If You Like Your Plan, You Can Keep it for 2 More Years

People who had lost their health insurance plans because they didn’t meet the requirements outlined in the Affordable Care Act will be able to keep those plans until Oct. 1, 2016, the Department of Health and Human Services confirmed Wednesday.

The fix, first announced by President Obama in November, allows consumers to keep canceled plans, at the discretion of both state regulators and insurance companies. During the 2012 presidential race, the president repeatedly promised that under his signature legislation, “if you like your plan you can keep it.” That turned out to be not true for a large amount of Americans.

So far, more than six million people have had their plans cancelled under the ACA because they didn’t meet the 10 essential health benefits required of all plans under the reform. These benefits include everything from ambulatory services to mental health care, despite the tier of coverage.

Under the ACA every individual in the country has to have insurance by the end of open enrollment period, or they will face a fine of $95 a year or 1% of their annual income for failing to comply. Open enrollment period ends on March 31, and so far 4 million Americans have selected plans on both state and federal exchanges.

“These policies implement the health care law in a common-sense way by continuing to smooth the transition for consumers and stakeholders and fixing problems wherever the law provides flexibility,” HHS Secretary Kathleen Sebelius said in a release. “This comprehensive guidance will help ensure that consumers, employers and insurers have the information they need to plan for next year and make it easier for families to make decisions to access quality, affordable coverage.”

Analysts say the extension may not matter much for large insurers, which tend to focus more on group insurance, but smaller insurance companies could be adversely impacted by the move.

Tom Harte, president of the National Association of Health Underwriters, says the move would be unfair to the insurance industry, which has already spent millions of dollars to comply and meet the deadlines it was assigned under the president’s legislation.

“This is good practice for politics, but bad in the real world,” Harte says. “It is cost prohibitive to have to administer these plans, and is contradictory with the original intent of the law.”

HHS says the policy extension could end up costing the federal government more than previously anticipated via its risk corridors program.  “Because issuers’ premium estimates did not take the transitional policy into account, the transitional policy could potentially lead to unanticipated higher average claims costs for issuers of plans that comply with the 2014 market rules,” it said in the release.The ACA’s risk corridors, which the GOP has tried to undo with Sen. Marco Rubio of Florida leading the pack, protect insurers against unanticipated losses. If insurance companies have losses greater than 3% of their projections through 2017, the government is on the hook to cover 50% of the costs. If losses are higher than 8% of the insurance company’s estimates, the government will pay back 80% of these losses.

In another provision meant to stabilize premiums, the Congressional Budget Office estimates the government will take in about $16 billion in the next two years from insurance companies making cash on enrollees, but will have to pay out $8 billion to insurers who lose money due to these unanticipated costs. It’s unclear how the transition extension will impact the CBO’s projections.

People who had lost their health insurance plans because they didn’t meet the requirements outlined in the Affordable Care Act will be able to keep those plans until Oct. 1, 2016, the Department of Health and Human Services confirmed Wednesday.

The fix, first announced by President Obama in November, allows consumers to keep canceled plans, at the discretion of both state regulators and insurance companies. During the 2012 presidential race, the president repeatedly promised that under his signature legislation, “if you like your plan you can keep it.” That turned out to be not true for a large amount of Americans.

So far, more than six million people have had their plans cancelled under the ACA because they didn’t meet the 10 essential health benefits required of all plans under the reform. These benefits include everything from ambulatory services to mental health care, despite the tier of coverage.

Under the ACA every individual in the country has to have insurance by the end of open enrollment period, or they will face a fine of $95 a year or 1% of their annual income for failing to comply. Open enrollment period ends on March 31, and so far 4 million Americans have selected plans on both state and federal exchanges.

“These policies implement the health care law in a common-sense way by continuing to smooth the transition for consumers and stakeholders and fixing problems wherever the law provides flexibility,” HHS Secretary Kathleen Sebelius said in a release. “This comprehensive guidance will help ensure that consumers, employers and insurers have the information they need to plan for next year and make it easier for families to make decisions to access quality, affordable coverage.”

Analysts say the extension may not matter much for large insurers, which tend to focus more on group insurance, but smaller insurance companies could be adversely impacted by the move.

Tom Harte, president of the National Association of Health Underwriters, says the move would be unfair to the insurance industry, which has already spent millions of dollars to comply and meet the deadlines it was assigned under the president’s legislation.

“This is good practice for politics, but bad in the real world,” Harte says. “It is cost prohibitive to have to administer these plans, and is contradictory with the original intent of the law.”

HHS says the policy extension could end up costing the federal government more than previously anticipated via its risk corridors program.  “Because issuers’ premium estimates did not take the transitional policy into account, the transitional policy could potentially lead to unanticipated higher average claims costs for issuers of plans that comply with the 2014 market rules,” it said in the release.The ACA’s risk corridors, which the GOP has tried to undo with Sen. Marco Rubio of Florida leading the pack, protect insurers against unanticipated losses. If insurance companies have losses greater than 3% of their projections through 2017, the government is on the hook to cover 50% of the costs. If losses are higher than 8% of the insurance company’s estimates, the government will pay back 80% of these losses.

The Congressional Budget Office estimates the government will take in about $16 billion in the next two years from insurance companies making cash on enrollees, but will have to pay out $8 billion to insurers who lose money due to these unanticipated costs. It’s unclear how the transition extension will impact the CBO’s projections.