions. CMS intends to continue to use the state EHB benchmark approach through at least plan year 2017 rather than define EHB itself. The final rule deletes, however, the requirement that the territories have benchmark plans, because the final rule, in accordance with earlier issued guidance, provides that the territories are no longer recognized as “states” under the market reform provisions of the ACA.
Rethinking Prescription Drug Benefits
The final BPP rule makes a significant change in EHB prescription drug benefit requirements. Current rules require that an insurer’s drug list cover the greater of at least one drug from each United States Pharmacopeia (USP) class or category or the same number of drugs for each USP class or category as is covered by the state’s benchmark plan.
P&T Committees. The final rule retains these requirements, but adds another. For plan years beginning in 2017, health plans must establish pharmacy and therapeutics (P&T) committees (similar to those required under Medicare Part D) that will in turn develop drug formularies.
P&T committees must draw a majority of their members from practicing physicians, pharmacists, and other clinical specialists, and have members representing a sufficient number of clinical specialties to meet the needs of enrollees. At least 20 percent of the membership of the P&T committee must not have a conflict of interest with respect to either the insurer or a pharmaceutical manufacturer, and individuals with conflicts of interest are not be allowed to vote on matters on which they were conflicted.
The P&T committee must meet at least quarterly, keep written documentation of the rationale for its decisions, and make drug inclusion or exclusion decisions based on scientific evidence. It must review utilization management and exceptions processes such as prior authorization criteria, step therapy protocols, and quantity limits, and evaluate formulary treatment protocols and procedures at least annually. It must review both newly approved drugs and new uses of existing drugs (according to the preface, within 90 days with a decision within 180 days of market release), and ensure the availability of a broad distribution of drugs to treat all disease states and not discourage enrollment by any group of enrollees.
Formularies and exceptions. Finally, formularies have to provide appropriate access to drugs included in broadly accepted treatment guidelines and be consistent with best practice formularies in widespread use. State regulators will be primarily responsible for enforcing these requirements. CMS considered replacing the USP standard with a standard based on the American Hospital Formulary Service (AHFS), but based on the comments it received decided to stick with the more familiar USP standard.
The final rule continues the current requirement that insurers provide an exceptions process permitting enrollees or their designees or physicians to request an expedited review when an enrollee is suffering from a serious health condition that might jeopardize the enrollee’s life, health, or ability to regain maximum functioning, or is undergoing a current course of treatment with a non-formulary drug. A health plan must make a decision and notify the enrollee or physician within 24 hours of a request (which can be made in writing, electronically, or telephonically).
For plan years beginning on or after January 1, 2016, however, the final rule add a “standard exceptions process,” whereby an enrollee or physician can request coverage of a clinically appropriate non-formulary drug in non-exigent circumstances and receive a decision within 72 hours of a request. Coverage continues for the duration of the prescription, including refills. Any drugs covered under the exceptions process will be considered EHB and any cost-sharing for such drugs count against the out-of-pocket limit.
An enrollee denied an exception will be able, for plan years beginning in 2016, to appeal to an accredited independent review organization, which will have to decide the appeal in the same timeframes permitted for the initial decision. A favorable decision by a review organization will last for the duration of the prescription, including refills. The exceptions process addresses drugs not covered by a plan, not tiering of drugs.
For plan years beginning in 2016, that final rule requires that insurers must post their formularies on their public website — where they can be accessed without a consumer creating or accessing an account or entering a policy number — clearly identifying which formulary goes with which plan. The information should be up-to-date and accurate and should be linked from the plan’s summary of benefits and coverage. It must identify any restrictions on the manner in which a drug can be obtained, such as step therapy, prior authorization, or quantity limits. It need not list every formulation of covered drugs, but information on specific formulations must be available on request.
CMS considered requiring insurers to identify cost-sharing information on the formulary, but decided not to require this. Formularies must provide information on tiering, however, which should enable a consumer to determine, using a plan’s summary of benefits and coverage, the cost sharing requirements for particular drugs. Insurers will not be permitted to change their formularies unless they simultaneously update their formulary list. CMS will also require insurers to make formulary information available in machine-readable form for 2016 so that third parties can use it to develop shopping tools.
