The Centers for Medicare
& Medicaid Services ("CMS") has issued proposed
regulations that implement several key health insurance market
reforms mandated under the Patient Protection and Affordable Care Act
("PPACA"). In particular, the guidance includes the
of Coverage. Health insurance
issuers must begin to make coverage available to any individual or
employer in the state, with limited exceptions. Thus, health
insurance issuers will no longer be able to deny coverage because of
a pre-existing condition, past medical claims or potential risk.
Furthermore, health insurance issuers will only be able to limit
enrollment due to (i) limited open enrollment periods; and (ii)
employees living outside the service area of a network plan. The
proposed regulations also provide individuals with new special
enrollment opportunities in the individual market after loss of other
Fair Health Insurance
Premiums. Health insurance
issuers in the individual and small employer markets will only be
allowed to vary premiums based on: age (with a maximum 3:1 ratio for
adults); tobacco use (with a 1.5:1 maximum ratio and subject to
wellness program requirements in the small group market); family
size; and geography. Other factors-such as pre-existing conditions,
health status, claims history, duration of coverage, gender,
occupation, employer size and industry-can no longer be used to
increase premium rates. States may adopt more stringent consumer
protection laws that go beyond these minimum standards.
Single Risk Pool. Health insurance issuers will be required to
maintain a single statewide risk pool for their individual market and
one for their small group market. A state may choose to merge these
two pools into one. Premiums and annual rate changes would be based
on the experience of the entire pool. This particular provision
prevents insurers from using separate insurance pools within markets
to avoid PPACA's market reforms.
of Coverage. The proposed
regulations reaffirm protections already in effect under PPACA
regarding coverage renewal. For example, health insurance issuers
cannot refuse to renew coverage because an individual becomes sick or
has a pre-existing condition. The proposed regulations also include
additional provisions that protect consumers' rights to renew
coverage, and increase coverage choices for small employers.
Catastrophic Plans. The proposed regulations outline the standards
for enrollment in catastrophic plans. Catastrophic plans are offered
only in the individual market. They cover required preventive
services without cost sharing, but offer affordable coverage options
to young adults and individuals who would otherwise be unable to
afford insurance coverage.
The final regulations are
scheduled to become effective for plan and policy years beginning on
or after January 1, 2014.