Commissioner Reaction Mixed to Policy Change on Existing Health Policies

The Obama administration has sent guidance to all state insurance commissioners regarding the delay in compliance with provisions of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) regarding individual and small group policies that are not in compliance with new health insurance plan benefits and protections. The guidance states that “health insurance coverage in the individual or small group market that is renewed for a policy year starting between January 1, 2014, and October 1, 2014, and associated group health plans of small businesses, will not be considered to be out of compliance” with PPACA’s insurance market reforms.

Under the guidance, insurance companies who have sent cancellation notices to people with individual health insurance policies have the option to continue offering those plans in 2014, under specified conditions. These conditions include (1) the insurance coverage must have been in effect on October 1, 2013; (2) insurance companies that extend policies have to notify existing customers of what protections and new benefits the existing plans do not include as wells as letting them know about new health insurance options and possible premium subsidies that are available in the new federal or state-based health insurance exchanges.

The guidance indicates that the administration will consider the impact of this transitional policy in assessing whether to extend it beyond the end of 2014.

Insurance Commissioner Response

The response from state insurance commissioners has been mixed. California Insurance Commissioner Dave Jones requested that “all California health insurers and HMOs provide current customers the option to renew their existing non-grandfathered policies for 2014 and issue new notices to policyholder advising them of their options.”

Florida state insurance commissioner Kevin McCarty said, “Most health insurers in Florida have already voluntarily extended coverage for affected policyholders through 2014. However, for those companies that did not, the Office pledges to work with any company that chooses to continue coverage in accordance with the President’s transitional policy, and to facilitate the continuation of coverage for Floridians.”

Mike Kriedler, insurance commissioner for the state of Washington, citing the insurance market reforms that have already been instituted in the state and the success of its state-run insurance marketplace, said that “we will not be allowing insurance companies to extend their policies.” He noted there are 46 individual health plans for sale in Washington’s exchange and 51 plans available outside the exchange.

Louisiana Insurance Commissioner Jim Donelon, who is also president of the National Association of Insurance Commissioners, said that the Obama administration’s decision “continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.”

Other state insurance commissioner websites can be easily accessed through the National Association of Insurance Commissioners website.