As the Obamacare Health Exchanges went live, thousands of Americans received an unwelcome letter from their health insurers. In spite of promises that the Affordable Care Act would not adversely affect their current coverage, health insurance companies have been cancelling thousands of plans, forcing consumers to buy new ones.
It was a detail that went unmentioned during the campaign to persuade the public to embrace Obamacare: If your individual plan did not comply with the new rules laid out by the Affordable Care Act, it would be cancelled. Under the new health law, all plans must include 10 essential health benefits, which are: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care, according to HealthCare.gov.
Plans already in place before the ACA went into effect on March 30, 2010, are known as “grandfathered plans” and would be allowed to remain valid after Jan. 1, 2014, when new plans sold on the exchange would begin coverage. But some companies began pushing consumers out of grandfathered plans early, forcing them to buy more-expensive plans that met Obamacare guidelines.
Last week, the president offered angry consumers a compromise: Cancelled, non-ACA-compliant plans could be extended for one year, as long as they are renewed before the start of the next health exchange open-enrollment period on Oct. 1, 2014.
“Already people who have plans that pre-date the Affordable Care Act can keep those plans if they haven’t changed. That was already in the law. That’s what’s called a grandfather clause that was included in the law. Today we’re going to extend that principle both to people whose plans have changed since the law took effect and to people who bought plans since the law took effect,” President Obama explained in the televised press conference on Nov. 14.
But while the gesture may appease some of the 4.2 million Americans whose policies were cancelled, it’s not a one-size-fits-all fix. There is no consensus on how each state will go about re-approving plans, the cost of such plans or whether all insurance companies will agree to renew them. So far, 13 states have opted to re-approve cancelled plans, while at least eight, including New York and Massachusetts, have decided not to, reports The New York Times. Other states, such as California, whose insurers have sent more than 900,000 cancellation notices combined, also recently decided not to renew cancelled plans, reports Bloomberg.
According to Linda Blumberg, senior fellow at the Urban Institute, just because you can continue a cancelled plan doesn’t mean you should want to. Consumers must take this time to weigh the options, she said. If you happen to have a cancelled health plan that can now be renewed for another year, it still is in your best interest to comparison shop on the exchange. “People should be really careful,” Blumberg says, because it “takes time to shop for it [health coverage] effectively.” The reality is that some “could be better off financially with ACA-compliant plans than keeping what they have.”
While some consumers have complained about having to pay for coverage they don’t need (men whose policies would now include maternity care, for example), the benefits of ACA-approved plans are far-reaching. In many “non-grandfathered” health plans, Blumberg points out, consumers may not realize how limited their coverage is until they get sick. Monthly premiums represent just one of several important things to take into account when purchasing a plan; it’s also important to compare deductibles and cost-sharing amounts.