Last fall, the federal government announced that insurance companies could renew health insurance policies in the individual and small group markets that would have otherwise been cancelled for failing to comply with certain market reforms required by the Affordable Care Act (the “ACA”). However, some insurance companies decided against renewing non-compliant plans, even though they could, which muted the practical effect of that change. This was largely the case in Alabama when Blue Cross Blue Shield of Alabama decided not to renew non-compliant plans. Last week, President Obama’s administration extended the transitional policy of allowing renewal of non-compliant plans for two more years. Now, consumers in the individual and small group markets can keep certain non-compliant plans through policy years beginning on or before October 1, 2016, as long as state insurance authorities allow it and insurance companies decide to continue to offer such policies.
This extension by the administration triggered significant political discussion. The Secretary of Health and Human Services, Kathleen Sebelius, was quoted in the New York Times as saying that the goal of this most recent delay is to “smooth the transition” to a new system. Some news outlets speculate that the transition relief is intended to prevent a wave of cancellation notices prior to the upcoming mid-term elections. The announcement from the federal government, through the Centers for Medicare and Medicaid Services, may be found here.