ACA-Mandated Premium Grace Periods Could Be On Chopping Block

One of the biggest changes to how healthcare policies were issued and paid for came courtesy of the Affordable Care Act. And now one of the biggest changes – how lenient insurers can be with enrollees becoming current on past-due premiums – could undergo dramatic shifts in California and elsewhere.

            Last spring, the Trump administration issued an executive order that nibbled at the margins of the ACA, including cutting the open enrollment period in half and other changes. One of the changes involved the 90-day grace period individuals who purchase subsidized insurance on state or federal health insurance exchanges. Under the executive order, if an enrollee owes premiums at the end of the calendar year and switches policies, they could be compelled to pay what’s due before they’re enrolled. That was intended to mollify claims by critics of the ACA that many enrollees deliberately ducked out on their premiums at the end of the year, although that is not supported by sharply declining enrollment s toward the end of the calendar year.

            But more serious is the potential elimination of the grace period altogether. In negotiations over a Congressional spending bill that would fund the Children’s Health Insurance Program, Republican lawmakers have suggested stripping the 90-day grace period altogether, and having such grace periods revert to the whims of individual states.

            If such a proposal became law, it could foment further instability in the healthcare markets. The Center on Budget and Policy Priorities has estimated eliminating the grace period could cause between 259,000 and 688,000 enrollees to lose their insurance coverage, and as many as 70,000 Californians.

            A shorter grace period could also provide more leverage among insurers to determine their risk pool. “It puts the insurance company in the position of cherry-picking who they are or are not going to dump on payment issues,” said Hector De La Torre, a former California Assemblyman who is currently executive director of the Transamerica Center on Health Studies in Los Angeles. De La Torre added that an insurer could be more lenient on reinstating a healthier enrollee than an older, less healthier one, potentially allowing them higher margins.

            “If you have a long enough grace period, you can prevent that and any opportunity for insurers to take advantage and destabilize the market,” said Anthony Wright, executive director of Health Access California, a California-based advocacy group.

            At the moment, however, California is still in charge of its own destiny. Since it runs its own exchange, it reserves the right to set its own grace periods. For the Covered California health insurance exchange, it remains at three months. While some insurers have been fined for violating those guidelines, the intent in California is to uphold both the intent and spirit of the ACA.

            A spokesperson for Covered California said it was looking at the proposed legislation in Congress and “evaluating the potential impact” but declined further comment.

            “California has the ability to withstand the attack and shield the consumers from the sabotage of the federal government,” Wright said. We shouldn’t see healthcare as only a business transaction. As essential as it is, if you miss a payment, you shouldn’t be automatically disenrolled.”