What Insurers Aren't Telling you About Canceled Health Plans

No wonder people losing their old health insurance policies are mad. A lot of them aren’t being told about better alternatives. Instead, insurers seem to be going out of their way to avoid letting their customers know about state Health Insurance Marketplaces where they might see plans from, gasp, competitors, and possibly qualify for financial help with premiums and out-of-pocket expenses.

The news and social media channels have been chock-a-block lately with indignant accounts from folks who are being moved from inexpensive old health insurance plans to expensive new ones, courtesy the new health care law. There’s even a new Tumblr where angry consumers are posting pictures of cancellation notices.

But plans are being canceld for a simple reason: They don’t comply with one or more provision of the new law. Some don’t cover all “essential benefits,” with maternity and drug coverage especially likely to be among the missing. Some have deductibles higher than the new allowable maximum of $6,350. Companies can’t sell or renew these policies on or after Jan. 1, 2014.

We’ve gotten hold of a number of cancellation letters (if you have one, feel free to mail a copy to me at this address). The information in them can be incomplete, to say the least.

Take, for instance, a cancellation letter sent out on Sept. 25 from Anthem BCBS of Missouri offering a policyholder a new plan priced at $1,004 a month. “You don’t need to do anything; you will automatically transition into your new…plan,” the letter said. “Or we can help you choose a different plan. Just talk to your Anthem agent.” Phone number and web address thoughtfully provided, of course.

But what about other options? That’s in the next paragraph: “You can also check into whether you’re eligible for a government subsidy to help you pay for health coverage. If you are, you could buy an Anthem plan on the government-run Health Insurance Marketplace.” Perhaps it was an oversight that the letter didn’t supply Healthcare.gov’s address? Or mention that other carriers were also selling plans on the marketplace?

“I don’t know if anyone’s watching these letters, to tell you the truth,” said Karen Pollitz, an insurance expert at the nonprofit Kaiser Family foundation.

Even when the letters mention the option of using the state marketplace, it can be hard to find. Humana’s Colorado customers saw, in boldface on the first page of their notice, that “you must choose one of these two options…or your coverage will be terminated.” Both options, needless to say, were full-price Humana plans. Information about Connect for Health Colorado, the state’s well-functioning marketplace, and the availability of financial help there, was relegated to small print under a footnote on the second page of the letter. (As Dylan Scott reported on Talking Points Memo, Humana got in trouble with Colorado regulators over this notice and was forced to send out a corrected version.)

The best notice we've seen came from Highmark Bue Cross Blue Shield in Pennsylvania. It said the plan was being discontinued and in the very next paragraph explained what the marketplace was and where to find it, that it included several Highmark choices, and how to find out about eligibility for financial help.

The bottom line: Do not rely on your cancellation notice when you search for replacement coverage. As we said last week, it is possible if not likely that you can find a better deal on your state’s marketplace. To begin, use our free online tool, HealthLawHelper.org, which will tell you whether your household may qualify for various types of financial help. And then visit your state’s marketplace to explore your complete range of options.

Got a question for our health insurance expert? Ask it here. It helps if you include the state you live in.

— Nancy Metcalf

Health reform countdown: We are doing an article a day on the new health care law until Jan. 1, 2014, when it takes full effect. (Read the previous posts in the series.) To get health insurance advice tailored to your situation, use our Health Law Helper, below.