When Patients Don’t Pay Their Premiums in the ACA Marketplace

Q. Will physicians have to refund payments to an insurer if a patient who bought coverage from that insurer in the Affordable Care Act (ACA) marketplace doesn't pay his or her premiums?

A. Yes, possibly. Federal regulations give patients in health insurance exchange plans three months to pay their premiums. For the first 30 days of patients' coverage, the insurers are required to pay claims under the federal regulations and accept the government advance tax credit as payment of the premium. However, for the last 60 days of the grace period, there is no such mandate. If the insured person does not pay his or her premiums within the grace period, the law does not require the insurer to cover any services the physician provided during months two and three.

Here is what the government said in the March 27, 2012, Federal Register, when adopting the regulation:

We note that QHP [qualified health plan] issuers may still decide to pay claims for services rendered during that time period in accordance with company policy or State laws, but the option to pend claims exists. If the individual settles all outstanding premium payments by the end of the grace period, then the pended claims would be paid as appropriate. If not, the claims for the second and third months could be denied. The grace period under this final rule represents an extended time for enrollees to catch up on premium payments before coverage is terminated. (Emphasis added.)

Here are examples the government provided to explain its regulation.

Assumptions for a monthly premium:

  • Premium: $500
  • Advance premium tax credit share of premium: $450
  • Enrollee share of premium: $50
  • First month of grace period: March
  • Individual pays enrollee share of premium for January and February coverage.

Example No. 1: Individual misses $50 payment due Feb. 28 for March coverage. Individual realizes mistake and pays $100 on March 31 for March and April coverage, satisfying all obligations for premium payments through the end of March.

  • Insurer adjudicates claims for March consistent with normal practices (that is, for nongrace periods).
  • Individual will have full coverage for March and April.

Example No. 2: Individual misses $50 payment due Feb. 28 for March coverage and misses $50 payment due March 31 for April coverage. Individual pays $150 on April 30 for March, April, and May coverage.

  • Insurer adjudicates claims for March.
  • Coverage continues for April and May (second and third months of the grace period), but:
    • Insurer notifies physician of the potential for a denied claim.
    • Issuer pends claims for services performed in April and May until individual pays outstanding premiums.

 Example No. 3: Same facts as example No. 2 except that individual does not pay his or her share of premiums for March, April, or May.

  • Coverage is terminated retroactively to March 31.
  • Insurer can deny claims for services rendered during April and May. Physician could then seek payment directly from the individual for any services provided during that time.

As you can see, coverage is available for the first 30 days of the grace period, and the insurer may not recoup. Termination of coverage begins on the 31st day. After that time (day 31 forward), the insurer can retroactively terminate coverage and may recoup payments to the physician.

Of importance is the notation that state law applies to exchange plans (qualified health plans in ACA terminology). Texas prompt pay law says insurers must pay you within 30 days following receipt of a clean claim (45 days if the claim is submitted on paper). Thus, you may receive some payments within the grace period. Texas prompt pay law also permits recovery of overpayments and audits with the ability to recover paid amounts (up to 180 days after payment).  A retroactive termination may cause an overpayment or audit recovery.

 For details, see:

  • Texas Insurance Code, Subchapter C. §§ 1301.103 and 1301.105-1052
  • Texas Insurance Code, Subchapter C-1. Other Provisions Relating to Payment of Claims §§1301.131-132)
  •  77 Federal Register (March 27, 2012), pages 18427 and 18471

NOTICE:  This information is provided as a commentary on legal issues and is not intended to provide advice on any specific legal matter.  This information should NOT be considered legal advice and receipt of it does not create an attorney-client relationship.  This is not a substitute for the advice of an attorney.  The Office of the General Counsel of the Texas Medical Association provides this information with the express understanding that 1) no attorney-client relationship exists, 2) neither TMA nor its attorneys are engaged in providing legal advice and 3) that the information is of a general character. Although TMA has attempted to present materials that are accurate and useful, some material may be outdated and TMA shall not be liable to anyone for any negligence, inaccuracy, error or omission, regardless of cause, or for any damages resulting therefrom.   Any legal forms are only provided for the use of physicians in consultation with their attorneys.  You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought.

Published Nov. 13, 2013   

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Last Updated On

April 17, 2018

Originally Published On

November 13, 2013

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