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April 29, 2024 at 10:30 AM
What You Need to Know
- Many federal regulations leave out Medigap policies and other forms of excepted insurance benefits.
- HHS says the ACA nondiscrimination section affects all forms of health insurance.
- Insurance agencies with 15 or more workers must name nondiscrimination complaint coordinators.
The U.S. Department of Health and Human Services is changing its strategy for regulating Medicare supplement insurance policies and saying that the products are subject to the new federal health nondiscrimination rule.
The new HHS final rule implements section 1557 of the Affordable Care Act. The section prohibits discrimination on the basis of race, color, national origin, sex, age or disability at health programs that receive federal funding.
Medicare supplement insurance policies, or Medigap policies, are state-regulated health insurance products that help 14 million consumers cover deductibles, co-payments and coinsurance charged by original Medicare. In the past, HHS has excluded Medigap policies and other products “excepted” from typical federal benefits regulations, such as hospital indemnity insurance, from most ACA-related regulations.
In the introduction to the new regulations, HHS officials say section 1557 applies to all forms of health insurance, including Medigap policies and excepted benefits policies.
The section also applies to Medicare Advantage plans, Medicare Part D prescription drug coverage and Affordable Care Act public health insurance exchange plans, officials say.
What it means: Agents and brokers who help clients with their Medigap coverage could end up running into federal officials more often.
The regulations: A preview version of the final health nondiscrimination rule appeared on the web. HHS is planning to publish the final rule in the Federal Register, an official regulatory publication, May 6.
Sections of the final rule deal with topics such as discrimination related to sex and gender, website accessibility and section 1557 nondiscrimination coordinators.
The rule is set to take effect 60 days after the official publication date.
Nondiscrimination requirements for insurance products not previously subject to federal health nondiscrimination regulations will apply to coverage starting on or after Jan. 1, 2025.
Insurers have succeeded at using lawsuits to block some federal regulations in the past, and previous presidential administrations have clashed over how to interpret and apply ACA section 1557.
If President Joe Biden is not reelected in November, his successor could choose an HHS secretary who would slow, block or change the new nondiscrimination requirements.
Medigap and nondiscrimination: Congress created the framework for the Medigap market in 1990.
Private insurers write the policies, based on standardized templates included in federal statutes. State insurance regulators oversee the insurers.
The insurers must sell the policies on a guaranteed-issue basis during a six-month open enrollment period after a consumer first becomes eligible for Medicare.
But, in many states, issuers can consider age and health status when selling policies to consumers who do not qualify for an open enrollment period or a special enrollment period.
HHS officials note in the introduction to the new regulations that Medigap issuers use medical underwriting.
Officials do not say whether they think ACA section 1557 could have any effect on age-related or disability-related Medigap policy underwriting.
