Sticker shock often follows insurance cancellation

Some receiving word they're losing coverage because their policy doesn't cover benefits required under Affordable Care Act
Associated Press
Nov 3, 2013

Dean Griffin liked the health insurance he purchased for himself and his wife three years ago and thought he'd be able to keep the plan even after the federal Affordable Care Act took effect.

But the 64-year-old recently received a letter notifying him the plan was being canceled because it didn't cover certain benefits required under the law.

The Griffins, who live near Philadelphia, pay $770 monthly for their soon-to-be-terminated health care plan with a $2,500 deductible. The cheapest plan they found on their state insurance exchange was a so-called bronze plan charging a $1,275 monthly premium with deductibles totaling $12,700. It covers only providers in Pennsylvania, so the couple, who live near Delaware, won't be able to see doctors they've used for more than a decade.

"We're buying insurance that we will never use and can't possibly ever benefit from. We're basically passing on a benefit to other people who are not otherwise able to buy basic insurance," said Griffin, who is retired from running an information technology company.

The Griffins are among millions of people nationwide who buy individual insurance policies and are receiving notices that those policies are being discontinued because they don't meet the higher benefit requirements of the new law.

They can buy different policies directly from insurers for 2014 or sign up for plans on state insurance exchanges. While lower-income people could see lower costs because of government subsidies, many in the middle class may get rude awakenings when they access the websites and realize they'll have to pay significantly more.

Those not eligible for subsidies generally receive more comprehensive coverage than they had under their soon-to-be-canceled policies, but they'll have to pay a lot more.

Because of the higher cost, the Griffins are considering paying the federal penalty — about $100 or 1 percent of income next year — rather than buying health insurance. They say they are healthy and don't typically run up large health care costs. Dean Griffin said that will be cheaper because it's unlikely they will get past the nearly $13,000 deductible for the coverage to kick in.

Individual health insurance policies are being canceled because the Affordable Care Act requires plans to cover certain benefits, such as maternity care, hospital visits and mental illness. The law also caps annual out-of-pocket costs consumers will pay each year.

In the past, consumers could get relatively inexpensive, bare-bones coverage, but those plans will no longer be available. Many consumers are frustrated by what they call forced upgrades as they're pushed into plans with coverage options they don't necessarily want.

Ken Davis, who manages a fast food restaurant in Austin, Texas, is recovering from sticker shock after the small-business policy offered by his employer was canceled for the same reasons individual policies are being discontinued.

His company pays about $100 monthly for his basic health plan. He said he'll now have to pay $600 monthly for a mid-tier silver plan on the state exchange. The family policy also covers his 8-year-old son. Even though the federal government is contributing a $500 subsidy, he said the $600 he's left to pay is too high. He's considering the penalty.

"I feel like they're forcing me to do something that I don't want to do or need to do," Davis, 40, said.

Owners of canceled policies have a few options. They can stay in the same plan for the same price for one more year if they have one of the few plans that were grandfathered in. They can buy a similar plan with upgraded benefits that meets the new standards — likely at a significant cost increase. Or, if they make less than $45,960 for a single adult or $94,200 for a family of four, they may qualify for subsidies.

Just because a policy doesn't comply with the law doesn't mean consumers will get cancellation letters. They may get notices saying existing policies are being amended with new benefits and will come with higher premiums. Some states, including Virginia and Kentucky, required insurers to cancel old policies and start from scratch instead of beefing up existing ones.

It's unclear how many individual plans are being canceled — no one agency keeps track. But it's likely in the millions. Insurance industry experts estimate that about 14 million people, or 5 percent of the total market for health care coverage, buy individual policies. Most people get coverage through jobs and aren't affected.

Many states require insurers to give consumers 90 days' notice before canceling plans. That means another round of cancellation letters will go out in March and again in May.

Experts haven't been able to predict how many will pay more or less under the new, upgraded plans. An older policyholder with a pre-existing condition may find that premiums go down, and some will qualify for subsidies.

In California, about 900,000 people are expected to lose existing plans, but about a third will be eligible for subsidies through the state exchange, said Anne Gonzalez, a spokeswoman for the exchange, called Covered California. Most canceled plans provided bare-bones coverage, she said.

"They basically had plans that had gaping holes in the coverage. They would be surprised when they get to the emergency room or the doctor's office, some of them didn't have drug coverage or preventive care," Gonzalez said.

About 330,000 Floridians received cancellation notices from the state's largest insurer, Florida Blue. About 30,000 have plans that were grandfathered in. Florida insurance officials said they're not tracking the number of canceled policies related to the new law.

National numbers are similar: 130,000 cancellations in Kentucky, 140,000 in Minnesota and as many as 400,000 in Georgia, according to officials in those states.

