What to Do If Your Health Insurance Policy Is Cancelled Under Obamacare
Updated: March 5, 2014
If you received a notice from your health insurance company saying your insurance plan has been cancelled, you’re not alone. Millions of Americans have learned they may not be able keep their existing health coverage under Obamacare. Cancellation is primarily affecting those who purchase individual insurance plans, such as the self-employed, but some people employed by small businesses are losing their existing coverage, too.
The Obama administration, Congress, and insurance providers have engaged in a strenuous debate over whether the cancellations will stand or whether some individuals will be allowed to continue coverage under their cancelled plans for another year or more. On March 5, 2014 the Obama administration announced that you can keep your cancelled policy through 2016. The catch is that state insurance officials must agree to this extension. So far, about half states have decided to allow renewals, while the rest have decided against them.
To learn whether you may have the option of keeping your existing plan, contact your insurance provider.
Why Insurance Plans Have Been Cancelled
Beginning January 1, 2014, insurance companies are no longer allowed to reject people who have pre-existing conditions, nor may they be charged more for coverage. In addition, all policies must offer the same package of essential benefits, including hospitalizations, prescription drugs, maternity care, mental health care, and others.
Insurance companies have always been able to terminate or change policies, but if your plan has been cancelled recently, it’s probably because it didn’t offer all the benefits required under Obamacare. Or perhaps the plan required you to meet a deductible or cover other costs that exceeded Obamacare’s annual out-of-pocket maximum, which is $6,350 for individuals or $12,500 for families.
If your existing plan doesn’t meet Obamacare’s requirements and you didn’t get a cancellation notice, that’s probably because it is still in effect as a “grandfathered” plan. Under the law, a grandfathered plan is one that was purchased before March 2010 and hasn’t changed since then. Changes that could knock an insurance plan out of grandfathered status include new premium, deductible, or co-pay amounts, or any changes to plan benefits. If you have a grandfathered plan, you can keep it for as long as the insurance company continues to sell it.
Problems You May Face If Your Policy Was Cancelled
If your health insurance policy was cancelled, don’t assume your situation will worsen. Some people whose plans have been cancelled are finding themselves better off. When they visit the New York health insurance exchange at NY State of Health, they learn that they can get a policy with better benefits at a lower cost. These cost savings come in large part from subsidies in the form of tax credits. (To learn more, see Ways to Save Money on Obamacare.) Visit the exchange and compare plans. Especially if you qualify for subsidies, you may be pleasantly surprised by your new options.
If the surprise you get isn’t a good one, the trouble you face could take several forms, including an increase in monthly premium costs, limited access to doctors, or a shrinking coverage area.
If you are relatively young and healthy and your existing policy was cancelled, there’s a good chance your new plan will cost more. Some people are being asked to pay two or even three times more for coverage that’s no better than what they had before.
These price increases are happening because the new health insurance system will work only if there’s the right mix of healthy and seriously ill people signing up for coverage. Comparatively healthy people are paying more so that people in poor health have access to coverage, too.
Loss of Providers
Some people who lost their existing policies will no longer have access to the doctors they know and trust. For some, especially those with life threatening illnesses, this limitation can be devastating. Here’s how one man battling gallbladder cancer explained it in a recent Wall Street Journal editorial:
You would think it would be simple to find a health exchange plan that allows me, living in San Diego, to continue to see my primary oncologist at Stanford University and my primary care doctors at the University of California, San Diego. Not so. UCSD has agreed to accept only one Covered California plan -- a very restrictive Anthem EPO Plan. EPO stands for exclusive provider organization, which means the plan has a small network of doctors and facilities and no out-of-network coverage (as in a preferred-provider organization plan) except for emergencies. Stanford accepts an Anthem PPO plan but it is not available for purchase in San Diego (only Anthem HMO and EPO plans are available in San Diego).
So if I go with a health-exchange plan, I must choose between Stanford and UCSD. Stanford has kept me alive—but UCSD has provided emergency and local treatment support during wretched periods of this disease, and it is where my primary-care doctors are.
If you will be shopping for coverage at NY State of Health you want to keep your current providers, carefully review the plans on offer to be sure you can continue to see them after your new coverage takes effect.
Limited Coverage Area
If you previously had a plan that covered you in more than one state -- for example, if you spend one part of the year in New York and another in Florida, or if you live on the border of two states -- you may find it difficult to obtain multi-state coverage when you shop for new insurance at NY State of Health.
Review your options carefully. If you don’t find what you’re looking for, you may want to contact an insurance agent or broker to see if they can help you find an off-exchange plan that will meet your needs.
What to Do If Your Plan Was Cancelled
If you want to keep your old plan. If you’d rather continue on your cancelled insurance plan than shop for a new one, contact your insurance provider and let them know your wishes. There’s a chance the insurer will extend the plan under new options offered by the Obama administration.
If you want to shop for a new plan. For many, a cancelled insurance plan is an opportunity to obtain better coverage. Here are the most important things to keep in mind as you shop:
- Compare plans carefully. When you received your cancellation notice, your provider may have suggested a new plan or even automatically enrolled you in a new plan. That’s not your only option, however. Talk with your insurer about other options, visit NY State of Health to compare plans, or talk to a qualified agent or broker to learn about the range of options available to you. Be sure your new plan keeps you in the clear on all counts mentioned above: affordable premiums (as well as deductible and co-pay costs you can live with), the doctors you want, and the coverage area you need.
- Watch the clock. The current deadline for obtaining health coverage under the Affordable Care Act is March 31, 2014. If your existing plan has been cancelled, you’ll want to make sure you’re covered as soon as possible. Don’t decide on a new plan in a rush, but don’t procrastinate, either.
If you don't buy insurance. It's probably not the wisest strategy, but if you decide to forgo health insurance in 2014, you won't have to pay the Obamacare tax penalty in 2015. That's because, on December 19, 2013, the Obama administration decided that people with canceled insurance plans qualify for a hardship exemption from the law. As an alternative, the new rules also allow you to purchase a minimal "catastrophic" insurance plan, if you prefer.
For More Information
To find out whether you can keep your existing health insurance plan, contact your insurance provider.
To learn whether your current health plan satisfies the requirements of Obamacare or to find out whether you qualify for an exemption from the law, see Do I Need to Get Obamacare in New York?
To learn more about enrollment, including how to find the New York health insurance exchange and get help using it, see How Do I Sign Up for Obamacare in New York?