Administration Loosens Individual Mandate to ‘Un-cancel’ Policies

The Obama administration on Nov. 14 proposed an administrative fix to allow individuals and small businesses losing coverage to keep their plans for another year. The fix was necessary in part because many people who lost coverage: (1) could not enroll for coverage on reform-mandated state-based health insurance exchanges due to problems with the government’s enrollment website; or (2) found that exchange coverage was far more expensive than the individual and small-group coverage they lost.

According to a Centers for Medicare and Medicaid Services memo to state insurance commissioners, affected individuals and small businesses can choose to re-enroll in such coverage.

[H]ealth insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage. Under this transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between January 1, 2014, and October 1, 2014, and associated group health plans of small businesses, will not be considered to be out of compliance with the market reforms specified below under the conditions specified below.

Insurance companies will be required to notify the policy holder of:

1. benefits they might lose by staying in their plan;
2. which of the specified market reforms would not be reflected in any coverage that continues;
3. their potential right to enroll in health coverage on an exchange Marketplace and possibly qualify for financial assistance;
4. how to access such coverage through a Marketplace; and
5. their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms.

Where individuals or small businesses have already received a cancellation or termination notice, the insurer must send this notice as soon as reasonably possible. For cancellations about to happen, the notice must be sent before the cancellation.

The proposal would apply only to people who had policies on or before Oct. 1.

For more information on health care reform’s individual mandate, see Section 600 of The New Health Care Reform Law What Employers Need to Know. For more information on the Small Business Health Options Program, see Section 800.