Why Insurance Plans are Being Cancelled

Recent news surrounding the Affordable Care Act (ACA), and testimony by HHS Secretary Kathleen Sebelius this morning before the House Energy and Commerce Committee, has brought to light the hundreds of thousands of cancellation letters that have been sent to insured Americans. These letters have caused a general uproar, after President Obama publically promised that anyone who liked their policy prior to the ACA would be able to keep said policy.

These policies will terminate come January as a result of compliance requirements under the ACA that prevent insurers from omitting certain core areas of coverage in policies sold both on and off the exchanges.

These ten core areas of coverage, called essential health benefits, include:

Ambulatory services, emergency services, hospitalization, maternity/newborn care, mental health services, prescription drug coverage, rehabilitative and habilitative services and devices, laboratory services, preventative/wellness services including chronic disease management and pediatric services. (More detail on these areas of coverage are available here and at cms.gov)

While it is clear that the Obama administration omitted this type of compliance conflict when stating American's could keep their coverage, those loosing their insurance come January will have the opportunity to sign up for coverage under policies that will cover these essential health benefits.

It is important to note that policies issued prior to March 23, 2010 are considered "grandfathered" and are not required to comply with all of the ACA essential health benefits, such as preventative care, but are required to comply with certain requirements such as no lifetime limits, and covering dependents up to the age of 26.