New federal PCIP plan established; contains employer “anti-dumping” rule

The federal Patient Protection and Affordable Care Act (PPACA) requires the Department of Health and Human Services (HHS) to establish a temporary high risk health insurance pool to provide affordable health coverage to individuals who are otherwise unable to obtain coverage due to a pre-existing condition. On July 30, 2010, HHS issued an interim final rule to implement this program, known as the Pre-Existing Condition Insurance Plan (PCIP) (75 Fed Reg 45014, July 30, 2010). In order to be eligible for the program, an individual must be a citizen or national of the United States or lawfully present in the United States, must not have been covered under creditable coverage during the six-month period prior to applying for coverage under the PCIP, and must have a pre-existing condition. The new rules set forth enrollment and disenrollment processes for the plan, required benefits, premiums, cost-sharing and other plan details. The PCIP will continue until January 1, 2014, when the state-based health insurance exchanges are required to be operational.

An important piece of the rules for employers to be aware of is what is known as the “anti-dumping” rule. This rule prohibits employers, plans and insurers from singling out high-risk individuals and offering them incentives to disenroll from employer-sponsored coverage in favor of coverage through the PCIP. If HHS determines that “dumping” has occurred, it will bill the plan for any medical expenses incurred by the PCIP for that individual and it will refer the plan to other state or federal authorities for further enforcement action. 

Tips: The same type of “anti-dumping” rule, prohibiting employers from offering incentives to opt off their group health plan in favor of government-sponsored coverage, applies to individuals who are eligible for Medicare and Tricare, but guidance has been issued indicating that an employer who offers the incentive under its Section 125 cafeteria plan does not violate the anti-dumping prohibition if the incentive is available to all participants, regardless of Medicare or Tricare eligibility. It is unknown whether a similar rule applies for individuals eligible for the PCIP. For more information about the PCIP, check out the HHS Fact Sheet.