The Ninety-Day Grace Period
Under the ACA, insurers must wait three months before cancelling the policies of subsidized enrollees who are delinquent on premium payments.
The ACA's uniform grace period could prove to play an important role in keeping people enrolled in their plans.
From October 2013 through March 2014 more than eight million Americans enrolled in a new health plan through the Affordable Care Act's (ACA) insurance Marketplaces.The law recognizes that for some enrollees this represents a significant period of transition, with many gaining regular health coverage for the first time in their lives. To help enrollees new to the system keep their insurance, the ACA provides a 90-day grace period before an insurer can discontinue someone’s coverage for failure to pay a monthly premium.This applies only to those who have received an advance premium tax credit to purchase health insurance through the Marketplaces and have previously paid at least one month’s full premium in that benefit year.
The grace period allows for continuity of care for patients by preventing people from shifting or "churning" in and out of coverage when they fail to make a monthly premium payment. Health care providers, however, have argued that the way in which the Centers for Medicare and Medicaid Services (CMS) has implemented the grace-period requirement could expose them to significant financial risk.
This Health Policy Brief focuses on CMS’s implementation of the ACA grace period and concerns from hospitals and physicians about potential financial liability now that millions of people have signed up for subsidized health insurance on the Marketplace exchanges.