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CMS Creates New ACA Penalty Mandate Exemptions, Including Opposition to Abortion

Allison Inserro
CMS said that those opposed to abortion could use their belief as a hardship exemption to avoid the Affordable Care Act’s (ACA) individual mandate penalty this year. Plus, the agency will allow states more flexibility in setting their essential health benefit benchmark plans, in a series of rule changes finalized Monday.
CMS said that those opposed to abortion could use their belief as a hardship exemption to avoid the Affordable Care Act’s (ACA) individual mandate penalty this year. Plus, the agency will allow states more flexibility in setting their essential health benefit (EHB) benchmark plans, in a series of rule changes finalized Monday.

“It’s clear that Obamacare continues to have negative effects on many Americans,” said CMS Administrator Seema Verma during a media call to explain the changes, which the Trump administration said are necessary to make insurance premiums more affordable. CMS said the announced changes were designed to increase state flexibility and reduce unnecessary regulatory burdens.

State will no longer be limited to 10 options when selecting a plan that serves as an EHB benchmark. While the 10 essential health benefits remain, states can look across state lines to look at up to 50 plans or choose from specific coverage categories. Avalere said that could lead to a narrower set of benefits and worse access for consumers.

CMS is also making significant changes to its navigator program, which helps people sign up for ACA health plans. Under the new rules, CMS said it was removing the requirements that each exchange must have at least 2 organizations, and that 1 of these entities must be a community- and consumer-focused nonprofit group. Also, CMS also said the organization no longer has to maintain a “physical presence” in the area it serves. These moves will allow the exchanges “flexibility to ensure that grant funding goes to the strongest applicants,” CMS wrote.

The Trump administration started cutting back on the navigator program last year, suggesting the job could be done by insurance agents.

Under the hardship exemption rule, individuals who live in counties or an area with no issuers or only 1 issuer will qualify for a hardship exemption from paying the ACA tax penalty for not having coverage. In addition, those who live in service areas where the only plans available cover abortion are able to get out of the mandate by “attesting” to their personal anti-abortion belief. The ACA allows states to ban abortion from marketplace plans, and 3 states—California, New York and Oregon—require abortion to be included in state-regulated private insurance plans.   

While President Donald Trump’s repeal of the mandate in his December tax bill does not take effect until next year, the hardship exemptions are available now and are also retroactive to the 2017 tax year. The guidance also allows CMS to consider a broad range of circumstances that result in consumers needing hardship exemptions.   

At the same time, CMS said it would start imposing more stringent income verification checks to ensure that people applying for advance premium tax credits (APTC) were doing so honestly. Exchanges will discontinue APTCs for enrollees who fail to file taxes and reconcile past APTCs, even if the exchange does not first notify the filer directly.

Also in the realm of returning more power to the states, the final rule returns oversight of qualified health plan (QHP) certification standards regarding network adequacy, and eliminates the meaningful difference requirement for QHPs to give insurers more flexibility in designing plans.

Monday’s final rule would also let states apply for a change from the 80% medical loss ratio (MLR) standard for the state. The key ACA tenet requires insurers to spend 80 cents of every premium dollar on customers’ medical claims and activities to improve the quality of care. The MLR has been cited in the many consolidations that have occurred in healthcare under the ACA, as insurers have sought efficiencies to meet the standard.

The final rule also allows insurers to raise their rates by 15%, up from 10%, currently.

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