Beginning with 2017 plan years, insurers may not limit access to drugs to mail order pharmacies except when the FDA has restricted distribution of drugs to certain facilities or practitioners or when appropriate dispensing of drugs requires special handling, coordination, or patient education not available in a retail pharmacy. Such restrictions must be noted on the insurer’s formulary website. Insurers can charge higher cost-sharing for the use of retail pharmacies (if permitted by state law), but this cost sharing must be considered as in-network cost sharing and count toward out-of-pocket limits.
Finally, CMS encourages insurers to allow new enrollees access to non-formulary drugs (or drugs that would otherwise require prior authorization or step therapy) that enrollees have been prescribed and are currently taking for their first 30 days of coverage in a new plan, to allow sufficient time to comply with formulary requirements, but the agency did not make this a regulatory requirement at this time. CMS is also monitoring whether limits should be placed on the ability of plans to modify formularies mid-year.
Discriminatory Benefit Design
The preface to the final rule addresses the issue of discriminatory benefit design, although CMS is not adopting a new or amended rule on this topic. The preface notes that CMS has become aware of benefit designs that discourage enrollment based on age or health condition and that this is prohibited, even if the benefit design is based on a state’s benchmark plan. Age limits, for example, are discriminatory if applied to services found effective at all ages. An insurer that puts most or all drugs that treat a specific condition on the highest-cost tiers effectively discriminates against individuals with that condition. State regulators are primarily responsible for ensuring that benefit designs are not discriminatory, but the HHS Office of Civil Rights also has jurisdiction.
CMS also addresses this issue in the letter to issuers. Insurers in the FFE that reduce or limit benefits targeting a particular group without justifications based on clinically indicated, reasonable medical management practices may be asked by CMS to explain why their plan design is not discriminatory
CMS had proposed to require non-calendar year plans to adhere to the cost-sharing limits effective for the year in which the plan begins and to prohibit them from resetting cost sharing requirements at the end of the calendar year. CMS decided not to finalize this policy, but emphasizes that an annual limit on cost sharing must apply on for an entire year regardless of whether a plan is a calendar year plan or not.
The final rule clarifies that health plans may refuse to count out-of-network charges toward cost-sharing limits but are not required to do so. Cost-sharing for out of network services does not count toward actuarial value calculations, however.
Self-only cost-sharing limits apply to all individuals regardless of whether the individual is covered by a self-only plan or an other-than-self-only plan. For example, if the out-of-pocket limit on a family plan is $13,700 (the limit for 2016), no individual in the family should have to incur out-of-pocket costs of more than $6,850 (the limit for self-only coverage). Insurers, however, are not required to limit expenses incurred by an individual to a self-only deductible, but may require the enrollee to cover all expenses incurred by an individual family member until the family deductible is met. This is an issue that is very confusing to consumers.
Requirements For ‘Minimum Value’ Coverage
The final rule adopts in final form the position taken by the agencies earlier in November that group health plans must cover substantial hospitalization and physician services to meet the minimum value requirement and offers an articulate justification for this requirement — hospital and physician services have always been covered by major medical coverage. Employees not offered minimum value coverage can get premium tax credits through the marketplaces, and large employers must pay a $3,126 tax for each employee who does so if they do not offer minimum value coverage.
Some employers have reportedly offered plans that do not cover inpatient hospital care but that still met the requirements of the minimum value calculator, which is a permissible approach for determining minimum value. This will no longer be permitted, although employers who 1) have already enrolled employees in plans that do not cover hospital care, or 2) had by November 4, 2014 entered into binding contracts to provide such plans for plan years beginning no later than March 1, 2015, may continue to do so for the 2015 plan year. Employees offered only such coverage will qualify for premium tax credits even if the employer is not yet subject to a penalty. The rule does not single out any other benefits, such as pharmaceuticals, for required coverage in minimum value plans.
The ACA requires qualified health plans (QHPs) to provide data to the marketplaces, CMS, and state regulators on enrollments, disenrollments, claims denials, cost-sharing for out-of-network care, and other specified topics for public display. CMS anticipates collecting this information and making it available to the public in 2016; however the agency has not yet decided what information it should collect, how it should be displayed, or its time frame for moving forward.
