CMS Lets Health Insurers Cut Premiums During Pandemic

August 5, 2020



Elizabeth (Izzy) Montgomery, MPA
Policy Analyst

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In response to the COVID-19 public health emergency, the Centers for Medicare and Medicaid Services (CMS) has announced a temporary policy allowing health insurers to provide premium reductions to consumers.

Announced on Tuesday, August 4, the new policy permits individual and small-group insurers to provide short-term reductions in health insurance premiums to their policyholders. CMS said the policy is intended to support continuity of coverage for families and small employers who may struggle to pay premiums because of illness or loss of income resulting from the COVID-19 pandemic.

Under federal law, insurers are barred from making premium adjustments in the individual and small group market once a new benefit year has begun. CMS said it will relax the enforcement of applicable regulations to allow these premium reductions, when consistent with state laws, for one or more months of 2020 coverage. The policy will be in place through the end of 2020.

CMS has previously offered flexibilities and relaxed enforcement policies in other areas, including allowing issuers to prepay some or all of the medical-loss ratio (MLR) rebates their enrollees would be due to receive for the 2019 reporting year.

The MLR requirement in the Affordable Care Act directs issuers to spend 80% to 85% of premium dollars on medical care. If issuers fail to meet this threshold, rebates must be returned to policyholders.

ACHI Health Policy Director Craig Wilson recently wrote an op-ed on the MLR requirement and rebates in the context of the COVID-19 pandemic.

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