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HHS: Insurers in Individual Market Need Not Enroll Kids All Year

By John Reichard, CQ HealthBeat Editor

July 28, 2010 – The Department of Health and Human Services (HHS) issued a clarification Tuesday of its rules requiring insurers in the individual market to accept children with pre-existing medical conditions, saying they would not have to offer insurance at all times during the year.

The statement — inserted in the “questions and answers” section on an HHS website devoted to the rules — follows comments last week by some state insurance commissioners that insurers were dropping kids-only coverage because of worries about “adverse selection” (See related story, CQ HealthBeat, July 23, 2010).

Commissioners said parents could simply wait until children get sick to buy coverage and then stop paying for it after they got well, leaving insurers without premiums from good risks to balance out the costs of medical payouts for sick children.

“To address concerns over adverse selection, issuers in the individual market may restrict enrollment of children under 19, whether in family or individual coverage, to specific open enrollment periods if allowed under State law,” the website says. “This is not precluded by the new regulations.”

“For example, an insurance company could set the start of its policy year for January 1 and allow an annual open enrollment period from December 1 to December 31 each year. A different company could allow quarterly open enrollment periods. Both situations assume that there are no State laws that set the timing and duration of open enrollment periods.”

Scott Serota, chief executive of the Blue Cross and Blue Shield Association, hailed the clarification. He said in a news release that “we have been working closely with the administration to identify potential problems and seek solutions to ensure smooth implementation of the new healthcare reform law.
Today’s clarification is a good example of how we can successfully implement the new law by working together.”

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