Although the data requirement applies independently to all group health plans and health insurers, CMS has delayed implementing the requirement until QHP data become available. In the meantime, the National Association of Insurance Commissioners (NAIC) is moving forward with providing a data-call tool to the states to make sure that someone will be collecting the data necessary to ensure that health insurers are in fact complying with ACA requirements.
Network adequacy has proven a major flashpoint in ACA implementation as plans have moved to narrow and ultra-narrow networks. Current QHP rules require adequate networks but have obviously not been up to the task. The NAIC is actively engaged in drafting model state network adequacy legislation, but that will not be finalized for several months and even then states would have to adopt it as law.
CMS states in the preface that it will await the NAIC model act before proposing significant changes in its requirements. CMS clarifies, however, that available out-of-network providers cannot be counted in determining network adequacy and suggests, without requiring, that new enrollees be allowed to use their current providers for up to 30 days after joining a plan if under an ongoing course of treatment. CMS also urges, but does not require by rule, insurers to ensure that services are available from in-network providers in in-network hospitals. Network adequacy is also addressed in the FFE letter to issuers.
Inaccurate and out-date network directories have been a major problem during the first year of QHP implementation. The final regulation requires that a QHP issuer publish online (with a hard copy available on request) an up-to-date, accurate, complete, and plan-specific provider directory, including information on which providers are accepting new patients, as well as providers’ location, contact information, specialty, medical group, and any, institutional affiliations.
An insurer must update the directory information at least monthly, and must permit the public to view all of the current providers for a plan on the plan’s public website through a clearly identifiable link without having to create or access an account or enter a policy number. The final rule requires QHP insurers in the FFE to submit provider directory information in a format determined by CMS. This is intended to require data to be submitted in machine-readable form or using a CMS-designated standardized template so that software developers can create tools for consumers to better access this information. Finally, CMS decided not to require information regarding provider accessibility for disabled individuals to be listed in the provider directory, but will continue to monitor this issue.
Essential Community Provider Requirements
The final rule strengthens essential community provider (ECP) requirements for 2016, although not as much as some commenters had hoped. ECPs are providers that serve predominantly low-income or medically underserved individuals. The definition of ECP is expanded to include state-owned, government, and not-for-profit facilities, including family planning service sites, regardless of whether they receive federal funding under specific federal programs, and Indian health providers. In general, a QHP insurer that uses a provider network must include in its network a sufficient number and geographic distribution of available ECPs, “to ensure reasonable and timely access to a broad range of such providers for low-income individuals or individuals residing in Health Professional Shortage Areas within the QHP’s service area, in accordance with the Exchange’s network adequacy standards.”
Specifically, in the FFE for 2016, QHPs must include a specified percentage, to be provided in future guidance, of available ECPs; include all available Indian health providers in their service area (which must each be offered a contract every year); and include at least one ECP in each ECP category in each county in the service area where an ECP providing medical or dental services is available. The ECP categories include Federally Qualified Health Centers, Ryan White Providers, Family Planning Providers, Indian Health Care Providers, Hospitals and other ECP providers). Multiple ECP providers at a single location count as a single ECP. CMS has recently released a draft list of ECP providers. State exchanges are urged to apply the same standards.
CMS notes that it is likely to create a separate ECP category each for children’s hospitals and free-standing cancer centers and to disaggregate hemophilia treatment centers, community mental health centers, and rural health clinics from the “Other ECP Providers” category, but not until 2017.
QHPs that do not meet these standards must offer a narrative justification providing a thorough explanation of why good faith efforts to contract with an ECP failed, as well as what plans the QHP has for providing services to enrollees who would have otherwise received ECP services and for improving ECP services in the future. QHPs that provide a majority of their services through employees or a single contracted medical group (like a staff-model HMO) may meet an alternative standard for providing services to low-income and medically underserved enrollees, described in some detail in the final rule.
The final rule clarifies that QHP insurers are not required to offer ECP providers rates or contract provisions not offered to similarly situated providers. They must pay federally qualified community health centers at least the amount that would have been paid by Medicaid unless the center agrees to a lesser rate that is at least equal to the generally applicable payment rate by insurers.
