Insurance companies find loophole before Obama clears path to keep policies

By Jakob Rodgers Published: November 14, 2013 | 9:05 pm 0

Colorado insurance regulators expect few companies to reverse course on their decision to cancel insurance plans for nearly 250,000 Coloradans, despite President Barack Obama clearing the way Thursday for them to do so.

One reason: They already found a loophole to accomplish the same thing.

And many already decided against it.

The work-around option, called "early renewal," allowed health insurance companies in Colorado to offer their policy holders the same plan for most of 2014 - even if it didn't meet requirements of the Affordable Care Act, also known as Obamacare.

The loophole only covered people whose carriers allowed them to renew existing policies by Dec. 31, said Vincent Plymell, a Colorado Division of Insurance spokesman.

Any plans purchased after that date needed to include 10 essential elements, including substance abuse treatment and maternity care.

Given that option, many insurance companies decided against offering "early renewals."

For instance, 61,000 people covered in small group plans by Kaiser Foundation Health Plan of Colorado were offered the choice to renew early, because their plan was being discontinued.

But thousands of people in Anthem-based small group plans weren't given the same choice when informed their plans were being cancelled.

Together, those Kaiser and Anthem customers represented 76 percent of the 143,116 Coloradans on the small group market who received policy cancellation letters, as of Nov. 1.

Another 106,083 people on the individual market received cancellation letters - some of whom were offered early renewals, some of whom weren't.

"We're thinking that today doesn't change things too much for folks in Colorado," Plymell said. "... This has been on the table all along for them."

Complicating matters is the fact that many of those cancellations were made for business purposes, Plymell said, meaning that even if a plan met those requirements, it might still have been dropped.

He questioned whether insurance companies would change course after making those decisions - especially knowing that Colorado's much-anticipated health insurance marketplace would be open.

"The thing we're going have to take a look at is: Will there be that demand from the carriers?" Plymell said.

Only insurance companies can decide whether to once again offer those previously cancelled plans.

Should companies decide to do that, the division would have "a very tight timeline" to approve those re-issued plans by Dec. 15, the deadline to purchase plans that begin Jan. 1, Plymell said.

Even if insurance companies choose to offer once-cancelled plans, there's no guarantee that the plan won't cost more, said Jennifer Becker, president of the Colorado Group Insurance Association. The member-based nonprofit organization is comprised of insurance companies and brokers.

"The insurance companies obviously want to do what's best for themselves," Becker said. "But they want to please their consumers because they don't want to lose policies."

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