Two Critical Impacts of 2021 Special Enrollment Period Gains

Higher demand on customer service

If there was ever a time for states to invest in their marketplace customer service, it is in 2021. 

Millions of individuals who are considering a marketplace health plan with a lower premium will require assistance navigating the new benefits and unusual circumstances.

“Whether the new enrollees are coming from employer plans—folks who lost their coverage during the pandemic—or they are people who were uninsured or now newly-able to be insured because of the subsidy increases, if they do not have familiarity with this type of insurance then there is a real learning curve for the enrollees,” Simon said. 

“So that could be a resource demand throughout the year that usually is focused on the first quarter of the year.”

Recognizing the strain that this special enrollment period could place on state health insurance marketplaces, CMS recently announced a $20 million grant available to states to help improve the enrollment process.

While CMS emphasized how states could use these funds to modernize their enrollment technologies, the agency also noted that awardees could put the funds toward enrollee education programs.

There are a couple of unexpected effects that consumers may encounter when switching health plans mid-year.

Members should be made aware that their deductible could reset if they switch plans mid-year. Even if a member had nearly fulfilled the out-of-pocket deductible costs for her original health plan that started on January 1, 2021, when she switches to a new plan during the special enrollment period her deductible will probably return to zero.

The only exception to this is for specific states and payers that have chosen to make allowances. In some states, members who switch between ACA health plans but stay within the same payer company can carry over the deductible payments from the previous health plan.

Additionally, enrollees who are new to the ACA marketplace might be unaware of certain benefits and, as a result, may not fully leverage the health plan’s services, Simon pointed out. 

For example, preventive care services are covered under the ACA but new enrollees who are unaware of that coverage may continue to forego preventive services in order avoid perceived costs. They might not realize that the cost for preventive services will not factor into out-of-pocket healthcare costs.

Unexpected changes to risk adjustment, medical loss ratios

Not only will the mid-year special enrollment period impact the present insurance landscape, but it will continue to have an influence in the coming years.

“Insurers should be looking at their mid-year enrollment trends this year and getting out ahead of whether they need to revisit the assumptions they made about risk adjustment and medical loss ratio when they filed their 2021 plans before the American Rescue Plan was passed,” Simon noted.

Special enrollment periods on the ACA marketplaces are nothing new, nor is the problem that they pose to risk adjustment a novel issue.

In 2017, CMS tried to compensate for the impacts of special enrollment periods—which resulted in underpayment for part-year enrollees—by boosting payments for enrollees who had been on a plan for less than a year.

According to a Health Affairs article, the move reduced underpayment due to special enrollment periods, but it did not eradicate the issue altogether. The authors recommended increasing payments for special enrollment period enrollees in order to disincentivize payers from setting up barriers to gaining special enrollment period enrollees.

However, the risk adjustment for 2022 is especially fraught due to factors related to—but not limited to—the coronavirus pandemic. 

When payers set their rates for 2021 in the fall of 2020, the first vaccine had not yet been been approved in the US, the presidential and congressional elections had not yet been decided, and the American Rescue Plan was not in place. 

All of these factors ended up influencing the ACA marketplace. And now, stakeholders must add strong special enrollment period gains to the list as well.

“In some ways, it's going to be difficult to untangle some of the impacts of these mid-year enrollees on plans because there were so many other uncertainties that we started the year with,” Simon said.

While the rates must remain in place, Simon expressed confidence that CMS would listen to payers that identified specific downstream impacts and that made recommendations. She expected that CMS might release guidance around managing the effects on risk adjustment and medical loss ratios.

It would be useful for payers to know which metal tiers will receive the most enrollees. However, due to the unusual circumstances, this information would be difficult to predict.

“The important thing for plans to look at is how these American Rescue Plans subsidies are changing premium obligations for individuals and families,” Simon recommended. “Because the subsidies are much more generous than they were in the past, we can't assume what metal level people will be going into.”

Simon expected that, since a large group of individuals will be eligible for fully subsidized silver plans, the silver tier plans might receive the bulk of the enrollment boost during the special enrollment period.