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Focus on Regulation

CMS Releases Final Rule on the Affordable Care Act’s Health Insurance Reforms

The Centers for Medicare and Medicaid Services (CMS) released a final rule on February 22, 2013, implementing four key consumer protections enacted by the Affordable Care Act, including:

  • Guaranteed Availability: Health insurance issuers must sell health insurance policies to all consumers who apply for coverage, regardless of health status.
  • Guaranteed Renewability: Health insurance issuers will be prohibited from refusing to renew or continue in force coverage on the basis of health status.
  • Fair Health Insurance Premiums: Health insurance issuers may only vary health insurance premiums rates based on age, tobacco use, family size, and geography; the use of other factors (e.g., gender, occupation, health status) will be prohibited.
  • Single Risk Pool: Health insurers will be required to maintain a single state-wide risk pool for the individual market and a single state-wide risk pool for the small group market (unless a state decides to merge the markets into a single risk pool), and thus may no longer charge higher premiums to higher-cost enrollees by moving them to a separate risk pool.

The rule also outlines the standards for enrollment in catastrophic health plans for young adults and individuals who cannot otherwise afford health insurance coverage.  These protections will apply to health plan or policy years beginning on or after January 1, 2014, and will affect nearly all health insurance issuers that sell coverage in the small group and individual markets. 

To reflect these market reforms, the final rule also amends the standards under the health insurance rate review program established under 45 CFR part 154.  Specifically, the rule: (1) revises the timeline for states to propose state-specific thresholds for rate review and approval by CMS; (2) modifies the criteria and factors of an effective rate review program; and (3) directs health insurance issuers to submit data regarding proposed rate increases in a standardized format.

CMS also released a fact sheet summarizing key parts of this final rule.