Health Insurance Cancellations: What Can You Do About It?
Health insurance continues to be a hot topic as Congress grills key Obama-administration officials over the website woes of Healthcare.gov and the mass cancellations that are affecting hundreds of thousands of existing policyholders. (Some estimate the numbers could climb in to the millions before long.)
While the health care law has enabled millions of Americans to get coverage for pre-existing conditions, there remains some questions as to whether or not the Patient Protection and Affordable Care Act (PPACA) is truly affordable.
In a recent post from NPR, the dual nature of the law was illustrated by two examples involving policyholders, who felt both the up and the downside.
Jamie Walters, a Chicago area corn farmer, received his cancellation letter from Blue Cross Blue Shield of Illinois. Under the old policy, Walters’ coverage for himself, his wife, and three young children was $585 a month with a $5,200 family deductible.
The cheapest plan he could receive on Healthcare.gov, by comparison, will run him $902 per month and only offer a $12,700 deductible.
“I think you’ll find that many small business owners, young professional families, families with dual incomes, etc., will not qualify for subsidies, because the income limits really are very much smack in the middle of the middle class,” Walters said.
Walters’ family earns more than $96k per year, so they don’t qualify for any subsidies.
On the other hand, Johanna Humbert of Galien, Michigan, said she was “very pleased” with her policy. She recently went shopping on Healthcare.gov and found out she would be paying half her original premium for the same deductible. (Humbert makes between $30,000 and $40,000 a year as a freelance fundraiser for non-profits, NPR noted.)
Why the discrepancy?
Subsidies are funded by individuals or families who earn too much to qualify. Those under the income threshold pay either a reduced rate or nothing at all. We’ve discussed what those thresholds are in past posts, and you can (hopefully) view them on the few parts of the Healthcare.gov website that work.
We’ve also talked about why many policyholders are getting cancellations. In most cases, it’s because the policies do not meet all the coverage criteria of the PPACA mandate. To that end, supporters of the law, including Health and Human Services director Kathleen Sebelius, have attempted to characterize pre-PPACA policies as “junk policies” in that they do not cover pre-existing conditions and patients could be dropped if they become too much of a health liability.
However, many policyholders (like Walters) would disagree with such a characterization. Their policies carried affordable deductibles, comparably cheap premiums, and offered plenty of protection in the case of a major medical event.
So what happens next for them — what options do they have?
Unfortunately, not many, but it could be possible to keep the old plan.
According to the Kaiser Foundation, “In some states, insurers are offering selected policyholders a chance to renew early, meaning they can continue their existing plan through next year, even if it doesn’t meet all the law’s standards.”
Choosing this option will not guarantee that your premium stays the same, Kaiser notes. (It could go up due to medical inflation.) And it’s important to know this option isn’t available in every state. Also, this will really only buy one more year of coverage as most of these policies will sunset at the end of 2014.
On the chance you were insured under your current policy prior to 2010, it should be grandfathered.
PPACA certainly has its winners and losers. Unfortunately, many of those on the losing end — at least for now — could end up paying 50 percent more per year (or higher). Still, if more people begin paying into the system, then it’s possible healthcare costs could start to tumble. To know for sure, we’ll have to wait around a year to see what effects the law’s first-year operations will have on 2015 costs. Here’s hoping it’s a good thing!