As litigation surrounding the Affordable Care Act and its mandates abounds, the Iowa Farm Bureau announced three new health plans that will deny coverage to individuals with preexisting conditions (a denial prohibited under the ACA). These ACA-noncompliant plans are sanctioned under an Iowa law we wrote about in April that permits certain types of health plans to shirk ACA requirements.
The Iowa legislation, signed by Governor Kim Reynolds on April 2, 2018, permitted the Farm Bureau to partner with a designated insurance company to create self-funded health benefit “arrangements” that are not technically health insurance plans. This technicality allows the “arrangements” to avoid state regulation and ACA mandates, like essential health benefits.
In a press release issued October 3, the Farm Bureau announced that it will start taking applications for its noncompliant plans next month. While the press release states that the plans will comply with the ACA in some respects — most notably covering maternity, mental health and substance abuse and prescription drugs, which are essential health benefits under the ACA — the plans will deviate from the ACA in one major respect: Applicants must pass underwriting to qualify for enrollment. In other words, they can be denied coverage for preexisting conditions.
A pre-enrollment checklist for the plans asks applicants to disclose any medical conditions within the past five years and to release medical records for those conditions. The checklist specifically asks applicants about 16 categories of conditions, including diabetes, drug and alcohol, brain, heart, liver, lung and mental health issues, among others. The form also requires records of prescription drug use for the prior two years. According to the Des Moines Register, Farm Bureau Vice President Steve Kammeyer said in an interview that he was unsure which health conditions might preclude coverage for an individual. See “Cheaper Farm Bureau Policies Could Turn Applicants Away For Pre-Existing Issues,” Des Moines Register (Oct. 4, 2018).
Kammeyer also said that he could not predict enrollment numbers. The plans will be available to residents who do not qualify for employer-based insurance or coverage through Medicare and Medicaid. Some have expressed concern that consumers might opt for the plans, with their cheaper premiums, without realizing that they could qualify for ACA subsidies for ACA-compliant plans. Less than half of those eligible for subsidies in Iowa obtained them, one of the lowest rates in the country.
We will continue to watch Iowa and its new noncompliant plans. They may serve as an important test run of state attempts to shirk ACA requirements.
Barak A. Bassman and Sara B. Richman are partners in Pepper Hamilton’s Health Sciences Department, a team of 110 attorneys who collaborate across disciplines to solve complex legal challenges confronting clients throughout the health sciences spectrum. Leah Greenberg Katz is an associate in the Health Sciences Department.
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