Health insurance cancellation letters return: are you next?

health insurance cancelled

A new wave of letters are expected to be issued soon as plans fail to comply with the health care reform.

Last year’s massive wave of letters that swept the country to inform previously covered Americans that their health insurance plans were being cancelled is about to be seen again.

The question doesn’t appear to be whether or not this will happen, but how many will be affected.

health insurance cancelledWhile some have predicted that the final tally could be rather low, others have said that there could be up to 20 million health insurance plans lost. These letters will be issued regarding small group plans, this time. Although the mandate from the health care reform does not impact businesses that have under 50 workers, a number of those companies are still starting to receive notices from insurers, stating that the plans that they previously maintained were being canceled as they are not up to the level of the requirements of the Affordable Care Act.

Similar to the cancellation letters for individual health insurance plans last year, now group plans are being hit.

According to Dr. David Hogberg, a health care analyst from the National Center for Public Policy Research, if an insurance policy was purchased before March 2010, when the Affordable Care Act became law, then that plan would be grandfathered. However, since that time, the Department of Labor issued regulations regarding the grandfathered policies. He said that “It’s almost like telling a guy you can keep walking on the beach as long as you don’t get any sand on your feet. It’s almost impossible not to violate.”

Hogberg gave some examples of the ways in which the regulations have made it impossible for many plans to be grandfathered. For example, if one of the co-payments rises by $10 over a period of a single year, then the plan will no longer qualify to be grandfathered. Similarly, if the co-insurance would previously have paid for 15 percent of a procedure and that is changed to 16 percent, then it will also no longer be permitted to be grandfathered.

He went on to point out that the statistics from the Department of Labor have indicated that 66 percent of small group health insurance plans will not qualify to continue to be grandfathered as a result of these regulations.

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