President Obama announced yesterday that insurance companies that offer individual plans can reinstate cancelled plans—even if those plans do not conform to market reforms effective January 1, 2014—so that individuals may keep their prior health benefits for one more year. What this actually means will be determined over time.
The Department of Health and Human Services sent a memo to state insurance commissioners granting them authority to allow insurance companies to reinstate cancelled plans for individuals and small groups. Insurance companies will assess their options and make their own decisions about feasibility of reinstating cancelled plans. To be eligble for this “transition relief,” individuals and businesses must have purchased policies on or before Oct. 1, 2013. This relief does not extend to grandfathered employer plans.
Health insurers are required to notify policyholders of:
- benefits they might lose by staying in their plan;
- which of the specified market reforms would not be reflected in any coverage that continues;
- their potential right to enroll in health coverage on an exchange and possibly qualify for federal subsidies;
- how to access such coverage through an exchange; and
- their right to enroll in health insurance coverage outside of an exchange that complies with the specified market reforms.
Insurers must notify individuals whose plans have been cancelled as soon as reasonably possible, and those whose plans will soon be cancelled must be notified before cancellation.
Today, the House voted to approve a bill to make this change allowing individuals to keep non-conforming plans permanent. The bill has not gone to the Senate, however, and the White House has threatened a veto.
The precise impact to employers, if any, cannot be determined at this time. We are monitoring developments and will update members of the potential impacts, once they become known. This announcement only affects plans cancelled (or scheduled to be cancelled shortly) by insurance companies that have yet to choose whether to offer this reinstatement transition. If employees ask about the announcement, it is best to explain that the situation is still evolving and you are working to understand its impact.