August 10, 2020
On August 4, the Centers for Medicare and Medicaid Services (CMS) issued new guidance to allow insurers in the individual and small group markets to temporarily offer premium credits for 2020 coverage to insureds who may be affected by COVID-19.
In general, insurers are not permitted to reduce premiums under federal law. Given the economic hardship that many individuals and small employers are facing in the midst of the COVID-19 pandemic, however, CMS has opted to relax its enforcement of these restrictions. This will allow insurers, subject to approval by their state regulator (or CMS in states where CMS is the primary enforcement authority) and following notification of their marketplace entity, to reduce premiums owed by a fixed percentage of the insurer’s choosing, provided that the percentage is offered uniformly and in a non-discriminatory manner.
In practice, the premium credits:
- May only be applied prospectively;
- Must begin on the first day of a month;
- May continue for one (or more) full months, ending no later than December 31, 2020; and
- May not be used to cover the portion of the premium attributable to coverage of abortion services.
The guidance further addresses reporting obligations, the policy’s impact on HealthCare.gov displays, adjustments to the advance premium tax credits, etc.
Additional guidance is expected from CMS in the coming months to further address the implications of this policy. In the meantime, information regarding this new enforcement discretion effort can be found here.