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Consumer Guide To Obama's Plan For Canceled Health Policies

Posted: November 15, 2013

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The president offered a fix for people whose insurance coverage has been canceled because it didn't meet the minimum standards of the federal health law. But will insurers follow through? And even if they want to, will state regulators let them?

President Obama laid out a plan Thursday to allow people who received insurance cancellation notices to keep their coverage, at least for a while.

President Obama laid out a plan Thursday to allow people who received insurance cancellation notices to keep their coverage, at least for a while. Charles Dharapak

President Obama's pledge to Americans that they could keep their health plans if they liked them began to backfire last month.

Insurers sent cancellation letters to hundreds of thousands of customers holding individual and family policies. Their plans wouldn't comply with the law come Jan. 1.

Bill Clinton even called on his fellow Democrat to honor his promise.

Now Obama has apologized. And on Thursday he offered what he called "an idea that will help" fix the problem, allowing insurers to renew existing plans even if they don't include the full menu of health law benefits.

But will insurers follow through? And even if they want to, will state regulators let them? Here are some questions and answers about the Obama course change.

What did Obama propose exactly?

He's allowing insurers to extend existing plans for one more year for current customers. Policies renewing before the end of this year would last until late 2014. Policies that expire in 2014 would be permitted to extend into 2015. In many cases the existing plans have been less expensive than policies with more benefits scheduled to take effect next year.

If carriers do renew, they must disclose where the benefits of the existing plan fall short of those benefits required by the Affordable Care Act. It's possible the insurers will charge more for these renewed policies.

Who is affected?

The proposed change affects only individuals and families buying plans directly from insurers and who received cancellation notices in recent weeks. The administration is also allowing extension of small-employer plans that didn't meet ACA requirements.

Consumers covered by Medicaid, Medicare or large employers are unaffected.

What should I do if I got a cancellation notice?

Check with the insurer to see if it will be renewing canceled policies. Even if it is, you should review alternatives offered in the health law's online marketplaces to see if they offer better coverage. That's especially true if you have a chronic illness.

Insurance sold through the marketplaces also comes with substantial government subsidies for those who qualify. By contrast, the noncompliant plans the administration is allowing to be stretched into next year aren't eligible for subsidies.

Who decides whether I can renew a policy slated for cancellation?

Insurers and state regulators. Neither Obama nor the federal Department of Health and Human Services can force extension of the plans.

Washington state Insurance Commissioner Mike Kreidler said he would not allow insurers to extend the policies "in the interest of keeping the consumer protections we have enacted."

How have insurers reacted?

Many wanted to learn more about Obama's offer. BlueCross BlueShield of North Carolina, which was canceling about 200,000 individual policies at end of the year, said it was interested in the option but not ready to commit.

Florida Blue says it will allow customers to renew 2013 policies, a decision that could affect as many as 300,000 people over the next year and immediately affects 40,000 people who were losing their existing plan at end of this year.

Some insurers are urging state regulators to disallow the extensions. In California, the state should "stay the course and transition people into more comprehensive policies," said Patrick Johnston, CEO of the California Association of Health Plans.

A group of insurance executives was reportedly set to meet Friday with the president at the White House.

Copyright 2014 Kaiser Health News. To see more, visit http://www.kaiserhealthnews.org/.

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