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Back in March, the Centers for Medicare and Medicaid Services (CMS) issued the Notice of Benefit and Payment Parameters for 2021 (2021 Payment Notice).
The rule includes a number of changes for insurers, including an extension to the deadline for submitting qualified health insurance plans for the 2021 tax year. The deadline for submitted qualified health insurance plan applications was June 17.
The extension came at a time where insurers are facing significant challenges due to COVID-19. CMS stated the following in an official press release, “This additional time will allow issuers and states to better collect and assess data around the effects of COVID-19 and thereby establish more accurate premium rates.”
One of the most controversial aspects of the 2021 Payment Notice pertains to automatic re-enrollment.
Following the 2020 Payment Notice, CMS sought feedback regarding the automatic re-enrollment process, specifically whether or not to remove it. The 2021 Payment Notice leaves the automatic re-enrollment intact.
CMS stated that, “Automatic re-enrollment significantly reduces issuer administrative expenses, makes enrolling in health insurance more convenient for the consumer, and is consistent with general health insurance industry practice.”
The controversy around the automatic re-enrollment stems from enrollees who receive a Premium Tax Credit (PTC) and pay $0 a month towards their health insurance premium. The automatic re-enrollment allows individuals to continue to receive this subsidy, sometimes wrongfully. A recent TIGTA report found that nearly 30% of PTC recipients are improper.
The final 2021 Payment Notice addresses this issue by, “finalizing enhancements to the Periodic Data Matching (PDM) processes to reduce the risk of incorrect Advance Payments of the Premium Tax Credit (APTC) payments to enrollees determined to be deceased or dually enrolled in Medicare.”
The 2021 Payment Notice also includes a number of provisions intended to promote affordable coverage and access to consumers, including the following:
• Special enrollment rules, including changes in plan type for enrollees
• A blueprint for aiding issuers in establishing innovate healthcare plans that help enrollees at low costs
• Changes to tax credit allocation
To view the 2021 Payment Notice click here.
Employers, with automatic re-enrollment remaining, employees may continue to wrongfully receive PTCs. As a reminder, PTCs are the trigger for the IRS issuing Letter 226J to employers identified as having failed to comply with the ACA’s Employer Mandate.
As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is Affordable for the employee or be subject to IRC Section 4980H penalties.
Best practices for reducing IRS penalty assessments from the IRS due to wrongful PTC allocation include a monthly ACA compliance process and data quality management.
You can get started with identifying your current ACA compliance status by electing to undergo an ACA Penalty Risk Assessment.
