From the July CMS Assister Update:
Key Takeaway: Under the recently finalized Marketplace Stabilization Rule, as of June 23, 2017, a health plan issuer may apply any payments a consumer makes for new coverage (a binder payment) with that issuertowards past-due premiums owed to that issuer. The issuer may also refuse to effectuate the new coverage if the consumer fails to pay past-due premiums owed from the 12-month period preceding the effective date of new coverage.
It is very important for assisters to help consumers understand the consequences of non-payment of premiums. Previously, issuers were prohibited from applying a binder payment to past-due premiums and issuers were required to effectuate the consumer’s new enrollment under the guaranteed availability rules. As of June 23rd issuers may apply the binder payment to an individual’s past debt to that issuer, from the 12 months preceding the effective date of new coverage, before applying the payment toward a new enrollment. The individual, however, must be provided notice of the issuer’s binder payment policy before the binder payment can be applied to the past debt.
For example, Claire was covered with Issuer A and stopped making payments in July 2017. Claire was receiving Advanced Payments of Premium Tax Credit (APTCs), so after her three month grace period, Issuer A terminated Claire’s coverage in October. In November, Claire would like to come back to the Marketplace during open enrollment to seek 2018 coverage. Claire enrolls with Issuer A and makes her binder payment. Under these new rules, Issuer A can apply Claire’s 2018 binder payment towards her debt owed to Issuer A and choose not to effectuate her 2018 coverage, unless Claire pays all her past-due premiums. Claire must pay the outstanding premium debt before the end of open enrollment for 2018, in addition to the 2018 binder payment, in order to enroll with Issuer A for 2018 coverage.
Here are some important tips for assisters:
- Let consumers know that if they wish to terminate their coverage, they should do so proactively rather than simply fail to pay their premiums. By actively terminating their coverage, consumers will not be liable for premiums of months that they did not pay and did not have coverage. Failing to pay will impact the consumer’s ability to sign up for new coverage in the future with the same issuer. Tell consumers: “If you want to terminate, choose a date!”
- Help consumers review their enrollment materials and notices from the issuer. Issuers who choose to implement this policy must describe in any enrollment application materials, and in any notice regarding non-payment of premiums, the consequences of non-payment on future enrollment.
- An issuer may only condition the effectuation of new coverage on payment of past-due premiums for the individual contractually responsible for the past-due premium.
- If a consumer pays past due premiums, let him or her know that the issuer is required to pay all appropriate claims for services rendered to the consumer during any months of coverage for which past due premiums are collected.
 This includes any issuer in the issuer’s controlled group. A controlled group means a group of two or more corporations that are treated as a single employer under sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of 1986, as amended, or a narrower group as may be provided by applicable State law.
 “Past-due premiums’’ refers to premiums that have not been paid by the applicable due date as established by the issuer in accordance with applicable Federal and State law. It does not include premiums for months in which individuals were not enrolled in coverage.
 Only the individual who is contractually obligated to make the payment would have his or her new coverage effectuation conditioned on past-due premiums. Dependents under the prior 12-month period of coverage could purchase new coverage for themselves from the issuer (or issuer’s controlled group), without paying past-due premiums.