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Treatment of Late Premium Payments in the Exchanges

Posted on August 1st, 2013

The public insurance exchanges are expected to introduce a new way for individuals to obtain health insurance coverage next year. However, with the introduction of these exchanges comes a number of complexities and nuances. That includes the topic of premium payment processing and late payments.

Individuals that qualify for Advanced Premium Tax Credits (APTC) through the exchanges will have a portion of their premium subsidized by the federal government, but the balance of the premium will be their responsibility.    

What happens if an individual receiving subsidized coverage in an exchange doesn’t pay their portion of the insurance premium on time?

Qualified Health Plan (QHP) issuers must provide a grace period of 3 months if the enrollee receiving APTCs has previously paid at least 1 full month's premium during the benefit year.

During the grace period, the QHP issuer must also adhere to the following rules:

  • Pay all appropriate claims for services rendered to the enrollee during the first month of the grace period. The QHP issuer may pend claims for services rendered in the second and third months of the grace period.
  • Notify the Department of Health and Human Services of such non-payment.
  • Notify providers of the possibility for denied claims when the enrollee is in their second and third months of the grace period.
  • Continue to collect APTCs on behalf of the enrollee from the Department of the Treasury.
  • Return APTCs to the Department of Treasury for the second and third months of the grace period if the enrollee fails to pay their portion of the premium and exhausts the grace period.

We expect more details about the exchanges to continue to be released as we move closer to October 1, 2013. Click here for additional details regarding premium payment processing and late payments in the exchanges.

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Note: The materials contained within are provided for informational purposes only and do not constitute legal or tax advice.

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