By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    How Not to Become a Victim of Medical Scams
    How Not to Become a Victim of Medical Scams
    December 22, 2021
    11 Ways You Can Care for Your Elder Family Members Health
    11 Ways You Can Care for Your Elder Family Members Health
    April 6, 2022
    How Can Brain Injury Lead To Dangerous Long-Term Effects?
    How Can Brain Injury Lead To Dangerous Long-Term Effects?
    August 30, 2022
    Latest News
    6 Easy Healthcare Ways to Sit Less and Move More Every Day
    September 10, 2025
    7 Most Common Healthcare Accreditation Programs: Which Should You Use?
    August 20, 2025
    Hospital Pest Control and the Fight Against Superbugs
    August 20, 2025
    Hygiene Beyond The Clinic: Attention To Overlooked Non-Clinical Spaces
    August 13, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    Why are Girls Being Abandoned and Battered ?
    August 20, 2012
    biopharma beat innovation and imagination
    BioPharma Beat: Imagination Is More Important Than Innovation
    August 5, 2014
    HIPAA Compliance Breaches Higher Than Ever: What Are You Doing About It?
    April 26, 2016
    Latest News
    Healthcare at a Crossroads: Why Leadership Matters More Than Ever
    September 9, 2025
    How Social Security Disability Shapes Access to Care and Everyday Health
    August 22, 2025
    How a DUI Lawyer Can Help When Your Future Health Feels Uncertain
    August 22, 2025
    How One Fall Can Lead to a Long Road of Medical Complications
    August 22, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: ObamaCare’s Biggest Worry: Collecting the Premiums
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > ObamaCare’s Biggest Worry: Collecting the Premiums
Health ReformPolicy & Law

ObamaCare’s Biggest Worry: Collecting the Premiums

Greg Scandlen
Greg Scandlen
Share
6 Min Read
obamacare health insurance
SHARE

obamacare health insuranceOne of the long-standing problems in the individual health insurance market is collecting premiums.

obamacare health insuranceOne of the long-standing problems in the individual health insurance market is collecting premiums.

The individual market is largely made up of people with tentative work histories. They may be self-employed or seasonal workers with surges of income, or they may work several part-time jobs, or they may even be fully employed in good paying positions but their employers don’t provide coverage.

In any of these cases, individuals are required to pay their own premiums in a timely fashion, even when money is tight in a given month. Insurers try to avoid lapses in payment by requiring automatic withdrawals from bank accounts, credit card back-ups, or prepayment of premiums on a quarterly basis. Like other businesses, the insurer may provide for a grace period of a week or so, but failure to pay means cancellation of the policy.

More Read

dermatology: skin diagram
Which Medical Specialty Should Medical Students Choose?
Does Shorter LOS Cause a Higher Readmission Rate?
Healthcare and You: 3 Legal Situations to Be Aware Of
A Humble Opinion: Book Review
Childhood Obesity: It’s Everyone’s Business

Coping with these issues is one of the reasons individual coverage has higher administrative expenses than group coverage.

It will be more than a little interesting to see how the Affordable Care Act deals with these problems, especially since cancellation means people will be in violation of a federal mandate.

Many people eligible for exchange coverage do not have bank accounts or credit cards. That is why inner city neighborhoods have storefronts that cash checks and issue money orders. Many people have surges of income, working one month but not the next, or collecting commissions one month and not the next. Many people have financial emergencies ― their transmission breaks down or they are out sick for two weeks, or their boyfriend moves out of the house ― they don’t have the money to pay their premium this month. We know these things will happen ― a lot.

So far, the regulations coming out of Health and Human Services are not encouraging (see pages 18337, 18387, 18394 and 18471 of the Federal Register.) As you might expect, the regulations are being written by people with nice bureaucratic jobs and steady paychecks. They have no idea what it is like to scramble to make ends meet.

It’s not that they haven’t tried. Lord knows they have issued more regulations than it would take to put a man on the moon. But they are illustrating the limits of the regulatory process. Regulations always mean “you must do Y, but you may not do X” ― as if every contingency can be anticipated from an office in Washington. So, rather than allowing insurance carriers to collect premiums in the ways they know will work, HHS has created a whole new and very restrictive method that must be followed to a “T.”

In this case, the bureaucrats realize that some people will have a hard time paying their bills, even when the bills are partially subsidized. So they have generously provided for a 90-day grace period for paying premiums ― but only for people who are getting a federal subsidy. None of this applies to people who are not subsidized.

The problem with a 90-day grace period for premium payment is that at the end of it you must pay for three months of premiums, when you couldn’t afford to pay one month in the first place. A lot of people won’t be able to do that, but meanwhile they have been running around with an insurance card receiving health services.

What then? Who is on the hook for those services? HHS has decided to split the baby. The insurance company will have to pay for the first month of non-coverage, but providers (doctors and hospitals) will have to absorb the costs incurred for the second two months. That could be a whole lot of money. The (formerly) insured person will be canceled after three months, but they get to re-enroll again at the end of the year without penalty. (And we were told one of the purposes of this law was to solve the “free-rider” problem. Oh, well.)

Along with paying for services during the first month of the delinquency, the insurer must: 1) notify HHS of the non-payment; 2) notify providers of the possibility of denied claims during the second and third months; 3) notify the insured that he/she is delinquent; 4) continue to collect the advanced tax credit on behalf of the policyholder; 5) return the tax credit for the second and third month to the Treasury; 6) issue a termination notice to the insured at the end of the grace period. Oh, and the carrier must also determine whether the insured has a disability as defined by the Americans With Disabilities Act, and make “reasonable accommodations” for such individuals. These are pretty substantial administrative burdens, and the costs will aggravate the Minimum Loss Ratio requirement for the carrier.

So, how many people do you suppose will do this? I would wager just about everybody. Why not? You can get 12 months of coverage for nine months of premiums and suffer absolutely no penalty.

Did somebody say, “Train wreck?”

(ACA and premiums / shutterstock)

Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

a woman walking on the hallway
6 Easy Healthcare Ways to Sit Less and Move More Every Day
Health
September 9, 2025
Clinical Expertise
Healthcare at a Crossroads: Why Leadership Matters More Than Ever
Global Healthcare
September 9, 2025
travel nurse in north carolina
Balancing Speed and Scope: Choosing the Nursing Degree That Fits Your Goals
Nursing
September 1, 2025
intimacy
How to Keep Intimacy Comfortable as You Age
Relationship and Lifestyle Senior Care
September 1, 2025

You Might also Like

Mass. Study – Insurance Costs Still Too High

March 9, 2011
healthcare elderly
BusinessFinanceHealth ReformPolicy & LawPublic Health

The Human Side of the Sequestration

June 19, 2013
obesity and stress
Global HealthcareNewsPublic HealthWellness

Fat, Stressed and Not Very Healthy: How We Rank in the Human Capital Index

November 5, 2013

GOP’s Best Bet on Health Care: Stick With the Slogans

April 25, 2011
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?