Cigna has sent thousands of cancellation letters to U.S. policyholders but stressed that 99 percent have the option of renewing their 2013 policy for one more year, company spokesman Joe Mondy said.

Cancellation letters are being sent only to individuals and families who purchase their own insurance. However, most policyholders in the individual market will receive some notice that their coverage will change, said Dan Mendelson, president of the market analysis firm Avalere Health.

The cancellations run counter to one of President Barack Obama's promises about his health care overhaul: "If you like your health care plan, you'll be able to keep your health care plan."

Philip Johnson, 47, of Boise, Idaho, was shocked when his cancellation notice arrived last month. The gift-shop owner said he'd spent years arranging doctors covered by his insurer for him, his wife and their two college-age students.

After browsing the state exchange, he said he thinks he'll end up paying lower premiums but higher deductibles. He said the website didn't answer many of his questions, such as which doctors take which plans.

"I was furious because I spent a lot of time and picked a plan that all my doctors accepted," Johnson said. "Now I don't know what doctors are going to take what. No one mentioned that for the last three years when they talked about how this was going to work."

Comments

mikesee

White House senior adviser Dan Pfeiffer, who appeared on "This Week," defended the president.

"If the president didn't intend to keep this promise, why would he have gone out of his way to put a provision in the law that specifically says that if you have a plan before Obamacare passed, you can keep that plan," he asked

Earth to Dan, earth to Dan...YOU CAN NOT KEEP YOUR PLAN UNLESS YOU ARE A CONGRESSMAN, SENATOR OR PRESIDENT. Got it?

Maybe the SR can send this article to Dan.

Darwin's choice

Obama's approval rating has just fallen to 40% according to the latest Gallop Poll. Please feel free to express what caused this precipitous drop.

The Big Dog's back

Polls, especially gallup's, mean what?

Darwin's choice

Well, like every comment you make and post here, not much really!!

I have noticed when they're the other direction, you love to throw BS stats out to suit your one sided view.

Troll. Funny you have been promoted to head cheerleader, with coasterfan stinking up Toledo and other papers....

Many liberals, Democrats, Illegals and the Free Stuffers will never give up Obama. Most Obama supporters know he is a liar, a radical and is harming the country but they just don't care. Obama fits their ideology.

This is big dog's mantra.

4shizzle

Dummies Choice still doesn't understand the definition of a troll .
Probably because he's a rock solid fool.

Darwin's choice

Keep proving you deserve the azzhat award....!

Another numbing,bumbling post! Your intelligence is alarming....classic Obamabot!

4shizzle

It's not a numbing,bumbling post. It's clear to someone with half a brain. Obviously , you don't have a brain at all.

By the way, dummy, what is your political party?

Tea tard , Libertard , or Republitard ?

8ballinthesidepocket

None are so blind as those who choose not to see!!! Name one thing Obozo has done that either moved the country forward or met one of his campaign promises?? Just one thing, please. And this joke of a healthcare system rollout should be the last straw before impeachment proceedings are started. His lack of business acumen is now starting to hurt, really hurt the citizens (the tax paying citizens that is) beyond belief. Nobody with any kind of systems experience rolls out something this big all at once, they should have done regionally to shake out all the bugs. But if you think this is bad, wait til you try to get a procedure scheduled or a claim processed. Thanks to all you blind folks out there that voted for this incompetent fool. I know already, it is still Bush's fault. Open your eyes for pete's sake.

The Big Dog's back

Blowhole, put a cork in it.

4shizzle

You are a blind man.

mikesee

A great read for all who support obamacare.

"I had great cancer doctors and health insurance. My plan was cancelled. Now I worry how long I'll live"

http://money.msn.com/health-and-...

kURTje

Sure 8ball..we are out of Iraq. McCain had no timeline, Obama did. (Both stated we'd be in Afghanistan. (Sad legacy of Wilson/Reagan)

Dr. Information

Obamacare is turning out to be nothing more than catastrophic insurance for many of people. The deductibles across the board for the lowest plan are simply crazy high. People that are broke are not going to get coverage. It was dumb to imagine that pay check to paycheck people (tens of millions across this nation) were going to come up with another 300 bucks a month for insurance.

Obama = failure and its just the truth. Sad.

mikesee

And now our liar in chief has done ALL of us wrong again! One of the "rules" of obumblescare is that ALL current corporations pay a $63 per person "tax". The UAW took exception with this as they felt it was wrong for their union members employers pay this. They cried & cried and cried some more. On Tuesday, I believe, the director of Health and Human Resources waived this for all UAW affiliated companies. He indicated that Odummy felt it was unfair to tax them and wanted to show them his gratitude for all they have done for HIM!

He is freaking moron. All dems should be outraged at this as he is saying screw the poor guys while giving to the rich. A total contradiction to the democrap mantra.

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