On July 16, 2014, the Consumer Information and Insurance Oversight (CCIIO) division of the Centers for Medicare & Medicaid Services (CMS) released an Enrollment Bulletin for the individual markets of Federally-facilitated Exchanges (FFEs) about grace periods for premium non-payment. The Bulletin addresses when grace periods related to terminations for premium non-payment fall across enrollment periods for the next benefit year. Issuers must provide a three-month grace period to Exchange enrollees who receive advance premium tax credits (APTCs), pay at least one month’s premium during the benefit year, and subsequently fail to pay their portion of the monthly premium. If the three-month grace period passes and the enrollee does not pay all outstanding premiums, the issuer must terminate the enrollee’s coverage, retroactive to the last day of the first month of the grace period. All other Exchange enrollees receive grace periods according to state law. The Bulletin explains the following for APTC recipients in FFEs:

  • If an enrollee has not paid premiums at the time of the Annual Open Enrollment for the next year, the issuer must still offer the enrollee guaranteed availability pursuant to 42 CFR 147.104. If an enrollee owes premium payments but only provides payments for insurance for the following year, the issuer may not use the premium funds for the new enrollment to pay the outstanding premium debt from the prior policy and refuse to enroll the applicant.
  • When an enrollee’s coverage terminates for non-payment of premiums, per 45 CFR 155.420(e), the individual does not qualify for a special enrollment period (SEP) for the resulting loss of minimum essential coverage. SEPs allow individuals to enroll in Exchange plans at times other than the Annual Open Enrollment period. However, the individual may become eligible for an SEP based on other circumstances.
  • If an enrollee’s premium payment grace period crosses over benefit years, and the enrollee renews for the next benefit year, the QHP issuer must accept the enrollment because the enrollee is still in a grace period. If the enrollee exhausts the grace period, the issue must still terminate retroactively to the last day of the first month of the grace period. If the retroactive termination occurs after the enrollment period has ended, the individual cannot enroll in the Marketplace until the next Annual Open Enrollment period, unless he/she qualifies for an SEP.
  • Issuers face different requirements for enrollees with grace periods ending December 31 depending on whether the enrollee has auto-renewal or actively selects a plan for the next year.
    • If the enrollee is subject to auto-renewal and has not paid all outstanding premium amounts due in accordance with the applicable grace period that ends December 31, the issuer may accept or reject the auto-renewal.
    • If an enrollee whose grace period would expire December 31 actively completes a plan selection for coverage in the next benefit year, even if the coverage would be under the same product, and makes payment of the first month’s premium by the applicable due date, the issuer must accept the enrollment in accordance with guaranteed availability requirements.

The Bulletin is available here.