Language Accessibility Requirements
The final rule expands language accessibility requirements in several respects. The rules currently governing exchanges provide that applications, forms and notices provided by the exchanges; QHP insurers; consumer assistance functions, including navigators; and web brokers or agents must meet language and disability access requirements. The final rule amends these provisions to require exchanges and QHP insurers as of the rule’s effective date to provide oral interpretation services through telephonic interpreters in at least 150 languages. Web brokers (but not navigators or assisters) must also provide oral interpreter services in 150 languages beginning on November 1, 2015 (when open enrollment for 2016 begins) or when the web broker has been registered with the exchange for at least a year, whichever is later.
No later than the beginning of open enrollment for 2017, exchanges and QHP insurers must also include taglines in at least the top 15 languages spoken by limited English proficient speakers in the state on all “website content and any document that is critical for health insurance coverage or access to health care services through a QHP for qualified individuals, qualified employees, or enrollees” (see next paragraph). Taglines must also as of 2017 be provided by web brokers who have been registered with the exchange for at least a year.
Finally, exchanges and web brokers (registered with the exchange for at least a year) must, no later than the first day of the 2017 open enrollment period, have any content on their website intended for qualified individuals, applicants, qualified employers or employees, or enrollees translated into any language spoken by 10 percent or more of the LEP population in the relevant state. QHP insurers must translate web content critical for access to health insurance or health services intended for these individuals.
Separate regulations governing QHPs expand the scope of current regulations that require QHPs to provide applications and notices in plain language and in a form accessible to persons with disabilities or with limited language proficiency. The final rule expands language access requirements to all forms and notices that are critical for obtaining health insurance coverage or accessing health care services. This is further defined as all such notices and forms required by state or federal law. The preface lists as included:
applications; consent, grievance, appeal, and complaint forms; notices pertaining to the denial, reduction, modification, or termination of services, benefits, nonpayment, or coverage; a plan’s explanation of benefits or similar claim processing information; QHP ratings information; rebate notices; correspondence containing information about eligibility and participation criteria; notices advising individuals of the availability of free language assistance; and letters or notices that require a signature or response from the qualified individual, applicant, qualified employer, qualified employee, or enrollee.
These requirements supplement any other language access requirements that are found elsewhere in the law, such as the requirement that summaries of benefits and coverage be available in any language in which 10 percent or more of a county is literate. Language access requirements do not, however, extend to marketing materials.
Billing For Abortion Coverage Premiums
Under the ACA, no federal funds may be used to pay for abortions except in cases of rape, incest, or where the life of the mother would be endangered by carrying the child to term. QHP insurers that elect to cover abortions that do not fall into these categories in states where it is legal for them to do so must estimate the cost of providing such services (which must be at least $1 a month), collect a separate premium for abortion coverage, and keep the funds in a segregated account to ensure that premium tax credits or cost-sharing reduction payments are not used to pay for abortion.
The preface to the rule clarifies that an insurer can send a separate invoice for these services, a single invoice that separately itemizes the cost of these services, or a single notice at the time of enrollment that monthly premium invoice includes a separate charge for this service. The insurer must, upon receipt of the premium, deposit the abortion-related funds in a separate allocation account. State regulators are primarily responsible for ensuring compliance with this requirement.
Premium Adjustment Percentage
The ACA requires CMS to establish each year a premium adjustment percentage, which is based on the increase in cost of employer-sponsored insurance since 2013, for increasing various amounts established under the ACA. For 2015, the premium adjustment percentage is 8.316047520 percent. Applying this percentage, the maximum out-of-pocket limit for 2016 becomes $6,850 for self coverage, $13,700 for other than self-coverage. This amount is reduced by 2/3, to $2,250 for self-only coverage and $4,500 for family coverage, for individuals with incomes between 100 and 200 percent of poverty who are eligible for cost-sharing reduction payments; it is reduced by 1/5, to $5,450 and $10,900, for eligible individuals with incomes between 200 and 250 percent of poverty.
