The Navigator was scratching his head. The Affordable Care Act (ACA) had banned insurance companies from discriminating against people with pre-existing conditions. How was it possible that his new client had a letter from his insurer, refusing to cover care for his HIV? The Navigator reached out to CHIR experts for answers, which we’re able to provide thanks to a Robert Wood Johnson Foundation-funded project to provide technical assistance to Navigator grantees in 5 states.
The Navigator’s client was a man who had recently gotten a new job, had been uninsured, and was excited to enroll in his company’s health plan. He was therefore shocked and disappointed by the letter from his employer’s insurance company, alerting him that pre-existing conditions, such as his HIV, were excluded from his coverage.
The “Early Renewal” Loophole in the ACA
Unfortunately, as we told the Navigator, his client had likely enrolled in a group plan that had “early renewed” in 2013 in order to escape complying with the consumer protections in the ACA, which went into effect January 1, 2014. This means that the plan does not need to comply with the ACA’s ban on pre-existing condition exclusions. Not only were early renewals legal, but the Obama administration has allowed these 2013 plans (often called “transitional” or “grandmothered” policies) to continue to be renewed through October 1, 2016.
Even worse, because this client has an offer of employer-based coverage, he is not eligible for premium tax credits on his state’s health insurance marketplace – even though that employer coverage does him very little good.
Let’s Say “Good Bye and Good Riddance” to Non-Compliant Plans
Some ACA supporters have been nervous that we’re in for another round of plan cancellations this fall, reviving charges that President Obama lied when he said, “If you like your health plan, you can keep it.” Even though most states have allowed non-compliant health plans that renewed in 2013 to extend another year, some insurance companies have already decided to cancel them. One company that did so, Moda Health in Alaska, cited concerns about a divided risk pool, and called it a “business decision.” Another company, Blue Cross Blue Shield of Texas, recently announced its decision to cancel grandmothered policies effective December 31, 2014. In an email to brokers, they said it was “based on the ability to administer and provide a comprehensive benefit plan.” The company called on brokers to help transition their clients to ACA-compliant plans.
These companies could have chosen to renew these non-compliant plans, because in both cases, their state regulators permitted them to do so. In all cases, however, enrollees will be able to move seamlessly into a new plan, and most will find a better value than anything they’ve been able to buy previously. For those in the individual market, they will no longer have to worry that if they get sick, critical benefits won’t be covered or their insurer will jack up their premium – that’s prohibited under the ACA. And many will qualify for premium tax credits that reduce the cost of premiums – as many as 71 percent – according to one survey. For employees of small businesses, they will no longer have to worry about their insurer refusing to cover their pre-existing condition, and many will have a greater choice of plans.
So I for one am ready to say good bye – and good riddance – to those pre-ACA policies that too often left consumers out in the cold.