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Why Insurers Cancel Policies, And What You Can Do About It
Originally published on Wed October 30, 2013 1:33 pm
Health insurers are ending policies for what could turn out to be millions of Americans. The moves have rattled consumers and stoked new debate about the health care law.
No one knows for sure right now how many of the estimated 14 million people who buy their own insurance are getting cancellation notices, but the numbers appear to be big. Some insurers report discontinuing 20 percent of their individual business, while other insurers have notified up to 80 percent of policyholders that they will have to change plans.
Here are some questions and answers about what's going on. See Kaiser Health News for a fuller list.
Why is this happening?
The health care law focused on the individual market because it hasn't worked well for many people, particularly those who are older or have health problems. People with pre-existing conditions were often rejected for coverage, charged more or had their conditions excluded from coverage. Some policies provided only the barest of coverage when someone did fall ill. Starting Jan. 1, insurers can't reject people who are sick or charge them more than the healthy under the Affordable Care Act. They must also beef up policies to meet minimum standards and add benefits, such as prescription drug coverage, maternity care and mental health services.
Why am I getting a cancellation notice?
Most likely your plan didn't meet all the standards of the federal health law. One type of policy being discontinued by Florida Blue, for example, didn't cover hospitalizations or emergency room visits and paid a maximum of $50 toward doctor visits. It's possible your plan also had deductibles and other potential expenses – such as copayments for doctors and hospital care — that exceeded the law's annual out-of-pocket maximum of $6,350 for individuals or $12,700 for families. Some policies that fail to meet the law's standards can still be sold, but only if the insurer decides to continue them and they are grandfathered, meaning they were purchased before March 2010 and haven't been changed substantially since then.
How are insurers picking policies to discontinue?
Kansas Insurance Commissioner Sandy Praeger said insurers can only discontinue entire blocks of business and can't pick and choose certain customers to cancel. Those whose policies are canceled can sign up for a new plan and can't be rejected because of their health. Insurers say they are ending policies that don't meet the law's standards or weren't grandfathered.
My insurer says I can keep my current plan, if I renew before the end of the year. Is that right?
In some states, insurers are offering selected policyholders a chance to renew early, meaning they can continue their existing plan through next year, even if it doesn't meet all the law's standards. If you choose this option, your premium may still go up, but the cause would be medical inflation, rather benefits added because of the health law. Not all states allow early renewals.