In what will certainly be a controversial issue heading into the mid-term elections, individual policy holders across the country are receiving cancellation letters informing them that their non-compliant plans will be terminated at the end of the year, and even more are expected to receive letters at this time next year.
The Affordable Care Act requires people to have minimum essential coverage, and in the individual market that coverage must meet certain standards unless the policy is grandfathered. Last fall, millions of people across the country received letters telling them that their plan was non-compliant and that they would need to move into a compliant plan, and that sparked outrage that ultimately led to the transitional plan option – the opportunity for carriers to renew this old coverage all the way through October, 2016 if the state allowed it. However, not all states permitted these plans to be renewed and, even where they were allowed, not all insurance carriers chose to renew these policies.
For example, in Colorado, “more than 22,000 Coloradans received cancellation notices in the last month” and another “192,942 Coloradans will lose their policies at the end of 2015” according to The Washington Times. In Texas, Blue Cross Blue Shield, the largest carrier in the state, has decided to offer the transitional plan option to small groups but not to individuals – tens of thousands of policyholders will lose their coverage at the end of the year. Most of these policyholders were moved to a December 1st renewal date at this time last year.
Individuals who have their policies cancelled and who are not offered a transitional plan do have a hardship exemption that will allow them to purchase catastrophic coverage through October, 2016 if there is not a more affordable option available to them. However, it is important to know that many of the people whose policies will be cancelled will qualify for a subsidy – the old plan designs are not subsidy-eligible, but when they move into the compliant coverage they may qualify. For brokers who sell individual policies, it would be worthwhile to find out what the carriers in your state are doing. If they’re anything like Colorado or Texas, this may create a big marketing opportunity.