President Obama announced Thursday that Americans who have lost their insurance plans because they don’t meet the standards under the Affordable Care Act will be able to keep their individual insurance coverage for another year if the insurer chooses to extend the plan.
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The administrative solution would not require legislation, and only applies to plans that are already in existence to continue through 2014. It does not allow insurance companies to sell non-compliant plans to new customers. State insurance commissioners and insurance companies will make the calls on whether to permit renewals.
"Already people who have plans that predate the Affordable Care Act can keep those plans if they haven't changed. It was already in the law - its' what's called a grandfather clause that was included in the law. Today we're going to extend that principle both to people whose plans have changed since the law took effect and to people who bought plans since the law took effect," the president said.
The plan also requires insurers that renew non-compliant plans to inform policyholders of other coverage options on the exchanges and detail what benefits are not covered on their current plan.
"State insurance commissioners still have the power to decide what plans can and can't be sold in their states but the bottom line is insurers can extend current plans that would otherwise be canceled into 2014 and Americans whose plans have been cancelled can choose to reenroll in the same kind of plan," the president said.
Calls from both political parties had been growing for a fix as a reported five million people have received coverage cancellation letters because their current plans don’t meet the standards .
The president had repeatedly promised that Americans would be able to keep their current health insurance plans and doctors if they wanted to under the Affordable Care Act—a promise that has proven not to be true.
The president’s signature legislation requires all insurance plans to meet certain requirement, including offering benefits like prescription drugs and maternity benefits.
The announcement comes the day after the Health and Human Services Department reported 106,135 Americans signed up for health plans in the first month on the state and federal insurance exchanges. A quarter of the new enrollees were in the federally-run marketplace that 36 states rely on to sign up residents.
The enrollment numbers for the exchange's first month fell significantly short of the White House’s previous estimates for the necessary numbers to create a balanced insurance pool to keep a lid on premium costs for policyholders. The Congressional Budget Office has estimated that seven million people will buy coverage through the exchanges by spring.
The health-care registration website, healthcare.gov, has suffered numerous glitches and outages since its debut that have prevented consumers from signing up for coverage. The president told reporters on Thursday he was not informed about the website. "Had I been, I would not be out there saying this is going to be great."
The ACA requires all Americans to have coverage by the end of the open enrollment period on March 31, 2014. If they fail to have a plan and have a gap in coverage for three consecutive months, they will face a penalty of $95, or 1% of their annual income for every year they do not have a policy.