The Domino Effect of President Obama Allowing the Continued Sale of Canceled Plans

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On November 14, 2013, President Obama held a press conference to announce that the health plans currently being canceled by health insurance companies because they violate coverage standards within the Affordable Care Act (ACA) may continue to be sold to current enrollees for one more year.  The ACA created new coverage standards that require a comprehensive set of benefits, modified community rating standards, guaranteed availability and renewability of coverage, nondiscrimination, and a prohibition of pre-existing condition exclusions.  There is little doubt this decision was made to avoid the backlash the administration received from consumers having their plans canceled.

This transitional relief requires the state governor or insurance commissioner to allow these policies to continue to be sold.  Insurers are not required to comply and renew these plans.  Insurers that decide to renew these plans must inform consumers of the alternatives within the ACA, and specify the areas in which that policy falls short of ACA approved plans.  For individuals and small groups that have already received their cancellation, the insurer must send this notice informing consumers of their options as soon as reasonably possible.  If the notice has not been sent, the insurer must send the notice by the time they planned to send the cancellation.

Individuals now able to continue their current policies will likely be re-underwritten and may face a premium increase, and still must plan to lose that coverage next year.

Insurance rates for the public exchange were created by insurers assuming those canceled policies would lead to new consumers purchasing coverage on the exchange.  Insurers already on the public exchange may consider no longer participating due to these disruptions in the risk pool.

Similarly, in Wisconsin, Governor Walker requested a special session with the state legislature to extend the January 1, 2014 termination of the state’s Health Insurance Risk Sharing Plan and BadgerCare Plus to March 31, 2014 over concerns that those affected would not be able to get coverage via the federal exchange website effective January 1, 2014.