California insurer delays policy cancellations tied to Obamacare

Reuters News
Posted: Nov 05, 2013 4:03 PM
California insurer delays policy cancellations tied to Obamacare

By Lewis Krauskopf

(Reuters) - Health insurer Blue Shield of California said on Tuesday it will delay policy cancellations for 113,000 customers who were due to lose coverage at the end of the year as a result of new requirements from President Barack Obama's healthcare law.

Under pressure from California Insurance Commissioner Dave Jones, Blue Shield agreed to allow customers on the individual insurance market to receive a 90-day extension of their plans.

The California extensions come amid a national political storm over hundreds of thousands of Americans losing plans that do not comply with the requirements of Obamacare. Obama had repeatedly pledged Americans could keep their plans if they liked them as he rallied support for the 2010 law.

Blue Shield of California Life and Health Insurance Company agreed to the delay after Jones threatened legal action against the company for providing only 90 days' notice to policyholders instead of 180 days, the insurer said. The affected policyholders will be able to keep their plans through March.

"Allowing consumers to stay in their existing plans longer is the right thing to do for policyholders," Jones said in a statement. "State and federal law allow Californians to keep their current policies beyond December 31."

In an interview, Jones said the situation with Blue Shield was unusual: The insurer was switching to another state regulator, a move that required it to give the longer notice. Jones said it was unlikely other companies that had issued cancellation notices would extend their policies.

He estimated that 900,000 additional Californians face termination of their policies this year.

"We're going though all the notices out there to make sure they're compliant with law...but this is a fairly unique circumstance," Jones said.

Jones said he was not sure what other state insurance commissioners might be able to do, noting that regulation was a function of state law.

The insurance department cautioned that policyholders who are eligible for subsidies available through California's insurance exchange likely will want to select new policies by December 15 to start receiving the premium assistance at the new year.

(Reporting by Lewis Krauskopf in New York; Editing by Matthew Lewis and Ken Wills)