President Obama recently made two big announcements: 1) that insurance companies could extend existing non-ACA-compliant coverage to current policyholders, and 2) that the December deadline to purchase a policy on federally run exchanges would be extended.
In response to millions of policyholders receiving cancellation notices from their insurance companies, the president made the decision to allow these customers to continue with their current coverage (or comparable coverage) for another year, effectively delaying their enrollment in an ACA-compliant health plan.
However, Obama made it clear that while he encouraged insurance companies to either reverse policy cancellations or offer similar non-ACA plans, he does not have the legal authority to require them to follow his suggestion. The best he can do beyond making the suggestion is to ensure that individuals who had coverage canceled would not pay a penalty for being uninsured.
For those who will be purchasing an ACA plan now, the president extended the deadline to enroll by eight days, from December 15 to December 23, 2013, to allow consumers shopping on the exchanges extra time to obtain a policy with an effective date of January 1, 2014.
This continued tweaking of the rules has been met with confusion and uncertainty, just like many other aspects of the Affordable Care Act.
Insurance Commissioners May Allow Canceled Policies to Renew, But Carriers Might Not
Since insurance is regulated by the insurance commissioners of each state, Obama had to leave the final decision up to them as to whether they would allow insurance carriers to continue coverage or offer non-ACA coverage. In turn, the commissioners have the option of allowing insurance companies to decide for themselves how they want to handle the president’s announcement.
At this point, only a few states have made definitive decisions on whether or not insurance carriers should follow President Obama’s suggestion that non-ACA plans be renewed or made available.
States That Have Agreed to Allow Non-ACA Renewals
Some states have already decided that they will allow insurance companies to either renew existing policies late or offer similar plans that do not comply with the Affordable Care Act mandates. As of this publication, these states include:
- North Carolina
Although these states are agreeable to allowing late renewals of coverage that has already been canceled, each carrier can still make its own decision about extending coverage. Texas has never enforced or supported the Affordable Care Act, so insurance companies in that state will be able to make decisions based on what will work best for their business.
States That Are Not Agreeing to the Extension
The states that have already declared that they will not renew canceled policies, regardless of President Obama’s suggestion to allow late renewals, are as follows:
- Rhode Island
In these states, policy cancellations will stand and no similar non-Affordable Care Act plans will be offered. The general consensus in each of these states is that at this late date, making more changes to the health insurance industry would create even larger long-term problems and confusion. Instead, they have decided to keep moving forward with the health care reform mandates and will work together to fix any issues that may arise.
The only exception to this is Vermont, as prior to Obama’s announcement the insurance commissioners had already made the decision to allow renewals of existing health plans through March 31, 2014. Since they had already made this concession, they were not willing to extend the date even further.
States That Have Made a Formal Announcement
As of November 25, three states have made the announcement that they will, in fact, be allowing renewals of existing policies. These states are Illinois, Oregon and Nebraska. However, Blue Cross Blue Shield of Nebraska is the only carrier as yet that has specifically said it will either renew coverage or offer comparable plans. As we hear from other companies, we will keep you informed.
Any state not mentioned above as being either for or against President Obama’s decision to allow policy renewals has either not provided any data or has claimed to be undecided. We will report back to you as these states make a decision one way or the other.
In the meantime, please remember that even if you live in one of the states where existing policies will be renewable, it does not mean you are required to stay with your current plan. In addition, just because your state itself is allowing policies to be renewed, this does not mean the insurance carriers will.
We do not expect the majority of cancellations to be extended or replaced with non-ACA plans because the legality of this has not been made clear, and despite the president’s approval, this would be a risky move for the insurance companies. It may also simply be too difficult to reverse course and reissue these plans in such a short period of time.
What About Self-Operated State Exchanges?
Keep in mind that the two announcements the president made regarding Affordable Care Act deadline extensions and policy renewals only apply to those states that are offering insurance on the federal Health Insurance Marketplace. States that operate their own exchange will decide independently whether or not to follow suit.
I don’t think that anyone should make a purchase on any state or federal health exchange. You should always talk to an insurance professional to make sure your existing plan offers the best coverage for you, and for the best possible price.