Loophole could let insurers delay reform compliance


An obscure loophole in the health reform law, which lets consumers renew their current policies for an extra year, may help insurers avoid covering additional benefits mandated under the legislation.

If insurers let members keep their current coverage until 2014, they won't have to comply with the reform law's provisions, most of which take effect in January, for an additional year, reported the Los Angeles Times.

This generally overlooked aspect of the reform law could be welcome news to insurers, particularly since only 2 percent of them already offer all the reform-mandated benefits. Extending their policies would provide a grace period for most insurers to bridge that significant gap, FierceHealthPayer previously reported.

"This could undermine the Affordable Care Act, and it opens the door for exacerbating potential rate shock in the exchanges," Christine Monahan, a senior analyst at Georgetown University's Health Policy Institute, told the LA Times. "The health insurers can cherry-pick some healthy people and it raises prices for everyone else."

But some states, like Arkansas, are encouraging their insurers to take advantage of this opportunity. In a bulletin last month, Arkansas insurance officials notified insurers that by extending individual policies until the end of 2013 and then renewing them for another year, the companies would not have to comply with the ACA's market reforms until Dec. 31, 2014.

Meanwhile, states like Oregon and California are taking action to close the loophole. Oregon issued a rule that prohibits such policy extensions beyond March 31, 2014. And California lawmakers are working on similar legislation to prevent insurers from extending policies, the LA Times noted.

For their part, most insurers haven't decided whether they will utilize the loophole. UnitedHealth said it's "currently looking at the best way to serve our customers' best interests" while ensuring compliance with the reform law.

WellPoint said its renewal practices differ depending on the state, with its Anthem Blue Cross unit offering renewals through March 31. And Kaiser Permanente doesn't intend to extend policies beyond Jan. 1 in in most states.

To learn more:
- read the Los Angeles Times article
- check out the Arkansas Insurance Department bulletin (.pdf)

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