The open enrollment period for 2018 begins in a little over two months, and yet there remain a lot of unknowns about how it will proceed. In mid-July, the Centers for Medicare and Medicaid Services released a guidance stating that it would basically follow the procedures it followed in 2016 for the 2017 open enrollment period, with a few changes. On August 28, 2018, CMS released at its REGTAP.info website slides dated July 17, 2017, setting out in much greater detail the procedures it intends to follow for the 2018 open enrollment period.
As during 2017, CMS will conduct two waves of batch auto-enrollments (BARs). The first wave will be sent to insurers between October 10 and 31. The first wave will newly include “alternate enrollments,” enrollments in which CMS or a state department of insurance selects an alternate plan for individuals whose 2017 insurer is no longer available for 2018.
The second BAR wave, sent after December 16, will include special enrollment period enrollees who enrolled late in the year and active reenrollees who had begun an application but had not enrolled before being BARed. Individuals who are auto-enrolled will have until December 31 to indicate that they do not want coverage for 2018 and have their coverage terminated. Agents, brokers, and direct enrollment partners will be directed to the future year application when one exists to assist enrollees.
Several new policies are in place for 2018. First, under the market stabilization rule, insurers may for the first time, to the extent state law permits, apply payments for new enrollees to past-due premiums owed to the insurer or an insurer in the same control group. If payment of applicable past-due premiums and a new binder is not received for the new coverage, the insurer may refuse to effectuate coverage.
Although the new rule permits a look-back period of up to 12 months, in fact, the look-back period for 2018 coverage cannot extend beyond June 19, 2017, when the new rule went into effect. The insurer must have described its nonpayment policy in its application materials and in any notice of nonpayment of premiums. The policy can only be applied to enrollees who received notice prior to the failure to pay the premium that became past-due, and only to enrollees who were contractually responsible for the nonpayment.
CMS is also cracking down for 2018 on dual qualified health plan (QHP) and Medicare enrollees. Dual QHP/Medicare enrollees will be auto-reenrolled; however, insurers that have positive knowledge that an enrollment contains a QHP enrollee who is entitled to Medicare Part A or enrolled in Medicare Part B are instructed to non-renew the entire policy covering the Medicare individual if the QHP reenrollment is a change of policy or contract under state law and duplicates Medicare. They should direct enrollees on the cancelled policy who remain eligible for QHP coverage back to the federal exchange to update their application and enroll to regain exchange coverage.
Insurers will be asked in October to reach out to individuals in danger of losing their premium tax credits and cost-sharing reductions. This includes individuals who have not authorized the IRS to release their tax information to the exchange, who have received a special notice because the IRS reports their income as exceeding 500 percent of the poverty level, who have failed to reconcile their advance premium tax credits (APTC) and actual premium tax credits in previous years, or who applied in 2014 or 2015 and were auto-enrolled for two years but have no available tax data.
CMS will notify insurers when their current enrollees switch to another insurer on a daily basis from November 3 to December 15. It will weekly notify insurers to cancel passive enrollments that duplicate active enrollments. It will contact insurers in January as to enrollees who were not auto-reenrolled due to processing issues. Insurers are to reach out to these enrollees to get them to actively reenroll, but open enrollment will by then be closed.
Insurers must, as in previous years, send renewal notices prior to open enrollment, using current APTC and CSR information if new information is not available, but notifying enrollees that this information will change. Insurers must then send a January bill in December with current APTC information. Insurers are strongly encouraged to emphasize to enrollees that they must update their applications, review available plans, and choose a plan by December 15: “There is only one deadline this year, so don’t wait.”
Auto-enrollment is invisible to consumers until December 16, and insurers are not supposed to tell consumers they are auto-enrolled before that date, but rather urge them to enroll actively. Insurers who have had enrollees switched to them from plans that are no longer available should hold off billing until open enrollment ends so as not to discourage enrollees from active enrollment. Enrollees who have been enrolled in an alternate plan because their 2017 insurer is no longer available should be sent information about the new plan by their new insurer, be encouraged to consider active shopping, but be told that if they fail to act they will be enrolled in the alternate plan.
Tax Court Judge Sympathizes With Tax Payers But Still Rules They Must Pay APTC Back
On August 28, 2017, Judge Buch of the United States Tax Court released the first tax court opinion that I am aware of regarding APTC under the Affordable Care Act. Steven and Robin McGuire applied for and received APTCs to purchase a qualified health plan through Covered California, the California exchange, for 2014. Based on their income at the time they applied, they received APTCs of $491 per month for an annual total of $7,092.
After they applied for 2014 coverage in 2013, but still in 2013, Mrs. McGuire began working at a job earning $600 per week, which brought their income above 400 percent of the federal poverty level. They promptly notified Covered California of the change in income, but Covered California did not acknowledge the change until June of 2014. That letter never reached them. Repeated efforts to get Covered California to recognize their change in household income also failed, as did an attempt to change their address. Covered California also failed to send them a 1095-A documenting their receipt of premium tax credits for 2014.
When the McGuires filed their 2014 taxes they failed to include an 8962 reconciling the APTC they received with the premium tax credits they were actually due. The IRS caught up with them, however, sending a notice of deficiency in August of 2016 claiming back a $7,092 overpayment plus an accuracy-related penalty. The McGuires responded that they never would have committed to enrolling in a plan costing in excess of $14,000 per year had Covered California informed them of their responsibility. But Covered California failed to respond to their repeated attempts to correct their eligibility. They asked to be freed from the tax deficiency.
Judge Buch clearly sympathized with their plight, but stated that the tax court could not ignore the tax law to achieve an equitable end. As their income was above 400 percent of the federal poverty level, they were also not protected by a statutory repayment cap. Judge Buch, however, determined that the McGuires had acted reasonably and in good faith, and thus relieved them of the accuracy-related penalty.