Elimination of the Individual Mandate Penalty
While attempts to “repeal and replace” the Affordable Care Act have not been successful and are unlikely to continue with the change in control of the House of Representatives, there have been other legislative changes that will have a significant impact in the enforcement of parts of the ACA, particularly as it relates to individual healthcare coverage. The most significant change for 2019 is the elimination of the penalty for the individual mandate. As part of the 2017 tax reform bill, individuals will no longer be penalized for failing to obtain healthcare coverage that meets the requirements of the ACA.
The Congressional Budget Office issued a report titled, Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2018 to 2028. One of the most relevant takeaways from that report for providers in 2019 is the fact that between 2018 and 2019, the number of individuals enrolled in non-group plans is expected to decline by 3 million, largely due to the elimination of the individual mandate penalty.
There is some uncertainty as to how much of an impact this will have on the number of insured
individuals long term, with estimates ranging from 3 million to 13 million fewer insured. However, there are steps you can take to make sure that your practice is prepared for the possible changes you will see in your patient population with regard to individual coverage.
Update Your Policies
The most important thing you can do is to make sure that you have a policy in place of verifying
your patient’s insurance coverage prior to every visit. With improvements in technology and the integration of eligibility verification tools offered by some billing and EHR software, there is no excuse for losing money as a result of incorrect eligibility information.
You will also need to make sure that your staff is familiar with your self-pay policies and are prepared to collect from patients who are newly without insurance and may not be aware of their financial responsibility. It’s a good idea to use the beginning of each new year to review your financial policy and make any updates necessary so that your patients are aware of their responsibilities. Also, you should require patients to not only update their demographic information during their first visit of a new
“New” Plan Options
The elimination of the individual mandate penalty also opens up the option for individuals to purchase Short-term Health Plans that don’t meet the requirements of the ACA. These plans can range in term from 3 months to 364 days and can be renewed for up to 36 months under the new regulations.
While some states are already pushing back on these plans—either not allowing them to be sold or limiting the duration and renewability—for those practices in states where these plans are allowed to be sold to the full extent of the new regulation, it may mean some challenges trying to keep up with all of the changes.
A few key points about short-term health plans:
• Not required to meet the “essential coverage” requirements of ACA
• Allowed to charge more for pre-existing conditions
• Attractive to younger, healthier individuals with incomes above the limits for receiving federal subsidies
• Cost approximately 50% of what ACA compliant plans do
• Have higher deductibles than ACA plans
• May contain exclusions for coverage which payers are required to disclose
It will be critical for providers and their staff to be aware of the limitations and exclusions of these types of plans before providing services to patients who have purchased them. These types of plans rarely cover preventative care and are primarily designed for unexpected injury or illness. They are effectively “catastrophic coverage” and these plans will likely appeal to younger, healthier individuals.
Association Health Plans
While Association Health Plans (AHPs) are not a new concept, the ACA had previously eliminated these plans. An executive order in 2018 has revived this option as a way for smaller employers to band together and recognize savings on their health coverage. These plans will still be required to meet most of the requirements of the ACA. In many cases, AHPs will be provided by some of the same payers as other individual and group plans, so again, it will be important to conduct regular eligibility and benefits verification to ensure coverage for patients with these plans.
This content is an excerpt from the white paper “Getting Paid in 2019 – What Independent Medical Practices Need to Know”, published by Kareo. The full white paper is available for download here.