Insurance Cancellations and The President’s Response

Over the past sev­er­al months, many peo­ple have received can­cel­la­tion notices from their health insur­ance car­ri­ers, often accom­pa­nied by the expla­na­tion that their cur­rent insur­ance plan does­n’t meet the min­i­mum require­ments of the Afford­able Care Act (ACA) sched­uled to take effect Jan­u­ary 1, 2014. In many instances, insur­ers are offer­ing to replace the can­celled insur­ance plan with more expen­sive cov­er­age that pre­sum­ably offers more ben­e­fits.

The pres­i­dent, in response to grow­ing num­bers of con­sumers whose poli­cies have been can­celled, announced that insur­ers could (though they need not) elect to allow con­sumers to keep non­com­pli­ant poli­cies through 2014. On Novem­ber 14, 2013, in a let­ter to state insur­ance com­mis­sion­ers, the Cen­ters for Medicare & Med­ic­aid Ser­vices (CMS) out­lined the con­di­tions insur­ers must meet in order to con­tin­ue offer­ing non­com­pli­ant poli­cies. The let­ter is avail­able on the CMS web­site, www.cms.gov.

 

Grandfathered health insurance plans

The ACA includes pro­vi­sions that allow con­sumers to keep their cur­rent health insur­ance. The ACA pro­vides that poli­cies in place on March 23, 2010 (the date of enact­ment of the ACA) that have not been mate­ri­al­ly changed, and that meet cer­tain min­i­mum cov­er­age and oth­er require­ments of the ACA, may be “grand­fa­thered” even though they do not meet all of the ACA’s require­ments for health plans. But it is impor­tant to note that the ACA does not require that insur­ers con­tin­ue to offer grand­fa­thered plans; insur­ance com­pa­nies can stop offer­ing these plans at their dis­cre­tion.

Accord­ing to the gov­ern­ment health-care site, www.healthcare.gov, there are two types of grand­fa­thered plans: job-based grand­fa­thered plans, which allow for enroll­ment after March 23, 2010, and indi­vid­ual grand­fa­thered plans, which can’t have new enrollees after March 23, 2010 (insur­ers can con­tin­ue to offer grand­fa­thered plans to indi­vid­u­als who were enrolled on March 23, 2010).

A grand­fa­thered plan can lose its sta­tus if it makes sig­nif­i­cant changes, such as sig­nif­i­cant­ly reduc­ing ben­e­fits, decreas­ing the annu­al dol­lar lim­it of cov­er­age, or increas­ing out-of-pock­et spend­ing above what it was on March 23, 2010.

 

So can I keep my current insurance plan?

The pro­vi­sions of the ACA allow­ing for grand­fa­thered plans pro­vide the basis for the premise that con­sumers can keep their cur­rent health insur­ance if they like it. Yet, as we have seen, insur­ers can choose to can­cel non­com­pli­ant plans even if they are grand­fa­thered. So if you like your cur­rent insur­ance plan, but it does­n’t meet all of the require­ments of the ACA, the bot­tom line is this:

  • If your plan is grand­fa­thered, you can keep it–unless your insur­er decides to can­cel it, which it can do
  • If your plan isn’t grand­fa­thered, you still may be able to keep it, at least through 2014–unless your insur­er choos­es to can­cel it