The Centers for Medicare and Medicaid Services (CMS) released guidance on August 4th allowing insurance companies to provide temporary premium reductions during the 2020 coverage year in the individual and small group markets. Doing so would otherwise violate the federal prohibition on mid-year premium changes.
Given the savings insurers have experienced due to a sharp decline in utilization during the COVID-19 pandemic, the guidance permits insurers to offer premium reductions through the end of 2020—if doing so is consistent with state law. These premium credits will help to support continuity of coverage for individuals and small businesses who may be facing economic challenges and/or health issues as a result of the impact of COVID-19. CMS encourages states to provide similar relief, stipulating that states will not be considered to have failed to substantially enforce federal law by virtue of allowing such credits. To provide premium credits, however, insurers are required to receive permission in advance from regulators, as well as the Exchange through which they offer Qualified Health Plans (QHPs). Insurers who offer QHPs through Federally-facilitated Exchanges (FFEs) or State-based Exchanges on the Federal Platform (SBM-FPs) must provide notice by October 1, 2020.
To comply with the guidance, premium credits must be:
- a fixed percentage;
- applied prospectively; and
- applied uniformly to all members in a state’s market, regardless of whether the plan is offered on or off the Exchange or whether the enrollee receives Advance Premium Tax Credits (APTCs).
CMS plans to provide updated guidance directing insurers to report their reduced premium amounts on the 2020 Medical Loss Ratio Annual Reporting Forms, as well as for purposes of the 2020 benefit year data submission for the federal risk adjustment program. The FFE and SBE-FP will continue to display full premium amounts and will use those amounts to make affordability calculations and to identify the Second Lowest Cost Silver Plan for purposes of APTCs. However, the premium credits will be considered for purposes of calculating the actual amounts due in APTCs and FFE and SBE-FP user fees.
CMS will also provide more guidance and templates for insurers on the FFE or SBM-FPs seeking to provide notice of credits. Questions can be directed to firstname.lastname@example.org with “Temporary 2020 Premium Credits” in the subject line.