President Barack Obama announced yesterday that previously canceled individual insurance plans could be renewed through 2014, exempting policyholders from individual mandate fines and allowing them another year to shop for an ACA-compliant policy.
However, the fix does require a few things from insurers and—by extension—producers.
First, those offering the previously-canceled plans must notify clients about what protections are normally offered under ACA-compliant plans and point out where their current plans fall short.
Second, the client must be told there are other options available through Obamacare, which may turn out to be cheaper if government subsidies apply.
Of course, all this depends on whether or not carriers will actually choose to renew plans they already canceled. Many may feel that because the “fix” makes no promises about 2015, the arduous process of renewing previously-cancelled plans may not be worth it.
"The complexity of trying to uncancel millions of canceled individual policies with only six weeks left in the year is staggering," wrote Citigroup analyst Carl McDonald in a report, saying the "fix" would cause "an enormous administrative burden" for both insurers and producers.
Insurance consultant Robert Laszewski spelled out the situation in more detail in a note to clients Thursday morning:
“This means that the insurance companies have 32 days to reprogram their computer system for policies, rates, and eligibility, send notices to the policyholders via US Mail, send a very complex letter that describes just what the differences are between specific policies and Obamacare compliant plans, ask the consumer for their decision—and give them a reasonable time to make that decision—and then enter those decisions back into their systems without creating massive billing, claim payment, and provider eligibility list mistakes. All by January 1.”
In many cases, producers will play a large role in helping clients make that decision and communicating it with the carrier. If clients choose to forego their old insurance in favor of options under the ACA, producers will need to tango with the still faulty HealthCare.gov.
For insurance professionals, Laszewski said, the fix means everyone involved is now “in a hell of a mess.”
