Obama Exempts Canceled Policyholders from Individual Mandate

By Margaret Talev and | December 20, 2013

Americans whose health plans are being canceled because their coverage doesn’t meet Obamacare rules will be exempt from the mandate that they carry insurance, under a change announced by the Obama administration.

Officials estimated the change will affect fewer than 500,000 people as a Dec. 23 deadline looms to purchase health policies to be eligible for coverage beginning Jan. 1. People losing coverage also will be eligible to buy high-deductible “catastrophic” insurance the law usually limits to those younger than age 30.

Insurers warned that the new exemptions, which would last a year and potentially longer for consumers granted hardship exceptions, risk destabilizing the new marketplaces if younger, healthier people who now carry cheap policies opt out of buying replacement coverage.

“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” Karen Ignagni, the president of America’s Health Insurance Plans, the industry’s Washington lobby group, said in an e-mail from a spokesman.

The Obama also administration yesterday gave its first estimate of the number of people who may be without coverage after their policies were canceled for failing to meet the requirements of the Patient Protection and Affordable Care Act, known as Obamacare. Fewer than 500,000 Americans will lose insurance starting Jan. 1 because their policies don’t meet the law’s requirements and they haven’t found new coverage, according to administration officials who briefed reporters on condition of anonymity.

Guidance Issued

The exemption from the law’s individual mandate was announced separately yesterday in guidance issued by the U.S. Center for Consumer Information and Insurance Oversight, a division of the Department of Health and Human Services.

“This is a common-sense clarification of the law,” Joanne Peters, a spokeswoman for U.S. Health Secretary, Kathleen Sebelius, said in an e-mail. “For the limited number of consumers whose plans have been canceled and are seeking coverage, this is one more option.”

In California, more than 1 million policy holders received letters from their current insurers saying their coverage will be canceled after Dec. 31 because their plans don’t comply, and hundreds of thousands were canceled in other states.

That has stoked the political backlash against President Barack Obama’s signature health-care law and came on top of the botched October rollout of the government-run insurance exchange where people are supposed to shop for health coverage.

Policy Changes

Obama has responded with a flurry of last-minute policy changes to give people more time to sign up for insurance and blunt the effect of cancellations.

He announced Nov. 14 that states could allow plans to extend current policies for a year. At least 22 states, including California and New York, have said they won’t allow insurers to extend expiring plans, according to Ignagni’s group. Instead, people in those states will have to buy new policies that comply with the law, either directly from insurers or through government-run marketplaces.

A week later, he pushed back the deadline to sign up for coverage effective Jan. 1 by eight days, to Dec. 23.

On Dec. 13 the administration urged insurers to provide more leniency to people shopping for new coverage by allowing them to pay for plans later in January and sign up retroactively for coverage beginning Jan. 1. The government also asked insurers to cover care from any doctor or hospital in January and to cover refills of prescriptions during the month regardless of any network restrictions.

Payment Window

The industry said this week that it would allow payment for coverage beginning Jan. 1 as late as Jan. 10. While insurers haven’t agreed to the other requests, they are automatically enrolling in new plans many policyholders who would otherwise lose coverage.

The government is trying to reach people seeking new policies who may have experienced bugs or errors in the federal enrollment system before the Dec. 23 deadline, said the officials who briefed reporters. More than 2 million e-mails have been sent to people who tried to sign up in October and November and hit technical problems, the officials said, and government call centers have placed more than 600,000 phone calls to those customers.

–Editors: Steven Komarow, Andrew Pollack

Topics Carriers Policyholder

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