Insurers may not modify or customize letters telling policyholders they can have their cheap health coverage back for one more year if it was cancelled due to health care reform. States may customize the letters, but only if the result is a letter that is more consumer protective and detailed than the federal template. That’s what new Q&A guidance from the Centers for Medicare and Medicaid Services states.
The letters are part of a transitional policy unveiled Nov. 14, which allows insurers to renew health plans that were in effect on Oct. 1, 2013, but were cancelled or are about to be cancelled due to noncompliance with health care reform’s 2014 market rule changes.
Under the federal policy, renewals will be possible for such plans until Oct. 1, 2014. It’s only one-year stay, so small businesses and individuals will have to enroll in compliant (or exchange) coverage in 2015. Also, the renewal rights will be available only in states that have allowed it.
The relief became necessary after it became clear that insurers were cancelling policies for thousands of individuals and small businesses, because they would not comply with health care reform standards that must be followed starting Jan. 1, 2014. This ran contrary to President Obama’s repeated promise that people could keep coverage that they liked.
Insurers must list shortcomings
While the letters tell enrollees they may get their coverage back, they must list all the ways the coverage is deficient when compared to exchange coverage. Letters must state:
If you choose to renew your current policy, it will NOT provide all of the rights and protections of the health care law.
Then the insurer must state that any renewed policy might lack of protection from: drastic premium increases; pre-existing condition exclusions; policy cancellations; and premium ratings based on health status and/or gender (all of which is not allowed under health care reform), to name a few.
Then the letters must describe how participants can purchase coverage through an exchange, and letters must mention the premium tax credits available for that purpose. CMS is strongly urging insurers and employers not to deviate from the text of three standard letters.
The first letter gives notice to policyholders who have already been sent a cancellation notice for the existing coverage. The second is for people who have not already been sent a cancellation. And the third lets insurers tell policyholders they do not intend on bringing back plans they cancelled.
The letters must be sent as soon as possible and may not be slipped in with any other correspondence, the Q&A states.