As many agents are discovering, health care providers may think twice when treating patients enrolled in ACA-qualified individual plans and receiving an Advance Premium Tax Credit (APTC). If you haven’t studied the ACA grace period rules, you may not understand why. In this post, we’ll provide a quick overview of those rules.
Individuals who purchase coverage through the Federally Facilitated Marketplace (FFM) are required to pay their first month’s premium by the effective date in order for the coverage to start. But, each year, a number of people who sign up for coverage fail to pay the premium and, in turn, their coverage never begins. Or, they fail to pay a future premium, which also puts their coverage at risk.
Once a policy is effective, the premium is typically due around the first of every month. If the premium is not paid by the due date, the members enter a three-month grace period. The policy cannot be cancelled as long as the full premium due is paid by the end of the grace period.
During the first month of the grace period, the members still have coverage and the insurance company must continue to pay claims.
However, during months two and three of the grace period, the insurance company can decide to pend claims for services the member received during that time. As long as the individual pays the premium due in full (including the premium due for those months of the grace period) before the end of the grace period, the coverage remains in effect and the insurance company is responsible for paying the claims. If the individual does not pay all premiums due by the end of the grace period, the policy can be cancelled back to the end of the first month of the grace period and the member will be responsible for paying for the services received during months two and three.
This puts the burden of collecting payment for services rendered on the provider, which is why doctors may hesitate to treat patients with FFM plans while receiving the APTC.
Insurance companies are required to notify doctors if an insured is in a three-month grace period, but it’s a bit unclear what providers are supposed to do with that information. Organizations like the American Medical Association do their best to keep providers informed, answer their questions, and provide resources to assist with patient communication and payment collection, but there’s still some confusion in the medical community.
While it’s not the broker’s job to make sure providers understand, an awareness of the grace period can at least help agents understand why their clients may have some problems with getting seen by contracted network providers.
Keep in mind the three-month grace period only applies to FFM plans and only when the insured is receiving an Advance Premium Tax Credit and has already paid the first month of premium. People with FFM plans but no APTC, as well as individuals with off-Marketplace plans, will have different grace periods regulated by state rules, usually 30 or 31 days. Some state-based Marketplaces (SBMs) may also set varying timelines or administer the grace period differently.
Again, as a broker you can’t do anything to change the grace period rules, and you probably won’t be explaining the grace period rules to any medical providers. But being able to help your clients understand why they may have difficulty using the health coverage they’re paying a bunch of money for is very powerful. Though they may not like what you tell them, the fact that you know the answers and are able to help, this will reassure your clients of the value of the agent, and that’s definitely a good thing.