Continuous Health Insurance Coverage Incentive

Obamacare mandated that we all have health insurance or else we would face a penalty, that increased each year, when we filed our federal income taxes. This particular part of the ACA was very unpopular amongst Americans who thought that the government should not force them to do anything in relation to their medical care.

Although the new American Health Care Act (Trumpcare) keeps in tact a lot of popular pieces from Obamacare such as the pre-existing conditions and dependents can stay on their parents’ health insurance plan until they are 26, the GOP wouldn’t dream of keeping anything in the new law that looked like the individual mandate, but they still needed a way to compel Americans to get health insurance. Unfortunately, health insurance only works if there are as many healthy people paying into the pool as there are sick people taking money out to pay for medical bills. The GOP needed to be creative in order to find a way to compel healthy people to choose to get health insurance, even when it wasn’t technically required.

That creative way was the “Continuous Health Insurance Coverage Incentive”.  

This requirement for continuous coverage ensures that anyone who goes without “credible coverage” for at least 63 continuous days will have to pay 30% more per month for their health insurance policy.

A couple questions stick out about this Continuous Coverage requirement:

  1. What kind of coverage is required?
  2. How long will I have to pay the increased amount?
  3. How does this affect Special Enrollment Periods?
  4. When does the continuous coverage requirement kick in?
  5. Who gets the money from the increased premium amount?
  6. What happens if I get a health insurance plan from my employer after being uninsured?

So first, what kind of coverage is required? The law just says that “creditable coverage” is required and it references the Public Health Service Act, Title XXVII, Section 2704(c), which states that creditable coverage could be: a group health plan, an individual and family health insurance plan, Medicare, coverage under the Indian Health Services or some other tribal organization, a state health benefits risk pool, Medicaid, or TRICARE to name a few.

Under the AHCA, any insurance policy under Trumpcare must also contain some very specific parts, such as it cannot deny a claim or coverage due to pre-existing conditions, but states have the option to allow insurance carriers to charge more to people with pre-existing conditions, which essentially places them into a separate high-risk pool, it must include coverage for preventative care and the essential health benefits, however states may also choose not to require carriers to offer this as a way to bring down costs, there’s no annual or lifetime caps on coverage, and dependents can be covered on their parent’s plan until age 26.

How long will I have to pay the increased amount?  Under Obamacare, Americans only paid a penalty for the number of months in a calendar year that they were uninsured, presuming they were uninsured for longer than 60 consecutive days in a year. Under Trumpcare, however, the carrier is permitted to upcharge you 30% each month for your premium for 12 months following your plan start date. After your insurance renewal anniversary passes, your payment will adjust to the normal rate.

When does the continuous coverage requirement kick in? Under the proposed healthcare bill, you would be required to prove that you had continuous coverage during the 2018 Special Enrollment Period, which would start immediately after the 2018 Open Enrollment Period ends. In past years, open enrollment periods ran from November 1st to January 31st of the following year. Earlier in 2017, HHS proposed shortening the open enrollment period so that it would now only last from November 1, 2017 to December 15, 2017. This proposed change approved and finalized on April 18, 2017 and was put into effect, which means that all Americans would be required to prove that they had creditable coverage by December 16, 2017 or else they could be charged 30% more on their monthly premiums, presuming their lapse in coverage lasted a full, continuous 63 days.

To be more clear, if someone was uninsured from December 16, 2017 to February 17, 2018, they would be charged more for health insurance when they did enroll. After February 17, 2018, everyone must have insurance or else they will pay more on their health insurance and a person is only permitted to be uninsured for a maximum of 62 continuous days in a year.

Who gets the money from the surcharge fee? This money would go straight to the carrier. This is unlike Obamacare, where the penalty money went to the government’s Obamacare pool and was used to pay for pieces of the law.

What happens if I get a health insurance plan from my employer after being uninsured? Under the bill, as it is proposed, an employer could be subjected to the increased premium amount for your insurance coverage if you were uninsured for 63 consecutive days before your group plan kicked in. This is a very controversial piece of the law because it disadvantages employers and could also be used to qualify or disqualify people for employment.

Trumpcare will change as it makes its way through the House and Senate and ultimately, what is signed into law may not look exactly like this, but it’s still important to understand what is on the table.