Horizon Decides Against Renewing Small-Group, Individual Insurance Plans

Andrew Kitchenman | December 11, 2013 | Health Care
But loophole in state law gives policy holders option of early renewal of policies by December 31 deadline

Horizon Blue Cross Blue Shield of New Jersey won’t be renewing any of its current health insurance plans for individuals and small groups in 2014, as they were invited to by President Obama, citing tight deadlines and minimal benefits that would come from extending the plans.

But a loophole will still allow people to renew their policies before the end of the month by applying for early renewals of their policies.

Horizon is offering an entirely new slate of plans that comply with the 2010 Affordable Care Act beginning on January 1, when many provisions of that law are scheduled to go into effect.

Horizon “had been working to implement the Affordable Care Act for the past three and a half years, and undoing our work and essentially creating new plans in three weeks has proven to be impossible,” said company spokesman Thomas Rubino.

The state’s largest insurer had been weighing its options since President Obama announced on November 14 that a number of federal regulations wouldn’t be applied to the existing policies for the time being, potentially allowing insurers to extend plans.

Despite that announcement, federal officials declined to allow New Jersey insurers to continue to offer the bare-bones plans that had proven to be the most popular on the individual insurance market in the state.

That’s because those plans had been operating under a a special waiver from an ACA-mandated removal of a cap on annual benefits. The ACA is phasing out annual caps on benefits. These caps limit the amount insurance purchasers can be reimbursed even when facing life threatening treatments such as cancer.

While that waiver allowed the bare-bones “basic and essential” plans to be offered through 2013, federal officials said the president’s announcement didn’t affect the scheduled expiration of the waiver.

Obama had made the announcement in response to a backlash from individuals and small business owners around the country who had notified that their current tplans were being canceled.

Obama had continually promised that that people who were happy with their current plans would be able to keep them.

In New Jersey, they actually can keep them one more year ,but time is running short. Horizon’s announcement yesterday means that those who want to keep their current plans through December 2014 must apply for early renewal this month. Otherwise, they will have to choose new plans when their current plans expire next year.

Rubino said the company is committed to helping its customers understand the status of their policies, as well as their options.

“We have already begun and will continue notifying individual and small group customers with approaching renewal dates of what their options are for converting their old policies into new ACA-compliant policies,” he said in a statement.

Individual and family policies can be purchased through the federal health insurance marketplace website, healthcare.gov, as well as directly from insurers.

The federal site had a troubled launch in October but has performed better in recent days. The marketplace, or exchange, is intended to be a one-stop shop for residents to purchase insurance and learn whether they are eligible for federal subsidies. People can also buy coverage directly from insurers, but they must buy it through the federal site to be eligible for subsidies.

The federal marketplace for small groups, known as the Small Business Health Options Program (SHOP), is also launching on January 1, but its website has been delayed until late 2014 by technical problems. Small-business owners are able to purchase SHOP insurance plans through insurance brokers or directly from insurers.

Rubino said Horizon conducted an in-depth analysis of the feasibility and impact of renewing current policies. “Since the federal government is requiring all 2013 policies to be modified upon renewal, our members’ current plans would be significantly different and far more expensive, especially for the most popular basic and essential plans,” he said.

Raymond J. Castro, senior policy analyst for the nonprofit New Jersey Policy Perspective, said Horizon’s rationale made sense.

“It’s true they’re under enormous time constraints to come up with the premiums they would have to charge and modify the existing plans,” Castro said, adding that some consumers had the misconception that they would pay a similar amount if they could keep the same plan in 2014.

Castro added that other than those with bare-bones plans, most individuals and small groups will have health plans similar to their current plans, since the state already required a comprehensive set of benefits. And of those who have had the bare-bones plans, many will receive subsidies that will make their new, comprehensive plans more affordable.

“Delaying this would have just been delaying the inevitable,” Castro said. He added that anyone interested in keeping their current plans could seek early renewals before December 31.

It’s not clear what the premium price level would be for plans that are renewed early, but since many ACA regulations won’t apply to early renewals this month, it’s possible that the price increases won’t be steep.

AmeriHealth New Jersey, the only other company that currently offers coverage for individual and small groups and plans to offer such plans next year, hasn’t announced whether it will be extending any of its plans in 2014.