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Affordable Care Act "grace period"

Under the Affordable Care Act (ACA), if a patient who receives an advance premium tax credit does not pay his or her health insurance premiums in full, he or she enters a 90-day "grace period." During the first month of the grace period, the patient continues to have health insurance coverage, and the patient's health insurer will pay claims for health care services provided to the patient during that time.  However, if the patient enters the second or third month of the grace period, the health insurer may pend claims for services provided to the patient during that time.  If the patient pays his or her premiums in full before the end of the grace period, the patient retains health insurance coverage for the second and third months of the grace period, and the insurer will pay the pended claims.  But if the patient does not pay his or her health insurance premiums in full before the end of the grace period, the health insurer will not extend coverage for the second or third months of the grace period and will deny claims for services provided during that time.  In this case, a patient is then responsible for paying the entire bill for services rendered during the second and third months.  

Health insurers are required to notify physicians of patients' grace period status. Still, a number of questions concerning the specifics of notification, as well as other issues of concern to physicians, have yet to be addressed.  It is, therefore, important that you find out how your patients' contracted health insurance issuers will provide notice and handle other grace period issues.  It is also vital that your practice proactively take steps to minimize any potential non-payments from health insurers that are due to cancellation of coverage at the end of the grace period.

To help your practice navigate this potential issue, the AMA has created a number of resources (below) to take you step by step through key aspects of the grace period.

Visit the AMA's ACA website for additional resources.

Resources for physician practices

The "Step-by-step guide to the ACA 'grace period'" outlines key questions to ask health insurers about how your practice will be notified of grace period status, your rights with respect to payment and recoupment, and more. It also includes information about how you can communicate with your patients who are in the grace period. 

The "Grace period collections policy checklist" provides help to physician practices for amending existing collections policies or creating new policies that anticipate and address potential grace period concerns.

The "Model financial agreement language for patients receiving Advance Premium Tax Credits" provides language relating to the grace period that you may consider adding to your existing patient financial agreements.

The " Sample letter: Grace period notice to patients" offers a template to provide to patients receiving an advance premium tax credit, explaining what the grace period is and what patients need to do if they are in the grace period.

Resources for legislators and medical societies

States are heavily involved in ACA implementation, and in particular, with health insurance exchanges. To help states address some of the key issues raised by these exchanges, the AMA has created six model bills for legislators and medical societies to use in their advocacy on state exchange implementation.  One of these model bills, titled, "Physician Notification of Patients in Health Insurance Exchange Grace Period Act", would require health insurers to provide physicians extensive information as part of the notification that a patient has entered the grace period. Failure to notify physicians as required under the bill would result in a binding eligibility determination upon the insurer and prevent the health insurer from subsequently canceling coverage.

Resources for technical staff, vendors and regulators

"Health insurance exchange premium payment grace period: Best practices for electronic notifications" is a technical document representing best practices identified by the AMA as part of its effort to ensure that physicians receive this critical notification in a standard, electronic format. Potential readers of this document include health plan electronic data interchange staff, vendors, regulators, and physician group and other health care provider technical staff.