Reduced Cost-Sharing Variations
The rule requires QHPs as of November 1, 2015, to provide a separate summary of benefits and coverage (SBC) for each of the reduced cost-sharing plan variations, including zero-cost sharing coverage of Indians with incomes below 300 percent of poverty. Insurers will have to provide individuals whose cost-sharing reduction classification changes with the appropriate SBC within 7 days following the QHP insurer’s receipt of notice that the classification has changed.
The rule also provides a method that QHP insurers can use to estimate the amount of cost-sharing that was attributable to non-EHB services, for which cost-sharing reduction payments are not available, when they reconcile the amount of cost-sharing reduction payments they actually received from the government with the amount they should have been paid for 2014 and 2015.
Status Of State High-Risk Pools
CMS intends to continue to recognize existing state high-risk pool coverage as minimum essential coverage. It was anticipated that high-risk pool coverage would end in 2014, but such coverage continues to be important for some individuals, and CMS will continue to recognize existing programs, but not new programs, as MEC. An individual eligible for but not enrolled in a state high-risk pool is eligible for premium tax credits.
Exchange Enrollment For 2016
CMS had proposed that the 2016 open enrollment period would run from October 1 to December 15, 2015. The final rule, however, sets the open enrollment period for the FFE and for all state-operated exchanges as November 1, 2015 through January 31, 2016. This later timeline gives insurers and state regulators additional time to prepare for 2016 and gives individuals auto-enrolled for 2016 time to change plans.
CMS rejected arguments that it should align exchange open enrollment with the open enrollment periods of Medicare and most employer plans. It also rejected the reasonable argument that exchange open enrollment periods should come during the tax filing season, when individuals are most aware of their exposure to penalties for being uninsured, can be advised by tax preparers on how to seek coverage, are better informed as to their projected income for the coming year, and have tax refunds available to help them pay for coverage. The 2016 open enrollment period will come, as have earlier open enrollment periods, at a time when enrollees are most financially stressed and most distracted.
For 2015, FFM exchange enrollees were auto-reenrolled in their 2014 plan unless they affirmatively changed plans. Where premiums have changed significant from year to year, however, or where the lowest- or second-lowest cost silver plan ceases to be so, enrollees may see their premium or required contribution increase significantly. CMS, therefore, proposed changing the default rule so that enrollees who do not affirmatively change plans would be auto-reenrolled into a low-cost plan (perhaps randomly) in the same metal level if the cost of the enrollee’s plan increased, or increased more than a threshold amount (5 or 10 percent). Consumers could opt into this alternative hierarchy. Consumers could, of course, switch plans during open enrollment if they did not like the plan they ended up in.
This proposal met with substantial opposition. While this alternative could reduce premiums for consumers, it could also end up leaving them in plans with very different networks, benefits, or cost-sharing structures than what they had initially chosen. CMS decided not to finalize it, but suggests that state-based exchanges may want to try this or other approaches for 2016 to see how they work.
The final rule also establishes dates for payment of the first month’s premium for coverage. For the FFE, QHP insurers can require payment of the first month’s premium no earlier than the effective date of coverage and no later than 30 days from the coverage effective date when enrollment is effectuated during the open enrollment period or with a normal special enrollment period effective date. For other special enrollment periods, payment must be received within 30 days of the date when the insurer receives the enrollment transaction. State-operated exchanges can establish their own policies on payment. Insurers may pend claims awaiting payment and then enroll an enrollee retroactively when it is received.
Special Enrollment Periods
The final regulation contains two separate sets of provisions on special enrollment periods. The part of the rule that pertains to individual health insurance generally continues to allow individuals enrolled in non-calendar year plans (which after 2014 will be transitional plans or group plans) a special enrollment period (called a limited open enrollment period outside the exchange). Individuals outside the exchange are allowed 60 days before or after certain triggering events to choose a plan, as is the case inside the exchange. Special enrollment periods outside the exchange are generally permitted for all of the reasons they are permitted inside the exchange except for those peculiar to the exchange (those concerning immigration status changes, Indians, and exceptional circumstances).
