It used to be that health insurance providers, like utility companies, offered a 30-day grace period for overdue payments. If consumers weren’t able to make a payment within the grace period, their policies would be cancelled, leaving them responsible for medical expenses. As it happens, though, Obamacare, or the Affordable Care Act (ACA), changed this general rule by mandating a 90-day grace period. This means that consumers have a full three months in which to make delinquent payments before health insurance policies can be legally cancelled. However, patients have to meet certain criteria in order to take advantage of this grace period.
The idea behind this extended grace period, as with the implementation of Obamacare as a whole, was to provide every possible opportunity for undeserved populations to take advantage of affordable health care. For some people, this meant changing insurance policies. For others, it meant navigating the tricky waters of health insurance for the first time and adding a new bill to the monthly budget. In essence, the upgrade to a 90-day grace period was intended to ensure a less disruptive transition when people changed their healthcare or started using it for the first time.
Even those who have had healthcare coverage in the past may have paid annually, biannually, or had the money removed from their paycheck automatically by employers. Switching to Obamacare and paying monthly premiums could therefore come as something of a shock. As for those who have never carried insurance, paying for this added expense could impact an already tight budget. However, not everyone qualifies for this extra convenience.
It turns out the only customers that qualify for a 90-day grace period are those that 1) qualify for the advanced premium tax credit (by which the government pays a portion of the cost for health insurance), and 2) have made at least one full payment of a monthly premium. In other words, only subsidized users that have paid their monthly premium at least once will enjoy the 90-day grace period. Everyone else is at the mercy of his or her insurance provider, and that often means a grace period of just 30 days.
Unfortunately, not everyone is on board with this policy. Doctors and other healthcare service providers are likely to take the financial brunt of this decision. When patients fail to pay premiums, insurers may withhold payment on claims from doctors and hospitals, despite the fact that patients were treated with the understanding that they were insured. This applies whether the patient in question has a 30-day or a 90-day grace period.
Further compounding the issue is that healthcare providers have no way to gauge a patient’s real-time insurance status. If patients show up with a card that says they are insured, doctors have no means of verification. Although insurance providers must notify the Department of Health and Human Services when an account is delinquent, they have no responsibility to notify healthcare providers, potentially giving them the opportunity to mitigate risk by rescheduling appointments until the patient is on track with premium payments. Doctors are then left to try to collect from the patients themselves, people who were unable to pay for insurance and are equally unlikely to have the money for medical bills.
Ideally, the extended grace period under Obamacare will help underserved groups to more easily make the transition to using the insurance coverage provided. In the meantime, some states have created additional laws requiring insurance companies to disclose patient information about payment status to healthcare providers that ask for it.
Submit your questions below or start a conversation in the comments!