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Life Health > Health Insurance

5 battles over the PPACA-free zone

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State insurance regulators are talking about how they should rewrite a sample law that shapes some of the hottest health insurance products on the market today.

The document, the Minimum Standards for Accident and Sickness Insurance Model Act, gives states a sample they can use when setting rules for health insurance products other than major medical insurance.

The act affects products such as disability insurance, cancer insurance, critical illness insurance, hospital indemnity insurance and dental insurance. Federal regulators have classified many of these products as “excepted benefits” — products not governed by the provisions in the Health Insurance Portability and Accountability Act (HIPAA) and the Patient Protection and Affordable Care Act (PPACA) that apply to major medical coverage.

Because those products are PPACA-free products, they are also the products many agents and brokers who have been selling major medical coverage are trying to emphasize, in light of all of the new red tape now associated with selling major medical coverage.

Officials at the Regulatory Framework Task Force — part of the National Association of Insurance Commissioners (NAIC), an organization for state insurance regulators — are looking to see what, if any, parts of the model act they should change to reflect all of the new PPACA rules and programs.

Consumer groups have been skeptical of many of the non-medical health products, such as cancer insurance, for decades, and the new regulatory debate is giving them and America’s Health Insurance Plans (AHIP) a chance to open up old wounds and pour acid in.

Here’s how some of the proposals that have been discussed could increase the acid levels in your digestive tract.

SBC coverage examples

1. You could have to provide a PPACA Summary of Benefits and Coverage (SBC) for non-medical health products.

Some consumer groups like the idea. AHIP says the coverage outline sellers already works fine, and that adding an SBC requirement would add new administrative burdens.

Blank walls

2. You might see disability insurance left outside the scope of the model act, and subject to some other model act yet to be written.

AHIP hates the idea of seeing regulators put disability insurance in another model.

“This category of coverage is a form of financial protection for the unexpected costs and losses associated with a health condition, disease, or injury,” C.M. Gallaher writes in an AHIP comment letter. “It is accident and sickness insurance in exactly the same sense that the other categories of HIPAA excepted benefits such as specified disease, or accident-only coverage are accident and sickness insurance. There is no legitimate reason to distinguish this category of coverage from the others in terms of minimum standards requirements.”

Man facing many possible confusing paths.

3. You might face new controversies about whether some of the products you sell are actually legal.

Consumer groups contend that PPACA bans many gap-filler products that pay health bills.

AHIP argues that federal regulators tailored regulations and guidelines carefully to continue to permit the sale of most products now on the market. The main change will be that consumers will have to have major medical coverage to be eligible to buy some products, Gallaher says. 


4. You might find that some grandfathered policies lost in model act limbo.

AHIP agreed with consumer groups that PPACA seems to have outlawed some types of limited-benefit medical insurance products, such as plans that pay only basic hospital expenses.

But AHIP noted that consumers can keep grandfathered policies, and that, if regulators move to take provisions concerning old, outmoded products out of the regulations, they need to find a way to continue to support the issuers and users of the grandfathered policies.

Policy folder

5. You might have to give consumers more disclosure forms.

This seems to be a likely outcome, no matter what happens with the other proposals. Consumer groups, HHS officials and state regulators have agreed that sellers have to make sure that non-medical health products aren’t major medical insurance and won’t help taxpayers meet the PPACA individual “minimum essential coverage” (MEC) requirement.


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