The part of the rule that applies to qualified health plans purchased through the exchange makes a number of changes with respect to special enrollment periods. The rule allows exchanges to permit qualified individuals or enrollees entitled to a special enrollment period in the event of birth, adoption, placement for adoption, or placement in foster care to choose to have coverage effective as of the first date of the month following the event or as of the normal effective date (i.e. the first day of the following month if the individuals is enrolled before the 15th of a month, the first day of the following month for enrollment after the 15th) in lieu of the date of the event itself .
The rule also allows individuals who acquire access to new QHPs because of a move to have coverage effective the first day of the month following loss of coverage if the individual selects a plan before losing coverage under the old plan. By January 1, 2017, individuals will be able to select a plan up to 60 days before a move (earlier if their exchange lets them). This special enrollment period is available to individuals released from incarceration.
The final rule recognizes several new special enrollment periods. One would require an exchange to make coverage available for the first day that coverage must be effective under a court order, for example to cover a dependent. The exchange may also permit the individual to elect coverage as of the normal coverage effective date. Another special enrollment period is available upon the death of an enrollee or the dependent of an enrollee and would allow a coverage effective date of the first of the month following plan selection by the surviving enrollee or dependent whose coverage is affected by the death, or the exchange could permit the choice of the normal effective date. Yet another allows individuals enrolled in non-calendar year group or individual health plans to enroll in a QHP when their coverage ends, even if they could renew it.
A special enrollment period is provided (at the option of an exchange at least until 2017) for enrollees who loses a dependent or loses dependent status due to legal separation (including perhaps the termination of a civil union or domestic partnership), divorce, or death. A current special enrollment period for the misconduct of a non-exchange entity (navigators or agents, for example) is eliminated, but it is replaced by a special enrollment period that would allow the exchange to more broadly remedy errors committed by non-exchange entities.
A final special enrollment period applies when a qualified individual with an income below 100 percent of poverty in a state that has not expanded Medicaid — and is thus ineligible for any coverage — has an increase in income or change in household composition or size that brings the individual above 100 percent of poverty. CMS rejected several additional special enrollment periods proposed by commentators, including special enrollment periods for pregnancy, domestic violence, or changes in a QHP’s provider network or formulary.
The final rule permits enrollees to terminate enrollment in a QHP with appropriate notice, including where permitted under applicable state “free look” cancellation laws. Exchanges would also be required to establish processes for third parties to report the death of an enrollee.
The final rule distinguishes between terminations, which end coverage after coverage is effective, and cancellations, which end enrollment before coverage becomes effective. It also specifies the effective date for a number of different types of termination. Termination because an enrollee is newly eligible for Medicaid or CHIP is effective on the date Medicaid or CHIP coverage begins. Termination because of death is effective as of the date of death. Termination for nonpayment is effective as of the end of the first month of the 90-day grace period or as provided by state law. Termination because the enrollee is covered by a new QHP is effective as of the day before the effective date of the new coverage.
Where terminations are effectuated retroactively — because for example the enrollee has enrolled in other minimum essential coverage and requests retroactive termination, or under a “free look” law – appropriate actions must be taken to refund premiums, premium tax credits, and cost-sharing reduction payments and credit back exchange user fees and claims payments.
The final rule also clarifies that, because of the guaranteed availability and renewability requirements of the ACA, loss of eligibility for enrollment in a QHP through an exchange is not necessarily grounds for termination of an individual or employer’s coverage outside the exchange.
The final rule adopts two hardship exemptions, both of which are already acknowledged by the IRS. One would allow individuals who are not dependents of others and whose gross income is below the filing limit to claim a hardship exemption on their tax return. Another would allow individuals who receive services from the Indian Health Service, a tribal health facility, or an urban Indian organization to claim a hardship exemption on their tax returns.
Finally, an individual is exempt from the shared responsibility tax if his or her required contribution for minimum essential coverage exceeds a “required contribution percentage” of his or her income. Certain employed individuals are also exempt if the combined cost of self-only coverage exceeds the required contribution percentage. The required contribution percentage under the ACA is 8 percent adjusted for the excess of premium growth over the rate of income growth for the period between 2013 and the date on which the determination is updated. Under this methodology the required contribution rate for 2016 is 8.13 percent.