In response to the backlash to his earlier statements that people will be able to keep their existing health insurance policies if they so choose, in a recent press statement President Obama noted that insurance companies offering individuals and small businesses plans that do not meet the minimum standards and requirements of the Affordable Care Act (ACA) will be allowed to renew those policies through October 1, 2014. This means that a policy renewed on October 1, 2014 for a 12 month period (standard policy term in this market) would be in existence until September 30, 2015.
The coverage in question must have been in effect as of October 1, 2013, and insurers are required to notify policyholders about which of the ACA’s market reforms will not be reflected in their coverage. Examples include coverage of the ACA’s essential health benefits, the prohibition on pre-existing condition exclusions, and new rules surrounding how insurers may set premiums. Although the policy permits states to allow insurance companies to offer these plans, it does not require states — or insurance companies — to offer these plans. It remains to be seen what individual insurers will decide to do.
Reports of the number of Americans who have had their health insurance policies cancelled as a result of the new health care regulations under the ACA range from 3.5 million to 4.2 million. Of those, 1 million cancellation notices were sent to California residents.
While widespread cancellations of existing polices have been staved off for one more year, individual states maintain the authority to decide whether insurers may continue offering health insurance plans that currently do not meet ACA standards. In addition, even if allowed to continue offering such plans, insurers are not required to, and many have voiced concern with the unintended consequences of this transition policy.