11 Ways New Obamacare Enrollment Rules Might Hurt Consumers

11 Ways New Obamacare Enrollment Rules from Trump Administration Might Hurt Consumers

The latest Obamacare enrollment rules from the Trump administration to stabilize healthcare costs will potentially favor health insurance companies.

While Donald Trump’s administration has adamantly argued for wider coverage availability and cost-savings for healthcare consumers, their efforts to reform the current healthcare system have been met with widely negative feedback. On Thursday, the Department of Health and Human Services released proposed regulations to stabilize the American health insurance market – and they’ll likely face wide opposition, with many of the new rules favoring health insurance companies over consumers.

The new healthcare enrollment rules tilt significantly in favor of insurance companies to make it harder for individuals to get coverage outside of the Open Enrollment Period for Obamacare. Two of the most significant points highlighted in the proposed rulings include:

  1. 45-Day Open Enrollment Period: This is sizable reduction in the number of days when you are guaranteed acceptance during Open Enrollment. Instead of the original 90 days, you now have just half the time to enroll in a healthcare plan. The new dates are from November 1st to December 15. 
  2. Pre-Verification Process for Special Enrollment: The administration will implement a pre-verification process for all people trying to purchase an Obamacare plan during the Special Enrollment Period. Originally, those who qualified for Special Enrollment (those who’d experienced life-changing events, such as marriage, recent unemployment, move to a different state, change in the number of dependents, and a few others) could simply claim that they experienced these events. Under the proposed rules, people will have to provide proof – and do it prior to the Special Enrollment Period.

There have been clear winners as a result of Obamacare. But there have also been losers.

For those self-employed individuals not eligible for subsidies, health insurance costs have soared. And health insurance companies have lost money, which has resulted in them raising premiums even more. As premiums rise, more young and healthy people refuse to buy coverage. In the end, many insurers have quit offering coverage in many counties across the USA.

Insurance companies argue that the Obamacare enrollment rules for purchasing health insurance need to be fixed. They claim that people are “gaming’ the system: buying coverage only when they need it (thereby abusing Special Enrollment rules); not making payments for several months at a time (resulting in their insurance being cancelled); buying a new plan during the next Open Enrollment Period; and then starting the cycle of missed payments all over again.

Here Are 11 Ways the New Obamacare Enrollment Rules Might Help Insurers and Harm Consumers:

  1. Can’t Change Plans Mid-Year Regardless of Special Circumstances

John pays for his own health insurance. He has a Bronze plan (less expensive, but less coverage). In January, he marries Sue and soon thereafter Sue becomes pregnant. Because they are newly married, Sue can automatically enroll in John’s plan. But they decide they want better coverage (there is a baby on the way) and so in the middle of the year they switch to a Gold plan.

Under the old rules: Switching healthcare plans in the same calendar year would be allowed.

Under the new rules: Not allowed.

  1. Denial of Coverage Due to Owed Premiums

Tim has a variety of part-time jobs at tiny businesses. None of them offer him employer-sponsored health insurance so he buys his own health plan. Of the $400 a month in premium, he gets a subsidy from the government that covers all but $50 a month. Late in the year, Tim stops paying his premiums for the last three months of the year. His insurance is cancelled. A few months later, Tim decides he wants coverage again, and applies for a plan with the same company.

Under the old rules: His insurance company must cover him.

Under the new rules: They can deny coverage until he pays them the back premium for the 3 months in which he was covered but didn’t pay.

  1. No Retroactive Government Subsidies

Tim says, well, fair enough. Because he was only paying $50 a month for coverage (the rest was paid as subsidies by the government) he thinks he needs to pay only $150 ($50 x 3 months of unpaid previous coverage) to be eligible for coverage.

Under the old rules: He wouldn’t have to pay anything back to the insurer.

Under the new rules: He’s not eligible for retroactive subsidies. Instead of having to pay $150, he has to pay $1,200.

  1. Evidence Must Be Submitted and Verified When Moving to a Different State

Sam lives in small town in western Montana. He moves south to Wyoming. His old insurance says his health care providers in Wyoming are out-of-network. Because he has moved outside of his network coverage area, Sam can apply and be accepted for health insurance after his official move date for the next 60 days.

Under the old rules: Sam tells his insurance company that he moved, and his new plan covers him immediately.

Under the new rules: Sam has to submit evidence to the government that he moved to Wyoming and that he’s no longer in his old plan’s coverage area. Sam won’t have coverage until the evidence is verified, and his pending coverage can only be backdated by up to 30 days.

