Why Is My Health Insurance Plan Getting Cancelled?!

Why are some health insurance plans getting cancelled?
Received a cancellation notice from your health insurer? You're not alone. Andersen Ross/Getty Images

Every year, some health insurance policies terminate and are not eligible for renewal. This is not a new phenomenon under the ACA, but it has been heightened over the last few years by some factors related to the ACA

Plans that aren't ACA-compliant

"Transitional" or "grandmothered" plans were issued after March 23, 2010, but prior to 2014. Although they are not ACA-compliant, HHS guidelines permit them to remain force as late as September 2017 - but only as long as the state and the carrier both agree to allow them to continue.

13 states and the District of Columbia had already blocked renewal of those plans prior to 2015. Oregon and Colorado allowed them to continue to renew for 2015, but are requiring all grandmothered plans to terminate no later than December 31, 2015. So everyone with a grandmothered plan in Oregon and Colorado will need to find new coverage for 2016. 

There are 35 states where carriers are allowed to continue to renew grandmothered plans for 2016, but they are not required to do so. Some grandmothered plans will renew again in those states, while others won't be eligible for renewal based on a business decision made by the insurance carrier. Non-ACA-compliant plans can be cancelled at the behest of the state or the carrier, but regardless of why they're cancelled, the result is that the insured has to find a new policy.

Even grandfathered plans can be cancelled. Grandfathered plans are those that were already in effect on March 23, 2010.

The ACA included a provision to allow those plans to remain in force indefinitely, as long as no substantial coverage changes were made. But they're not required to remain in force; carriers can decide not to renew those plans. Carriers have always had the option to terminate plans and replace them with new options, or exit the market entirely - that's still the case under the ACA.

ACA-compliant plans that are ending

In addition to plans that aren't ACA-compliant, some of the plans getting cancelled at the end of 2015 are policies that are fully compliant with the ACA and were issued just this year. Hundreds of thousands of people with CO-OP coverage will need to find new plans for 2016, as 11 of the 23 CO-OPs are winding down their operations (CoOpportunity, a CO-OP in Iowa and Nebraska, already closed at the start of 2015, and Health Republic in New York will actually shut down at the end of November, 2015; their insureds need new coverage in place by December 1).

Although the CO-OP failures have made headlines over the last several weeks, they aren't the only plans that are terminating at the end of the year. In several states, existing traditional carriers are exiting the exchange or even the entire individual market.

Assurant/Time announced in June that they would exit the health insurance market nationwide, and all of their insureds will need to find new policies for 2016.

In Florida, Cigna is exiting the exchange due to significant fraudulent claims from addition treatment centers, and in New Mexico, Blue Cross Blue Shield is cancelling all but one of their plans for 2016 (they will continue to offer just one off-exchange HMO). WINhealth, one of just two carriers of Wyoming's exchange, announced in October that they would exit the individual health insurance market at the end of the year.

These are just a few examples, and the carriers cited a variety of reasons for exiting the exchange and/or the whole market. So if you've received a notice from your carrier stating that your policy won't be available anymore in 2016, know that you're not alone.

But the ACA makes it easy to get a new plan

Fortunately for those whose plans are not eligible for renewal, the ACA did away with medical underwriting. That means that you can select from any other plan available in your area, and your enrollment in the new plan will be guaranteed, regardless of your medical history.

It can certainly be an inconvenience to have to shop around for a new plan, but it's also in your own best interest to do so annually, even if your plan isn't ending. New carriers join markets from one year to the next, and premium changes vary tremendously from one carrier to another each year.

So the plan you picked for 2015 might not be the best choice for 2016, even if it will continue to be available. Fortunately, the enrollment process for a new plan is much simpler than it was prior to 2014. There are no longer any medical history questions, and if you already gave the exchange your financial information when you enrolled last year, that data will still be in the system when you're switching to a new plan (you'll want to verify that it's still current though, and if you're in Hawaii, you'll need to re-enroll from scratch regardless of whether your plan is ending, because Hawaii has switched to the Healthcare.gov enrollment platform).

When selecting a new plan for 2016, don't forget to check the formularies (covered drug lists) and provider network lists for the new plans you're considering. There are brokers in every community who can help you compare the available plan options and select the one that's right for you; assistance doesn't cost you anything, and will help ensure that you end up with the plan that best meets your needs. 

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