State Insurance Commissioner Issues Advisory to Consumers of Cancelled Plans

The confusion surrounding the implementation of the Affordable Care Act (ACA) (P.L. 111-148) has received a lot of attention from the media as of late, but it is hard to tell what can be chalked up to hype or fact. One source of grief that has surfaced is reports that current individual policyholders not receiving coverage through an employer will see their policies cancelled as a result of the ACA and they are receiving letters to that effect from their insurance providers. One state, Washington, has even issued a consumer report warning of these letters and explaining why their policies are being phased out.

Basic Essential Benefits

Under the ACA, starting for 2014, health plans are required to cover a certain set of “basic essential benefits,” including prescription drugs,  free preventive care. maternity and newborn care, emergency care, and hospitalization. Beyond these, plans are able to offer more coverage, but not less. This is the reason that many individual policies are being cancelled. Some people might be more than happy with their individual coverage (and costs) under their current policy, but if that plan does not provide the basic essential benefits, it will have to change, leading to higher premiums than policyholders are paying today.

A Cautionary Tale

Some reports of the confusion surrounding the cancellation of health plans have surfaced. One individual in Seattle, Washington, reported receiving a letter from her insurance company saying that her plan would be cancelled, but that they had a new plan for her. To obtain coverage, she was told to do nothing. Only after the fact did she learn that the premiums for her and her teenage daughter would be $300 more per month than what she was previously paying for coverage.

Advice to Consumers

To address some of these reports, on November 5, 2013, the Washington State Office of the Insurance Commissioner issued a consumer report to inform residents of their options. “Premiums will change for some plans,” the report said, “But if you’re [sic] received a notice from your insurance company, it does not mean you have to stay with whatever they offer. You can shop around for plans, either in the new Exchange – or from insurers selling outside of the Exchange.”

The lesson–be wary of possible policy changes, particularly with regard to premium increases.