Industry News

HHS Preparing Revisions to Individual Market Regulations

(Updated Feb 16, 2017) HHS officially filed the proposed rule discussed in this article. The filed rule deviated from its draft versions. For example, no change to age rating curves and a modified expansion of metal plan actuarial values. Read our article about the filed rule here.

On Feb 1, 2017, HHS sent a proposed rule for individual “market stabilization” to the Office of Management and Budget for review. We expect this rule to be the first of many revisions of existing regulation affecting the private insurance markets. Politico reports that draft versions of the rule included the following changes (among others not reported):

  • Widen age rating curve – Expand the CMS standard age curve from a 3:1 to 3.49:1 ratio for adults in the individual and small group markets.
  • Shorten the annual Open Enrollment Period – Shorten the 2018 individual open enrollment period from 3 months (Nov 1 – Jan 31) to 1.5 months (Nov 1 – Dec 15).
  • Verify eligibility for Special Enrollments – Require individuals who enroll during special enrollment to provide documentation proving eligibility and require HHS to verify the eligibility before coverage is effective.
  • Expand actuarial value of metallic levels – Enable greater plan design flexibility in the individual and small group markets by increasing the actuarial variations for each metal level from +/-2% to +/-4%. E.g.: Silver plans would go from a 68-72% actuarial value to 66-74%.
  • Shorten grace period to 30 days for exchange enrollees – Shrink the requisite grace period for exchange enrollees to pay their premiums before coverage can be terminated from 90 days to 30 days.

If proposed and ultimately finalized the broader age rating curve and the expansion of metallic plan levels will provide significant relief to the ACA compliant individual and group markets. In our opinion, the current restrictions on plan design flexibility was as disruptive to the private market as the installation of community rating.

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