New Federal Exchange Rule May Lead to Billing Complications for Exchange Market Clients

New Federal Exchange Rule May Lead to Billing Complications for Exchange Market Clients

  • On January 13, 2020

At the end of December, the Trump Administration finalized the ACA Exchange Program Integrity Rule.  For the most part, this measure covers technical changes related to the federal health insurance marketplace and state-based exchanges.  However, it also creates a new billing headache that could impact some of your clients.  According to the new rule, if an insurer offers a qualified health plan (QHP) through an exchange that covers certain abortion services, then the carrier must send consumers two monthly bills separating out those services from all other types of care.

The new billing requirement takes effect on June 27, 2020, so it will have a mid-plan year impact on exchange market consumers with coverage that includes abortion services. Beginning with the July 2020 bill, applicable carriers must send consumers two premium statements.  One may only include the amount of the premium attributable to abortion services (which, according to the law, must be at least $1 per enrollee per month).  The other bill must reflect the rest of the person’s premium costs for all other services, even if federal tax credit subsidies cover all or most of the person’s premium. Carriers must keep funds separate, and customers must pay both bills monthly or risk losing coverage for nonpayment of premium.

This new requirement stems from both a longstanding federal law known as the Hyde Act, which restricts any federal spending relative to abortions, and Section 1303 of the Affordable Care Act (ACA).  Section 1303 allows QHPs to include coverage of abortion services, as long as the state permits, and the carrier follows specific requirements.  Since 2014, the federal Department of Health and Human Services (HHS) has allowed carriers to satisfy Section 1303 by simply itemizing the cost of abortion services separately on a single bill that consumers could pay in a single transaction.  The new rule reverses this practice and requires two bills and two separate consumer payments.  If consumers get a paper bill from their QHP carrier, insurers may mail both statements together and provide a written explanation with them.  However, with electronic billing, a consumer needs to get two separate communications.  If affected SHOP coverage is paid through a cafeteria plan and payroll deduction, then there must be two separate transactions.

If a consumer pays their two paper bills with one payment, an insurer cannot terminate coverage.  Still, they must unbundle the funds on their end, account for them separately, and make an effort to instruct consumers to pay their two bills in distinct transactions.  If a consumer does not pay both bills or pays an insufficient amount, it could potentially trigger a premium nonpayment grace period, and the person could eventually lose coverage. The new rule gives insurers some optional flexibility regarding nonpayment enforcement in this area.  It also expresses an intent to revise the premium payment rules in the future, but it is unclear when that new guidance will appear.

In the final rule, HHS acknowledges these new separate billing and payment requirements will be costly to implement and could increase premiums by up to 1 percent a year.  However, the Trump Administration feels the new rules are more consistent with Congressional intent when crafting the ACA.  This rule will likely be challenged in federal court since various entities have already argued it violates multiple sections of the Constitution, as well as the federal Administrative Procedures Act and other parts of the ACA.  As of now, though, broker partners need to be aware that the rule will impact billing in certain states starting this summer.

In the Kistler Tiffany Benefits’ service area, as of now, only clients with exchange-based coverage in New Jersey and New York may be affected.  According to the Kaiser Family Foundation, 26 states, including Pennsylvania, prohibit the sale of QHP coverage that includes abortion services.  Of the remaining 24, only 16 states, including New Jersey and New York, have exchange-based plans on the market that include abortion coverage.  In Delaware, no plan options currently include this coverage, and in New Jersey only some individual and SHOP exchange options do. New York state law mandates coverage of abortion services in all plans.

More guidance is coming on this controversial and costly rule, but until then, people who buy exchange-based coverage in affected states need to be aware that they won’t be getting two bills by mistake, and that they need to pay them both.


By Jessica Waltman, Special Contributor

Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.