June 3 update: Marketplace enrollment. On June 2, 2015, HHS released a report on “effectuated enrollments” in the ACA marketplaces as of March 31, 2015. In the past, HHS has reported numbers of individuals who have selected a marketplace plan, but this report gives the number of individuals who have not only selected a plan but also paid a premium and thus have an active policy as of the reporting date. During 2015 HHS intends to release state-by-state data on effectuated enrollments on a quarterly basis.
As of March 31, 2015, 10.2 million Americans had active marketplace coverage, including 7.3 million enrolled through federally facilitated marketplaces (FFMs) and 2.9 million enrolled through state-operated exchanges (including 0.2 million enrolled in state-operated exchanges that use the healthcare.gov platform in Oregon, Nevada, New Mexico.) This is up dramatically from 6.3 million active enrollees as of the end of 2014, but down from 11.7 million individuals who had selected a plan as of February 22, 2015, the close of the 2015 “in-line” special enrollment period. Some of the individuals who selected plans no doubt failed to effectuate coverage because they did not pay their premiums, but others likely found coverage through their employer or became eligible for Medicaid. The number of effectuated enrollees is in line with HHS predictions of 9.1 million enrollees for 2015.
Of the 10.2 million individuals with effectuated enrollments, 8.7 million or 85 percent received premium tax credits, which averaged $272 per month. Average monthly premium tax credits varied from $158 in Arizona to $$536 in Alaska. A total of 6.4 million FFM enrollees—87 percent–received premium tax credits. Nine of the ten states with the highest rate of enrollees with tax credits are FFM states, including Mississippi with 95 percent, Florida with 94 percent, and North Carolina and Wyoming with 93 percent. These enrollees stand to lose their tax credits, and likely in most instances their insurance coverage, if the Supreme Court rules for the plaintiffs in King v. Burwell.
Nine out of ten of the states with the highest percentage of tax credit recipients are also states that did not expand Medicaid, and which thus include enrollees with incomes between 100 and 138 percent of the federal poverty level.
For the first time, CMS in this report gives the number and percentage of enrollees covered by cost-sharing reduction payments—5.9 million, or 57 percent. Cost-sharing reduction payments increase the actuarial value of plans and reduce out-of-pocket limits, making actual health care and not just insurance coverage affordable. House v. Burwell, the lawsuit brought by the House of Representatives against the administration, challenges these cost-sharing reduction payments, potentially leaving 5.9 million Americans in state-operated exchanges as well as FFM states at risk of losing access to affordable care. In Alaska, Mississippi, and Florida, over 70 percent of enrollees received cost-sharing reduction payments.
The report also gives the percentage of individuals covered by plans with various actuarial levels. On March 31, 2015, 1 percent were enrolled in Catastrophic plans, 21 percent in Bronze plans, 68 percent in Silver plans, 7 percent in Gold plans, and 3 percent in Platinum plans.
Finally, the report gives the number of individuals whose enrollment was terminated because of failure to provide documentation of eligibility. During 2014, 109,000 individuals lost eligibility in the FFM for failure to adequately establish citizenship or lawful immigration status and 97,000 had their financial assistance adjusted because of data match issues. During 2015, enrollees must resolve citizenship or immigration status within 95 days of enrollment and financial assistance status within 90 days. On March 31, 2015, FFM enrollment was terminated for 117,000 consumers because of citizenship or immigration status data matching issues and 223,000 households had their financial assistance adjusted for 2015 because of data-matching issues.
Update: SHOP Enrollment. On May 29, 2015, CMS released a set of frequently asked questions (FAQs) addressing flexibility for direct enrollment for state-based SHOP exchanges. Although the federally facilitated SHOP exchange now has functionality to allow small employers to enroll online, some state-operated exchanges are still not able to do this. These states may continue to allow employers to enroll directly with insurers for coverage.
Employers that desire SHOP enrollment may enroll in a SHOP qualified health plan through an insurer complying with SHOP enrollment rules and policies. The employer may receive an eligibility determination from the SHOP either before or after enrollment. Employers must enroll through the SHOP to ensure eligibility for small employer tax credits; they risk being find ineligible if they do not receive an eligibility determination before enrolling in coverage. State-operated exchanges continuing direct enrollment must submit a plan to CMS for achieving full online eligibility functionality by January 1, 2017.
