Blue Shield of California has agreed to allow upwards of 115,000 individual and family plan members to keep their existing policies through March 31, 2014. The press release from the office of Insurance Commissioner Jones indicated the agreement to allow the policy holders to keep their plans past the original December 31, 2013 cancellation date was the result of a late filing or notification requirement for plan closures on the part of Blue Shield.
Blue Shield not alone in cancellations
Virtually all individual and family health plans by carriers participating in Covered California are being cancelled. Part of this had to do with the Covered California contract that stipulates that participating health plans can only offer plans outside the exchange that are identical to the plans offered through Covered California. The fear from Covered California was that if people could keep their existing plans or purchase a lower cost plan outside the exchange there would be little incentive to purchase a new Covered California health plan. The real reasons health plans are being closed
Californians get corralled
Even if the old plans were consistent with plans being offered inside the state health exchange, the carriers faced the prospect of seeking large rate increases on the old plans which would have been public relations nightmare for the carriers. It was simply easier to cancel the old plans and migrate existing members into plans that were specifically designed for Covered California.
Small group plans get a special break
Commissioner Jones did correctly cite that most of the insurance companies were offering early renewal of small group plans so those employers could avoid substantial changes to their existing health insurance plans until a late 2014 date. The early renewal process helps lock small group business with the existing carrier and reduces potential employers who might otherwise consider Covered California’s new small business health options program. Blue Cross exits Covered California small group plans
Too many cooks in the kitchen
From an insurance company’s perspective, having multiple lines of health plans (Grandfathered, post ACA, and Covered California plans) becomes a real challenge to properly service from both a computer system and member stand point. The implementation of the ACA and Covered California represents a historic change and shift with respect to health insurance and health care. The weak link has been the lack of an overall coordinated effort to protect consumers from inadvertent, although sometimes purposeful, regulatory decisions making Californians bear the burden poor planning. Health agents hear a sermon talk from Covered California Executive Director Peter Lee
Text of Insurance Commissioner Jones press release
November 5, 2013
Insurance Commissioner obtains delay of individual policy cancellations from Blue Shield
SACRAMENTO, Calif. – Insurance Commissioner Dave Jones announced today that he obtained an agreement from Blue Shield of California Life and Health Insurance Company (Blue Shield) to allow its California policyholders to keep their individual and family health insurance policies through March 31, 2014. Previously, the company announced plans to cancel these individual and family policies on December 31, 2013.
“Allowing consumers to stay in their existing plans longer is the right thing to do for policyholders,” said Jones. “State and federal law allow Californians to keep their current policies beyond December 31. The existing policies are likely to have a broader network of medical providers and for those who are not eligible for premium subsidies, a lower cost than what is available in 2014. There is nothing in the healthcare reform law that requires insurers to narrow their provider networks, but some insurers are doing so, which means consumers will want to confirm that their doctors and hospitals are in the network before selecting new coverage.”
The commissioner obtained an agreement from Blue Shield to send a new notice to consumers allowing them to stay in their individual market policies if they elect to do so and to provide the existing coverage through March 31, 2014, at the existing price with the existing medical provider network. If all of the policyholders elect to stay in their existing plans untilMarch 31, the premium savings could be as high as $28.6 million. However, policyholders who are eligible for federal premium subsidies through Covered California will likely want to select their new policies by December 15, so they can start receiving premium assistance for January 1 coverage in their new plan.
“I disagreed with health insurers’ decision to cancel policies and Covered California’s decision to require health insurers selling in the Exchange to cancel existing policies on December 31,” Jones added. “Health insurers and Covered California are allowing small businesses to renew their existing plans past December 31 and should have allowed individuals and families to do the same. Selecting the health insurance product that best meets your needs is an important decision and will take some time for those whose doctors are no longer in the networks of their existing health insurer. Policyholders should examine all their options and determine if they are eligible for a premium subsidy through Covered California.”
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Media Note:
Blue Shield notified the Department of Insurance it sent cancellation notices to approximately 115,000 policyholders to inform them that Blue Shield would cancel individual market policies at the end of the year. The commissioner objected to Blue Shield’s December 31 cancellations, because policyholders are entitled to 180 days’ notice if their carrier is going to stop selling new policies in a particular market, which in October, Blue Shield notified the Department it would be doing.
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Synopsis of letters being sent to current subscribers of certain Blue Shield of California health plans
New option to extend coverage for some subscribers enrolled in a Blue Shield of California Life & Health Insurance Company IFP plan
Subscribers in Blue Shield of California Life & Health Insurance Company (Blue Shield Life) non-grandfathered IFP plans were notified in late September that their plan will not be ACA-compliant on December 31, and therefore will be withdrawn from the market. These subscribers will be transitioned to a recommended ACA-compliant plan/policy on January 1, or they can select any plan offered by Blue Shield in 2014.
Now, these subscribers have a second option to extend their current coverage a few months through March 31, at which time their coverage must transition to an ACA-compliant plan.
- Option 1:
Move to an ACA-compliant plan covering all essential health benefits.
As previously communicated, Blue Shield will move subscribers into a recommended ACA-compliant plan on January 1. Subscribers just need to pay their January bill and they will be enrolled in the ACA-compliant plan. Or they can select from any of Blue Shield’s ACA compliant plans by contacting us. Those who reside outside of Blue Shield’s service area as of January 1, 2014, will need to enroll in an ACA-compliant plan through Covered California by December 15, 2013.
- Option 2 – New Option:
Extend current IFP medical plan through March 31, 2014 with Blue Shield Life.
To elect this option, subscribers must contact us no later than December 6, 2013 to temporarily extend their current plan for themselves and any covered dependents at current rates and with the current provider network. Subscribers can change coverage to an ACA-compliant plan during this period.VERY IMPORTANT NOTE:
Eligible Blue Shield Life IFP subscribers should consider this option very carefully as it may not be a good option for them. They should consider at least the following:- The extension of coverage will terminate March 31, 2014.
- If they take the offer, it will subject them to more than one deductible in 2014.
- And it they take the offer, premium assistance (subsidies) through Covered California may be impacted.
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