In late 2013, the administration announced a change that allowed insurers to renew health policies that do not meet the Affordable Care Act’s (ACA) coverage standards. Insurers were encouraged—but not required—to allow consumers to reenroll in these policies after January 1, 2014, the start of the most critical market reforms under the ACA. The administration subsequently allowed insurers to maintain noncompliant policies through 2017, if permitted by the states. Ultimately, most states allowed insurers to continue offering noncompliant policies, although not all have agreed to do so through 2017.
The administration’s decision to allow the extension of noncompliant policies was prompted by the ire of millions of consumers over the cancelation notices they received from their insurers. This problem was compounded by the fact that, at the time, consumers were unable to easily shop for more comprehensive and often more affordable coverage because of significant problems with the federal HealthCare.gov website and some state marketplace websites.
Last year many insurers took advantage of the ability to renew noncompliant policies, and some even withdrew the cancelation notices they had sent. But while this transitional guidance reduced the number of consumers facing policy cancelation in the early days of full implementation of the ACA, it only delayed the inevitable, as many of these same consumers were in policies scheduled to expire by the end of 2014.
Under the administration’s transitional guidance, all noncompliant policies must be discontinued in 2017. However, a number of insurers throughout the country have, in recent months, decided to discontinue these policies earlier. This should not be surprising, since insurers are constantly reevaluating their product lines, often based on financial and business considerations. For example, in Alaska, Moda recently canceled noncompliant policies affecting about 800 consumers in order to avoid a divided risk pool for the company this year. Similarly, in Indiana, Anthem BCBS noted a “lack of consumer demand” and a consumer “preference to go to the exchange” in support of discontinuing policies for about 30,000 consumers. In Colorado, Humana sent out cancelation notices to 18,000 policyholders, prompting the state’s insurance commissioner to note that insurers have the right to discontinue products for business reasons such as “updating their product portfolios” or “modifying their product offerings.”
While insurers have always been able to discontinue plans, the administration now requires insurers to inform consumers, at least 90 days prior to the end of coverage, that their current health insurance policy is being discontinued and that they have other health coverage options. Specifically, insurers must tell affected consumers of their right to buy any available individual market policy through the marketplace or outside of the marketplace during open enrollment or, if the policy is being discontinued outside of open enrollment, during a special enrollment period. In addition, insurers also are required to share other critical information with consumers, such as informing them of their ability to apply for financial assistance to pay for private coverage or determine Medicaid eligibility through the marketplace as well as where to get help doing so. Many consumers who lost their plans last year are eligible for financial assistance to help pay for premiums and cost-sharing through HealthCare.gov or the state marketplaces.
The Affordable Care Act seeks to remedy shortcomings of the individual market that imposed high costs on some consumers and locked others out of the market entirely. The decision to allow noncompliant policies to continue meant a delay in these reforms for millions of Americans. However, consumers facing discontinuation of their coverage are now able to compare plans and make a decision to purchase one knowing that it meets all the consumer protections under the ACA, such as guaranteed issue of coverage for those with preexisting conditions, premiums not based on health status or gender, and a comprehensive set of benefits and services, such as maternity coverage, mental health benefits, and pharmaceutical coverage.