Individuals And Small Businesses With Cancelled Health Coverage Are Given Transitional Relief

President Barack Obama announced on November 14, that in order to address situations in which some individuals and small businesses have been notified by their health insurers that their plans are being terminated, (often because they no longer meet the Patient Protection and Affordable Care Act’s (ACA) requirements to cover basic benefits like prescription drugs or doctors’ visits), the Administration is instituting a transitional policy whereby health insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage. Under this transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between Jan. 1, 2014, and Oct. 1, 2014, and associated group health plans of small businesses, will not be considered to be out of compliance with certain ACA market reforms, but only under specified conditions. The Center for Consumer Information and Insurance Oversight (CCIIO) has stated in a letter to insurance commissioners that it will “consider the impact of this transitional policy in assessing whether to extend it beyond the specified timeframe.”

The specified conditions are the following: (1) the coverage was in effect on Oct. 1, 2013; and (2) the health insurance issuer sends a notice to all individuals and small businesses that received a cancellation or termination notice with respect to the coverage, or sends a notice to all individuals and small businesses that would otherwise receive a cancellation or termination notice with respect to the coverage, that informs them of: (A) any changes in the options that are available to them; (B) which of the specified market reforms would not be reflected in any coverage that continues; (C) their potential right to enroll in a qualified health plan offered through a health insurance marketplace and possibly qualify for financial assistance; (D) how to access such coverage through a marketplace; and (E) their right to enroll in health insurance coverage outside of a marketplace that complies with the specified market reforms.

The CCIIO points out that grandfathered health plans are generally not subject to most market reforms, so they have no need for the above-detailed transitional relief.

Where individuals or small businesses have already received a cancellation or termination notice, the issuer must send this notice as soon as reasonably possible. Where individuals or small business would otherwise receive a cancellation or termination notice, the issuer must send this notice by the time that it would otherwise send the cancellation or termination notice. Also, the administration is encouraging state agencies responsible for enforcing the specified market reforms to adopt the same transitional policy with respect to this coverage.

Not everyone is a fan of the transitional relief. In a statement, America’s Health Insurance Plans’ (AHIP) president and CEO Karen Ignagni warned that, “Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers. Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers. Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.”

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