  1. For the Newly Married, Prerequisites Required for Joint Enrollment

Mary and Melinda are a legal couple of the same sex. Both are self-employed, and each has their own health plans. They recently are legally married and want to enroll in the same insurance plan.

Under the old rules: The marriage itself means they can apply for coverage under special enrollment rules, even if neither had health insurance before.

Under the new rules: At least one of them must have had health insurance coverage before.

  1. Having a Child Won’t Entitle You to Changes in Coverage

Mary and Melinda later adopt a baby with special needs, and want the child to have the lowest possible out-of-pocket expenses.

Under the old rules: They simply need to verify the birth of their baby and change their coverage.

Under the new rules: The newborn must have his/her own insurance, with a separate deductible and co-pay. Once insured during a calendar year, consumers can’t “improve” their coverage.

  1. State-Based Exchanges Can Create Their Own Special Enrollment Rules

Mark and Emily both have health insurance. Mark pays for his own coverage because he is self-employed, and Emily has insurance through a small company who found coverage through the federal Marketplace. They move from Ohio (a state that is part of the federal health insurance exchange through HealthCare.gov) to California, which has its own state-based exchange.

Under the old rules: The requirements for Special Enrollment in Ohio are the same as in California.

Under the new rules: The 13 state-based exchanges can either create their own separate rules for Special Enrollment or choose to keep the old rules.

  1. Special Enrollment Rules for Plans Under SHOP Remain the Same

Emily’s insurance was through the government program known as the Small Business Health Options Program (SHOP). And that adds further confusion to their situation, and they end having to get expert advice.

Under the old rules: Special Enrollment requirements under SHOP were the same as those that covered individuals.

Under the new rules: Those covered by SHOP are still governed by the old rules. That is to say: SHOP won’t require pre-enrollment verification.  Mark and Emily are confused and spend money to get expert advice about how to remain covered during their transition from home to the next.

  1. Government Can Block Your Access to Coverage Based on Past Behavior

Greg is a bit of free spirit. He has a job but occasionally he doesn’t. On a couple of occasions he hasn’t paid his premium in the last 90 days of the year. (He might have realized it was a way to game the system, or it might have been because he simply couldn’t afford it – only Greg knows the truth.).  

Under the old rules: Greg can apply for coverage in the next Open Enrollment Period even if he missed a few payments in the last Open Enrollment.  

Under the new rules: Insurers can share information with HealthCare.gov and Greg might not be able to get coverage in the future because of his past behavior. Is Greg a deadbeat who games the system, or were there special circumstances? Under the new rules, the government or insurers will decide.

  1. Consumers Are Left with the Burden of Proof to Support Their Claims in a Timely Manner

Jose is a farm worker. He came from Mexico, but is now an American citizen. His version of the American Dream takes him across many states during the year. He speaks English well, but finds all the forms difficult to understand. And, because he lives in rural communities, his access to fast technology is limited. With all of these limitations, enrolling in health insurance becomes a huge challenge.

Under the old rules: Jose didn’t have to provide prior proof of any move from one state to another, nor did he have to provide proof that he didn’t fully understand the health insurance enrollment process when signing up.

Under the new rules: The burden of proof is on Jose. And if he doesn’t have sufficient access to technology or able to produce documents to meet the required timeline (60 days) he loses his ability to access new coverage.

  1. Overall Stricter Limitations on Enrollment

Jessica likes to wait until the last second. When enrolling for health insurance each year she shops around and often buys on the last day of open enrollment. This year, the last day falls in the middle of Hanukkah. The last day of Open Enrollment is on Friday, December 15th. In all the bustle of the season, she forgets to enroll.  

Under the old rules: Jessica could still apply for coverage that starts on February 1, 2018 or March 1, 2018 even if she missed the final day to apply in the prior year.

Under the new rules: Sorry, Jessica –  one strike and you’re out.

Implications of the New Obamacare Enrollment Rules

Will these new rules help insurance companies? Certainly, it makes it much harder to game the system, and the burden of proof has shifted to consumers. In actuarial theory, these changes should help insurance companies lower rates. By how much? Maybe 1 to 2 percent.  

But, remember the old saying: Confused people don’t buy. The new rules start in June, and are phased in throughout the year. There will also be new rules on top of these new rules that will be released at a later date. Some consumers (especially the healthiest) won’t buy coverage. It just became harder. Those with health problems will plod through all the new requirements.

The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.

Image (cropped): Gage Skidmore / Flickr

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