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HR 1628 Congress.Gov AHCA of 2017

Section 133 - 30% Penalty - Continous Coverage Encouragement
Section 133 – 30% Penalty – Continous Coverage Encouragement

AHCA §133 CONTINUOUS HEALTH INSURANCE COVERAGE INCENTIVE.

–let insurers charge individuals who buy insurance after letting their coverage lapse – so be VERY careful about paying your premiums on time!,  a 30% premium penalty for one year, to encourage people to maintain continuous coverage. Section 133 Rev 3.6.2017 page 61

The substitute mechanism employed in section 133 of the AHCA requires insurers to charge purchasers a 30% “penalty” if they obtain coverage in a given year without having had coverage in the preceding year. The idea is that, in order to avoid those higher rates, individuals will be incentivized to purchase health insurance even in those years when they feel the premiums are high relative to their expected costs.   But under the AHCA you don’t generally need coverage in 2017 in order to get coverage in 2018. At least so long as you purchase your policy during the (shortened) open enrollment period at the end of 2017, there’s no continuous coverage requirement in 2018. It starts in 2019.

AHCA piggybacks on earlier statutes (42 U.S.C. § 300gg-3 and 42 U.S.C. § 300gg-91, for those scoring at home – our webpage) and defines creditable coverage to include “health insurance coverage,” which essentially means anything that covers health expenses, no matter how minimally.  Forbes 3.6.2017 Continous Coverage needs a redraft

USPS log of all mail sent to you. Prove you never got a late or cancellation notice! ???

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How it would change: The tax penalty is eliminated. But the House Republican bill still penalizes people who don’t get insurance.

If consumers allow coverage to lapse for as long as two months, insurers would be required to charge them a 30% penalty when they buy a health plan.

That penalty could discourage many people from getting new coverage if they lose their plan because of a job loss or other change. That could increase the number of uninsured Americans. Los Angeles Times 3.8.2017

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The AHCA bans discrimination against those with preexisting conditions — but charges more to people who have a break in coverage

AHCA keeps many of the popular health insurance reforms from Obamacare. This includes a ban on annual and lifetime limits, allowing kids to stay on their parents’ plans until they’re 26, and requiring insurance plans to offer coverage to all patients regardless of how sick they are. But AHCA, unlike Obamacare, does not mandate that all Americans be covered by health insurance or pay a fee.

Instead, it has a different way of penalizing people who decide to remain uninsured: requiring those who don’t maintain “continuous coverage” to pay a hefty fine when they want to reenter the insurance market.

This continuous coverage policy has shown up a lot in Republican replacement plans. It was part of Speaker Ryan’s A Better Way proposal and Rep. Tom Price’s Empowering Patients First Act.

Here’s how it works:

If a worker goes straight from insurance at work to her own policy, her insurer has to charge her a standard rate — it can’t take the cost of her condition into account.

But if she had a lapse in coverage longer than 63 days — perhaps she couldn’t afford a new plan between jobs — and went to the individual market later, insurers could charge her a 30 percent premium surcharge. She would need to pay that higher premium for a full year before returning to the standard rate.

A Congressional aide clarified that this surcharge would be the same for both healthy and sick people; insurers could not use it to turn away people they expect to have significantly higher medical costs.

This might end up having unintended consequences, because only the people who really need insurance — and who have high medical costs — may want to pay the surcharge. Healthy people might be more comfortable staying out of the individual market for longer, perhaps until they get a job that offers coverage. That could drive up premiums for everybody.

This is a less harsh penalty than the one Price suggested in his 2015 Empowering Patients First Act. In that bill, he would have allowed insurers to charge people like this 150 percent of the standard premium for 18 months.

The leaked draft does have a safety net for people who can’t afford to buy this more-expensive coverage. It would invest $100 billion over 10 years into a Patient and State Stability Fund. States could use this money to bump up the size of the tax credits in the individual market (more on that in a minute), build high-risk pools for those with exceptionally costly medical conditions, or send money to insurers who get stuck with especially costly patients (people who have claims higher than $50,000 in a single year).    Vox 3.6.2017

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IMHO this is like the penalty in Part D Rx Medicare

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More on American Health Care Act AHCA – Donald Care

Actual Text

Subpart I of part A of title XXVII of the Public Health Service Act is amended—

(1) in section 2701(a)(1)(B), by striking “such rate” and inserting “subject to section 2710A, such rate”;

(2) by redesignating the second section 2709 as section 2710; and

(3) by adding at the end the following new section:

“SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.

“(a) Penalty Applied.—

“(1) IN GENERAL.—Notwithstanding section 2701, subject to the succeeding provisions of this section, a health insurance issuer offering health insurance coverage in the individual or small group market shall, in the case of an individual who is an applicable policyholder of such coverage with respect to an enforcement period applicable to enrollments for a plan year beginning with plan year 2019 (or, in the case of enrollments during a special enrollment period, beginning with plan year 2018), increase the monthly premium rate otherwise applicable to such individual for such coverage during each month of such period, by an amount determined under paragraph (2).

“(2) AMOUNT OF PENALTY.—The amount determined under this paragraph for an applicable policyholder enrolling in health insurance coverage described in paragraph (1) for a plan year, with respect to each month during the enforcement period applicable to enrollments for such plan year, is the amount that is equal to 30 percent of the monthly premium rate otherwise applicable to such applicable policyholder for such coverage during such month.

“(b) Definitions.—For purposes of this section:

“(1) APPLICABLE POLICYHOLDER.—The term ‘applicable policyholder’ means, with respect to months of an enforcement period and health insurance coverage, an individual who—

“(A) is a policyholder of such coverage for such months;

“(B) cannot demonstrate (through presentation of certifications described in section 2704(e) or in such other manner as may be specified in regulations, such as a return or statement made under section 6055(d) or 36C of the Internal Revenue Code of 1986), during the look-back period that is with respect to such enforcement period, there was not a period of at least 63 continuous days during which the individual did not have creditable coverage (as defined in paragraph (1) of section 2704(c) and credited in accordance with paragraphs (2) and (3) of such section); and

“(C) in the case of an individual who had been enrolled under dependent coverage under a group health plan or health insurance coverage by reason of section 2714 and such dependent coverage of such individual ceased because of the age of such individual, is not enrolling during the first open enrollment period (special enrollment – loss of MEC?) following the date on which such coverage so ceased.

“(2) LOOK-BACK PERIOD.—The term ‘look-back period’ means, with respect to an enforcement period applicable to an enrollment of an individual for a plan year beginning with plan year 2019 (or, in the case of an enrollment of an individual during a special enrollment period, beginning with plan year 2018) in health insurance coverage described in subsection (a)(1), the 12-month period ending on the date the individual enrolls in such coverage for such plan year.

“(3) ENFORCEMENT PERIOD.—The term ‘enforcement period’ means

“(A) with respect to enrollments during a special enrollment period for plan year 2018, the period beginning with the first month that is during such plan year and that begins subsequent to such date of enrollment, and ending with the last month of such plan year; and

“(B) with respect to enrollments for plan year 2019 or a subsequent plan year, the 12-month period beginning on the first day of the respective plan year.”.

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