Original post: There has been a lot of chatter in recent days about dramatic health insurance premium increases coming for 2016. It is to be expected, of course, that insurance premiums will be higher in 2016 than in 2015. Health care costs, the largest determinant of premiums, are on the rise. The reinsurance program, which reinsures high cost cases in the individual market, is set to reduce the share of claims it covers again in 2016 before disappearing in 2017. The risk corridor program is also likely to pay out less than many insurers expected for 2014, 2015, and 2016.
The continuing delayed transition of non-compliant policies encourages adverse selection against ACA compliant plans in many markets. And the continued threat to insurance coverage caused by the King v. Burwell litigation (which challenges premium tax credits in federally facilitated exchange states) and House v. Burwell (which challenges the cost-sharing reduction payments in all states) creates a very uncertain environment for health insurers in the individual market.
Several states have released some information on rate increase requests, and some of these requested increases are quite high. But the rate review process is just getting underway, and it is likely that in the end increases will be more modest than initially appears, as happened last year. Moreover, enrollees in plans that seek high rate increases will have the opportunity during open enrollment to switch to lower-cost plans. And in any event, most marketplace enrollees receive premium tax credits and thus will not bear the full brunt of premium increases.
On June 1, 2015, the Centers for Medicare and Medicaid Services (CMS) released additional information on requested rate increases. All insurers in the nongroup market were to have filed rate requests in states using the healthcare.gov platform as of May 15. Insurers that requested “unreasonable” premium increases—that is, increases of 10 percent or more—were required to post justifications for their premium increases. The rate increases and justifications became available on June 1. The rate increase requests and justifications should also be available on (or linked from) state insurance department websites. Consumers may comment on these posted rate increases to their insurance departments for the regulators to consider in reviewing requested rates. The posted rate increases do not, of course, reflect the actual rate increases that consumers generally will experience for 2016, since they only include the highest rate increases—those of 10 percent or more
Agent & Broker Commissions And The Medical Loss Ratio
On May 27, 2015 the Center for Consumer Information and Insurance Oversight posted a guidance regarding medical loss ratio reporting and rebate requirements. The medical loss ratio requirement of the Affordable Care Act requires individual and small-group insurers to spend at least 80 percent of their premium revenues on health care claims and quality improvement expenses (85 percent for large-group insurers). Insurers who spend less than this amount must rebate the difference to their enrollees.
One of the most controversial issues during the drafting of the Medical Loss Ratio (MLR) regulations was how to treat agent and broker commissions. These fees have traditionally been considered as an administrative expense and as part of the premium, but agents and brokers mounted a vigorous, but ultimately unsuccessful campaign, to have the fees excluded from the premium for MLR calculation purposes.
The May 27 FAQ notes that some insurers have been attempting to exclude agent and broker fees from the premium to increase their MLR and reduce their premium. These insurers have claimed that payment of the commission is not a condition of coverage and that the amount is merely passed through to the agent or broker and is not part of the premium. In some cases, insurers have required policyholders to sign a statement that they have retained the broker or agent and paid the commission independently when this is not true.
In its May 27 guidance, CMS stated that agent and broker commissions can only be excluded from premium for MLR calculation purposes if seven conditions are all met:
- State law does not consider the agent or broker to represent the insurer;
- The policyholder is not required to use an agent or broker and may purchase the policy directly from the insurer;
- The policyholder selects, retains, and contracts with the agent and broker of his own accord;
- The policyholder negotiates and is responsible the fee or commission separate and apart from the premium;
- The insurer does not include the agent and broker commissions and fees in its rate filings as submitted to the state regulator;
- The policyholder pays the fees or commission directly to the agent or broker or voluntarily chooses to pass the fee or commission through the insurer and is not required to do so; and
- The policyholder issues the 1099 directly to the agent or broker if one is required.
CMS states that it intends to ensure insurer compliance with this requirement and take corrective measures if necessary.
The same guidance clarifies that if an MLR rebate is owed to an enrollee who is eligible for an advance premium tax credit which covers part of the premium, the full amount of the rebate is still due to the enrollee, who is in fact responsible for the premium and is merely receiving assistance in paying it.
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