CMS has released a Final rule which will implement and enforce five key consumer protections issued in the Patient Protection and Affordable Care Act (P.L. 111-148) and make the health insurance market work better for individuals, families, and small businesses beginning January 1, 2014. The new rule intends to prevent insurance companies from discriminating against anyone with pre-existing conditions and protect consumers from insurance company abuses.
“Because of the Affordable Care Act, being denied affordable health coverage due to medical conditions will be a thing of the past for every American,” said HHS Secretary Kathleen Sebelius. “Being sick will no longer keep you, your family, or your employees from being able to get affordable health coverage.”
Nearly all health insurance companies offering coverage to individuals and employers will be required to sell health insurance policies to all consumers. No one can be denied health insurance because they have or had an illness.
Fair Health Insurance Premiums
Premium rates in the individual and small group markets may only be varied within certain limits, on the basis of family size, geography, age, and tobacco use. Insurers must accept every employer or individual who applies for coverage in the group and individual markets, subject to certain exceptions. Premiums set using any other factors will be illegal. HHS has made it illegal to use health status, past insurance claims, gender, occupation, the length of time an individual has held a policy, or the size of a small employer to establish rates.
States also have the option to provide even stronger protections than those required in the final rule. Beginning in 2017, states will have the option of allowing health insurance issuers that offer coverage in the large group market to offer their coverage through the marketplace. There are also more rules in place for states that choose this option, which will apply to all large group health insurance coverage and are meant to standardize the method used to price insurance products. HHS put this into place in the hopes of bringing a new level of transparency and fairness to premium pricing.
Existing protections that individuals and employers have with respect to coverage renewal are reaffirmed in the final rule. For example, CMS maintains that these protections will prohibit issuers from refusing to renew coverage because an individual or employee becomes sick or has a pre-existing condition.
Single Risk Pool
Health insurance issuers will no longer be able to use rating pools to charge high-risk individuals more than low-risk individuals. Insurers are required to maintain a single state-wide risk pool for the individual market and a single state-wide risk pool for the small group market.
For individuals who would find regular insurance policies unaffordable, a catastrophic plan will be available in the individual market. These types of plans will have lower premiums, protect against high out-of-pocket costs, and cover recommended preventive services without cost sharing.