Health Law Challenged by Courts, Insurance Loophole

This week, the nation turned its attention to the split rulings of 2 state federal court of appeals. In a 2-1 ruling, the DC Circuit Court of Appeals determined that text within the Affordable Care Act (ACA) only authorized those states that established their own health insurance exchanges to provide subsidies to its citizens. Yet, just a few hours later, the Court of Appeals for the 4th Circuit in Richmond, Virginia, unanimously agreed that all consumers—including those that bought plans on the federal health exchanges—were eligible for federal tax credits. For the 36 states that utilize federal health exchanges, the final decision could impact millions of low- to middle-class Americans who rely on subsidies to afford health plans.

“Congress did say when there were supposed to be subsidies, but it’s just a little unclear whether it literally meant only a state-created exchange or if instead it meant, if you buy your healthcare through the exchange and you can’t afford health insurance, we will help you out,” said Tom Goldstein, co-founder and publisher of the SCOTUSblog. “There are certainly a lot of people who are very critical of the law. They have brought very sophisticated legal challenges. The statute has been upheld, by and large. This is the single greatest threat to the reach of the statute, to the attempt to help a lot of people be able to afford healthcare through insurance.”

The final ruling may rest in the hands of the Supreme Court, or it might require Congress to fix the law’s language so that it clearly states who is eligible for the federal money.

Although some stakeholders were concerned about the ruling’s impact on the health law, it isn’t the only issue they were aware of. The ACA provides enrollees with a 3-month grace period if they fall behind on paying their premiums. If a consumer makes up for any lost payments at the end of that grace period, they will remain insured; if not, they will lose their coverage. However, come December, payers worry that consumers may take advantage of a potential loophole in this exception for a free month of healthcare.

Hypothetically, a person could refuse to pay their missed premium in December 2014 and then rejoin the same plan—or even buy a new one—during the first few months of 2015. The new plan’s premiums would cover their outstanding charges, meaning the insurance company wouldn’t be able to terminate their coverage.

“What happens is you have all of December and January and February to pay that December 2014 premium,” said 1 payer agent to reporter Sarah Kliff. “If you still haven't paid by February, what we would typically do is terminate your policy. But we can't do anything if you have a new, 2015 policy.”

CMS said they expect most consumers will pay their December premiums. Officials added that the grace period remains an important component of the health law because it protects consumers. Many insurers are working ahead of any potential issues associated with the loophole to ensure they don’t miss payments.

Around the Web

Will Conflicting Federal Healthcare Law Rulings Head to the Supreme Court? [PBS]

After Health Law Rulings, Here Are Possible Next Steps [The New York Times]

Obamacare Loophole has Insurers Worried Customers will Skip December Premium [Vox]